on Precious Metals
"There are two ways to conquer and enslave a nation. One is
by the sword. The other is by debt." --John Adams
Supply and demand
1 (metric) tonne = 32,151 troy ounces.
Report of U.S. Treasury-Owned Gold. As of January 31, 2013, the
Federal Reserve Bank NY Vault has a total of 418 tonnes (i.e. 13,452,810
troy ounces), and the U.S. Treasury total is 7,715 tonnes (i.e. 248,046,115
- Silver/gold mine
production. In 2010, total global mine production of silver
was between 713 (22,177 tonnes; see here)
and 735 million troy ounces (22,861 tonnes; see here),
with Peru and Mexico being the largest producers. Gold mine production
is approximately 85.5 million ounces of gold (2,659 tonnes; see here),
or a 1 to 8 ratio of gold to silver. The ratio is even smaller when
one considers that over half of silver is consumed by industry and
most of newly mined gold is not. Discussion on peak gold (see here).
The USGS estimates worldwide silver reserves to be 530,000 tons as
of 2011 (see here).
At an average mining rate of 22,000 tonnes per year, all silver would
be mined out in 24 years. However, if you look at the USGS data each
year, the amount in reserves doesn't seem to change very much, so
I'm not sure how reliable that number is. For the complete series
- Silver demand.
Industrial usage was 55% of demand in 2010 (i.e. electronics, science,
cell phones, computers, wiring), jewelry demand was 19%, coin demand
12% and rising, photography 8% and declining, and silverware 6%. Percentages
derived from here.
Industrial demand for silver continues in 2011 unabated, see here.
Electronics is still the largest component of silver demand, accounting
for more than 60% of the total industrial demand , see here.
For a detail description of silver's various uses see Silver
Uses (from The Silver Institute).
- Gold supply/demand.
Approximately 52% is used for jewelry, 18% constitute official holdings
of central banks, 16% as investments, 12% for industrial use, and
2% miscellaneous. Jewelry consumption is primarily from India, China,
and the United States which collectively consumed 2,059.6 tonnes in
2010 or 87.6675% of the total consumed for jewelry worldwide. In 2010
the gold supply stood at 4108 tonnes (2659 tonnes from mine production,
neg. 116 tonnes hedging, 87 tonnes central banks sales and 1653 gold
recycling). Demand from industry was 420 tonnes, or 10 per cent. This
is 287 tonnes for the electronics industry, 50 tonnes for dentistry,
and 83 tonnes for other industrial purposes. In contrast, jewellery
demand was 2060 tonnes. (See here)
the World's Gold. The best estimate at the end of 2011 is
that around 165,000 tonnes have been mined in all of human history,
or about 5.3 billion troy ounces. With gold at $1,600 per troy ounce
that's about $8.4878 trillion in total dollar value. In terms of space,
it would be a cube 67 feet (or 20 meters) on each side. With the world
population at 7 billion, this leaves each person on the planet with
24 grams of gold or less than one troy ounce (0.76 troy ounce).
3 Big Charts I Watch For Silver. The 3 charts are US House
Price / Silver Ratio, The DJIA to Silver Ratio, and the
Gold to Silver Ratio.
Estate Home Appreciation - Last 12 Months. It is useful to In
1980 the average house price to silver ratio was 1:1448 (i.e. $72,400
ratio chart. The 1980 ratio high was 1:14, the ratio low was something
like 1:100 (?). The current ratio is around 1:45 (Aug 9, 2011). Potential
future ratios and price targets here: Future
ratio chart. The Gold to Light Crude Oil ratio. Since oil and
gold are similarly impacted by physical supply/demand and the expansion
of money supply, one can view gold as a real money measure of the
value of oil. The more it costs to buy oil in gold terms the more
likely oil is overvalued relative to gold, and vice versa. A savvy
investor can take advantage of relative mispricing by buying the underpriced
asset and selling the other. The lower the ratio value, the cheaper
is Gold relative to Oil, so you sell Oil and buy Gold. If you go back
to 1998 and look at the gold/oil ratio, we hit 27.5 to 1. The ratio
today (2/22/2012) is at 16.5 to 1. Lets say the ratio of 16.5
stays consistent, but crude moves to the old high of $150, that would
mean a gold price of $2,475.
ratio chart. The dollar continues to fall against gold.
