Is Silver Really Ready for a Crash?

As shown in the chart above for the iShares Silver Trust ETF (SLV), silver has enjoyed a parabolic rise in value over the past few months, recently closing at close to $50/share (one share is roughly equivalent to an ounce of silver).  The previous nominal high reached in the 1980's was about $50/ounce.  Many people are beginning to say that silver is ready to crash and a few bloggers have even suggested that now might be good time to short silver. I would much rather short the long US Treasury Bond using ProShares UltraShort 20+ Year Treasury ETF (TBT) than to try to short silver right now.

Here are the long term fundamentals for silver:

• Federal Reserve continues to print money, keep interest rates artificially low and thereby debase the currency, increasing the value of hard assets such as gold and silver

• The creditworthiness of the United States and the reserve currency status of the US dollar are no longer unquestionable - as shown in the chart below, the long-term trend for the dollar is a decline in value

• Prior peak inflation-adjusted value of silver is conservatively $150/ounce, which would indicate that silver has a little more room to run

• Silver is consumed in industrial applications, unlike gold which never "goes away"

• Silver is much more affordable than gold, making it accessible to more individual investors