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Miles Franklin sponsored this article by Gary Christenson. The opinions are his.

From Ralph Waldo Emerson: “It’s not the destination, it’s the journey.”

His insight applies in life, investing, analysis, the S&P 500 Index, gold, silver and others. Consider these examples.

You have $10 million to invest in a business and are searching for a manager. CEO #1 and CEO #2 have both amassed a personal fortune over $100 million. Which one do you choose?

CEO #1 built three companies over the past 30 years and grew revenues and profits most years. S/he built a loyal customer base and stockholder equity.

CEO #2 ran three companies into the ground, escaped through bankruptcy and then won $120 million in the Powerball lottery.

Both have a large personal fortune, but CEO #1 looks like a better manager.

How you arrive at your destination is important. It is path dependent.


Amazon stock sold for under $7 in June 1998 and over $100 in April 1999. It rose by a factor of 14 in only 10 months. Examine the chart from that time.

The upward path was not sustainable. Amazon stock crashed after the “Dot.com” bubble and fell over 90% during the following two years. It then rose to over $2,000 by 2018. What happens next to this high-flying stock?

Crude oil sold for $51 in January 2007 and bubbled higher to $147 in July 2008. It rose by a factor of 2.9 in 18 months.

The upward path was not sustainable. Crude oil prices crashed to $36 five months after its bubble high.

Silver sold for less than $5 in 1977 and bubbled higher to over $50 in January 1980. It rose by a factor of 10 in 2.5 years.

After the bubble peak, silver crashed to under $11 in five months. Blame the Hunt Brothers, blame COMEX, blame manipulation by Wall Street, blame whatever, but $50 in 1980 was unsustainable. Silver prices for the paper contracts on COMEX fell to a low of $3.51 over the next 20 years.

The paths to highs and lows are important. The above are a few of many unsustainable price advances and declines.

Examine the 10-year bond market yield for several decades.

Bond yields rise and fall but the long-term trend has been down for years. Will 10-year yields and mortgage rates fall further or is this a triple bottom?

Over $16 trillion in global sovereign debt now “pays” negative yields. This is crazy, but profitable for the front runners who assume central banks must lower yields and increase the value of those fiat-debt bonds.

The 100-year Austria bond is another example. Large paper profits for a few resulted from buying those bonds. However, the chart of the bond looks like the three unsustainable rallies described above.

Will bond yields continue lower or will bonds crash and drive interest rates higher? Intelligent analysts argue both sides of that debate. We prefer to avoid the subject and look at something that makes sense.


  1. Unfortunately, less and less. From Fox News:

San Francisco has declared that such words as “offender” and “addict” are no longer acceptable. A “convicted felon” will become known as a “justice-involved-person” or a “formerly incarcerated person.” A juvenile delinquent will now be called “a young person with justice system involvement.”

  1. Bonds are bought not for their yield, but because central banks are “gaming” the financial system and forcing yields down, which pushes prices higher. Front-running works until it doesn’t.
  1. Will heavy-handed central bank interest rate interventions end well?
  1. President Trump asked, “who is our bigger enemy, Jay Powell or Chairman Xi?” He asks a good question. The U.S. does not need a central bank.
  1. Gold sells at all-time high prices in many currencies, but not the U.S. dollar.
  1. China, India, Russia and other countries buy gold every month.
  1. Gold is real money with no counter-party risk. Europe, Japan and the U.S. issue more debt (unpayable) and demand that interest rates stay low so debt will grow exponentially higher. Counter-party risk and currency risk will overwhelm many $trillions of sovereign debts. Yet people buy dodgy debt instead of real gold or silver. Strange.

Examine the long-term chart of silver and note its 200-week moving average.

For contrast, examine the long-term chart of the S&P500 Index and note its 200-week moving average.

Markets are path dependent. Both silver and the S&P will move higher as governments and central banks devalue digital currencies and levitate stock and bond markets, but which market has more potential to rise higher?

ANSWER: Silver prices are a few percent above their 200-week moving average but have been below the average mostly since 2013.

The S&P is 15% above its 200-week moving average and has been above the average mostly since 2011.

The S&P might not crash until after the 2020 election. But is that a healthy bet given recent market action, trade wars, tariffs, currency wars, shooting wars, negative interest rates, extreme leverage, corporate debt, under-funded pensions, over $22 trillion in official national debt, unfunded liabilities of $100 – $200 trillion, and the plethora of economic, social and political nonsense that bombards us every day?


  • Bond yields are too low but may go lower. Depending on central banks to force rates lower is a dangerous game. Expect a nasty reversal… someday.
  • Debt, spending, and deficits are climbing out-of-control. Expect tears.
  • San Francisco is… different.
  • Gold and silver have no counter-party risk. Counter-party risk destroyed many people and investments during the 2007-08 crash. Expect the crash of 2019?-2022? to be worse, while gold and silver will soar as the purchasing power of fiat currencies crashes.
  • Silver recently crossed above its 200-week moving average. The S&P 500 Index is well above its 200-week moving average.
  • Gold and silver bullion have no counter-party risk. Russia and China convert dollars to gold every month. Perhaps we should as well.
  • Results are path dependent. It’s not the destination, it’s the journey.
  • How we arrived helps determine what we can expect.

Miles Franklin will exchange digital and paper dollars for real gold and silver bullion.

From David Morgan: “This is the real move in gold and silver.”

From Andy Schectman: “Gold bullion sales taking off.”

Or you can buy a bond that yields next to nothing and will repay you with devalued currency units.

The path is important. There is little point in becoming a billionaire if billion-dollar bills are less valuable than toilet paper.

Gary Christenson

The Deviant Investor