- Silver production
breakdown. Roughly 25% of silver production comes from copper,
and over 35% from lead and zinc. Roughly 10-15% comes from gold (see
both CPM Silver Yearbook and GFMS World Silver Survey). Only about
20-30% of silver comes from primary silver production. At least in
theory, if base metal prices collapse from a recession, it might be
difficult to increase silver mine supply and, therefore, any surge
in silver demand will not be met. Among major commodities and metals
(besides rare earth elements), silver has the least amount of mineable
reserves relative to demand. In other words, if all else remained
constant, we would run out of silver before other base metals, oil,
or, even, gold. Reference: Peak
- Metals of Sun (gold) and Moon (silver). For each cycle
of the Sun (1 year), there are 13 cycles of the Moon; thus, a gold/silver
price ratio of 13:1. Over the last 4 millenia, the gold/silver ratio
has averaged out to a little over 15:1. Modern science tells us that
silver is 17 times more plentiful than gold in the Earth's crust,
i.e. a 17:1 ratio. While virtually ALL the gold ever mined still exists,
most of mined silver is "consumed." Above-ground estimates
of the supply ratio range anywhere from 6:1 to 9:1. Given that
the current price ratio ranges around 50:1, there is high expectation
that silver will ultimately outperform gold.
- Commercials active on the buy side. When smart money
gold players (commercials) have been very active on the buy side,
enormous rises in the price tend to follow. See here.
- Gold climbed inspite
of banks selling. Bullion tripled from 1999 through the beginning
of 2008 as the banks sold more than 4,000 tons. But since 2009, central
banks have been net buyers.
- Silver in solar
panels. About 2/3 Oz per panel. Thus, 48 X 200 watt panels
would be 32 Oz of silver. In 2010, use of silver in solar cells was
about 64 million ounces, up from 20.9 million in 2009.
- Silver supply/demand
dynamics compared to 1980. When you realize that: (1) There
is a lot less above ground silver in the world since 1980 (4 billion
ounces versus 1 billion ounces in 2012), (2) There are 50% more people
in the world today than in 1980 (4.4 billion versus 6.8 billion),
(3) Only 15% of the world's population had an opportunity to buy silver
in 1980, and (4) There are a lot more U.S. dollars and other currencies
circulating in the world today than in 1980...then the current silver
price is too low.
Much Does it Cost to Mine Silver? Posted 5/15/2012. For two of
the U.S. silver miners the average "complete" cost in 2011
(includes shareholder dividend cost) is high at $27.75. For the Fresnillo
mining company $20.67 and for Hecla $23.88.
Right Time to Buy Gold. Posted 5/29/2012. Excellent article on
current supply/demand fundamentals for gold.
Gold Mines and Deposits Ranking 2012. The data is displayed using
Gold Facts. The amount of above ground has been revised here:
Aboveground Gold Stock: Its Importance and Its Size by James Turk
October, 2012 (in PDF) to 155,244 tonnes from 171,300 tonnes.
See also: Gold
- Visualized in Bullion Bars.
Is the 'Spot Price' of Gold and Silver?. Posted 2/26/2012.
production costs put a $1,300 floor under the gold price. Posted
11/20/2012. According to the Thomson Reuters GFMSs Gold Survey
2012, the average cost across the gold mining industry for mining
an ounce of gold is $727 per ounce. However there are many other costs
aside from those associated with mining and processing ore into gold,
including exploration activities (i.e. surveying and drilling), site
production preparation, and waste removal. The total all-in cost of
mining an ounce of gold across the industry is currently around $1,300
and for some producers it is considerably more. For example, it costs
Gold Fields, which is one of the worlds largest producers of
gold with annualized production of 3.5 million gold equivalent ounces,
$1,788 an ounce.
- 10 Silver Facts. Interesting facts about silver. Most shiny; second most ductile; most electric conductive; germicidal; most thermal conductive.
- (YouTube) Silver - The Element of Change. Describes the properties and uses.
