What will the price of silver be in 2021?  You can find articles suggesting the price of silver will be over $1,000 and under $10. Perhaps this is the wrong question.

A better approach: The global financial system is increasingly unstable and fragile, more so than in 2008. The important question is: How will governments, central banks and financial systems respond to the ongoing crisis? Future prices for silver are dependent upon the answer to that question. I suggest three possible scenarios.

Scenario One – status quo: The next five years could look much like the last 20 years. Politicians spend too much money, debt expands exponentially, central banks monetize debt and desperately inflate and reflate bubbles to maintain their power and continue the transfer of wealth from the many to the few. This is “status quo” or “more of the same” and indicates that silver prices will rise substantially, but not in a hyperinflation.

Scenario Two – deflationary crash: Deflationary forces overwhelm the financial system and central bankers and politicians can’t or won’t reverse those deflationary forces. In that scenario most paper assets crash while the purchasing power of silver increases far more. Central bankers will do almost anything to avoid this scenario.

Scenario Three – deflation and hyperinflation: Deflationary forces temporarily crash the financial system (signs are visible in 2016-Q1), and eventually central bankers and governments inflate currencies, possibly to hyperinflationary levels in their heavy-handed reaction.  In this scenario silver prices will go into the stratosphere – perhaps $150, or $1,500, or $15,000 per ounce. The ultimate silver price in a hyperinflationary scenario is unpredictable since hyperinflationary forces feed upon themselves and destroy purchasing power unpredictably. Gold reached nearly 100 trillion Weimar Marks per ounce in 1923.  Gold, if currently priced in 1945 (pre-devaluation) Argentina pesos would be over 10,000 trillion 1945 pesos.  Hyperinflation is an ugly, destructive, and unpredictable process.