Good money should be effective as (1) a store of value, (2) a medium
of exchange as well as (3) a unit of account. In order for money to
be effective it has to have the following properties:
- divisible - should be divisible in smaller units
- portable - able to carry it around therefore a high value
should be able to be contained in a small space and weight.
- homogenous - one unit should be the same as any other unit
- durable - should not be able to be easily destroyed or
- valuable - should have intrinsic value, normally because
it is desirable. Should not be able to be created or discovered
without reasonable effort. Normally a commodity itself.
is a monetary standard in which the value of the monetary unit is
defined as equivalent both to a certain quantity of gold and to a
certain quantity of silver. "In 1787 the United States Constitution
established gold and silver as the legal tender of the United States
at a floating exchange rate. Then in 1792, Alexander proposed fixing
the silver to gold exchange rate at 15:1..." The disadvantage
of fixed rate of exchange between the two was that silver was exchanged
for gold at the U.S. mint and then the gold sold in the open market
to in turn buy silver with the profits and repeat the process.
Act of 1873 (the fourth coinage act) embraced the gold standard
and demonetized silver. Western mining interests and others who wanted
silver in circulation years later labeled this measure the "Crime
of '73". Gold became the only metallic standard in the United
States, hence putting the United States de facto on the gold standard.
For a detailed description of the history see The
Crime of 1873 by Milton Friedman. A good video describing this
history at Silver
Update 11/27/11 Silver History Part 2. Also read more in the long
Quick summary of why the
Federal Reserve was created: Mainstream
Reporter Tells The Truth About Audit The Fed And The Creation Of The
Federal Reserve. The four-minute embedded video of the FED story
is found here: Reality
Check: Do We Really Need To Audit The Federal Reserve?
Greenspan on a gold standard (1966)
"Under a gold standard, the amount of credit that an economy
can support is determined by the economy's tangible assets, since
every credit instrument is ultimately a claim on some tangible asset.
But government bonds are not backed by tangible wealth, only by the
government's promise to pay out of future tax revenues, and cannot
easily be absorbed by the financial markets. A large volume of new
government bonds can be sold to the public only at progressively higher
interest rates. Thus, government deficit spending under a gold standard
is severely limited. The abandonment of the gold standard made it
possible for the welfare statists to use the banking system as a means
to an unlimited expansion of credit.
They have created paper reserves in the form of government bonds
which -- through a complex series of steps -- the banks accept in
place of tangible assets and treat as if they were an actual deposit,
i.e., as the equivalent of what was formerly a deposit of gold. The
holder of a government bond or of a bank deposit created by paper
reserves believes that he has a valid claim on a real asset. But the
fact is that there are now more claims outstanding than real assets.
The law of supply and demand is not to be conned. As the supply of
money (of claims) increases relative to the supply of tangible assets
in the economy, prices must eventually rise. Thus the earnings saved
by the productive members of society lose value in terms of goods.
In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. There is no safe
store of value. If there were, the government would have to make its
holding illegal, as was done in the case of gold [in 1933]. If everyone
decided, for example, to convert all his bank deposits to silver or
copper or any other good, and thereafter declined to accept checks
as payment for goods, bank deposits would lose their purchasing power
and government-created bank credit would be worthless as a claim on
goods. The financial policy of the welfare state requires that there
be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against
gold. Deficit spending is simply a scheme for the confiscation
of wealth. Gold stands in the way of this insidious process. It stands
as a protector of property rights. If one grasps this, one has
no difficulty in understanding the statists' antagonism toward the
--Alan Greenspan, 1966
When Greenspan later rose to a position of prominent political
power when named Chairman of the Fed, he disavowed his essay about
gold. However, that disavowal does not detract from the truth
of his written word. His words stand on their own. Also read: 41
Years After The Death Of The Gold Standard, A Look At "How We
Ended Up In This Economic Purgatory"
The U.S. government has
four basic ways to finance its spending:
- Increase income by raising taxes the citizens
- Cut spending by reducing benefits
- Borrow money through the issuance of government
- Print money. However, "By increasing the number
of U.S. dollars in circulation, or even by credibly threatening
to do so, the U.S. government can also reduce the value of a dollar
in terms of goods and services, which is equivalent to raising the
price's in dollars of those goods and services." --Bernanke,
November 21, 2002, Remarks
by Governor Ben S. Bernanke Before the National Economists Club,
The first two (i.e. raising taxes and cut spending)
can be political suicide, especially in an election year. Borrowing
money is a politically convenient option but you can only
borrow so much. That leaves the final option of printing money.
Printing money requires no immediate sacrifice and no spending cuts.
It's a perfect solution for a growing country that wants to avoid
making any sacrifices. However, printing more money than is needed
leads to inflation. Therefore, if a country can somehow generate a
global demand for its currency, it has a "permission slip"
to print more money. The U.S. has been able to do this and export
- Reckless monetary
policies. Since 2009, the U.S. along with the worlds central
banks have eased (i.e. printed money out of thin air) more than
they ever have in history. This results in inflationary and at times
deflationary cycles. See Inflation/Deflation.
A loss of faith in the currency results in Hyperinflation.
- Reckless fiscal policies.
The U.S. dollar is about 60% of the worlds reserve currency.
Yet the U.S. government runs a deficit over 100% of GDP with no
end in sight -- a government that also carries enormous off-balance
sheet liabilities (such as Social Security and Medicare) in the
tens of trillions of dollars and an effectively broken political
machine that assures paralysis for a long time to come.
- Negative real interest rates. Whenever the price of money
set by the Federal Reserve is below the rate of inflation, you have
what are called negative real interest rates. Such periods
of time are historically quite favorable to the price of gold.
Gold remonetarization. There exists the real possibility
that the FED will revalue the U.S. dollar against gold. See With
the World Waiting for QE3, is The Fed Preparing for Gold Revaluation?
Credit unworthiness of the United States. Would you
lend (if you were a bank) to someone with the following financial
|New annual debt
The above numbers is the
U.S. budget, as of the end of 2011, in tens of billions of dollars.
"Annual income" is from U.S. taxes. "New annual debt"
is the current U.S. deficit. See the USDebtClock.org
for exact numbers. Notice that the U.S. spends about 60% more than
it takes in via taxes (i.e. $23K of income versus $36K of spending).
Three Demand Waves of Silver
Notes based on the YouTube video, The
Three Demands of Silver:
- Industrial demand. Inelastic price, physical demand, lower
prices for value added profits, destroying the world's stockpile
- Investment demand. Paper and physical demand: paper traders,
international and individual physical buyers.
- Monetary demand. Insatiable demand for silver has a monetary
alternative to paper currencies and gold (i.e. silver as a poor
The first two are currently playing out. The third, monetary demand,
is still future. While industrial demand is steadily depleting
silver stockpiles through usage into landfills, investment
demand is increasingly accumulating silver as an alternative to gold.
Silver as money is currently being considered by some states in the
United States and proposed for Mexico by the influential Hugo Salinas
Mulls Silver Lining Against Currency Crash).
An Expansion/Contraction of Counterfeit Credit
The correct definition of inflation is an
expansion of counterfeit credit, whereas deflation is a
forcible contraction of counterfeit credit. Credit expansion, in and
of itself, is not counterfeit or illegitimate or inflationary. At
least two factors distinguish legitimate credit from counterfeit credit.
First, someone has produced more than he has consumed. Second, this
producer knowingly and willingly extends credit. He understands exactly
when, and on what terms, with what risks he will be paid in full.
He realizes that in the meantime he does not have the use of his money.
The third factor is that the borrower has the means and the intent
Banks create counterfeit credit via duration mismatch. As
detailed in Fractional
Reserve Banking: The Real Story when a bank takes in a deposit
and lends for a longer duration than the deposit, it is creating
counterfeit credit. It is a duration mismatch, which is fraud and
the source of banking system instability and crashes. If a bank lends
deposits only for the same or shorter duration, then the bank is perfectly
stable and perfectly honest with its depositors. Such banks can expand
credit by lending, (though they cannot expand money), but it is real
credit. It is not counterfeit. Unfortunately, this is not what the
banks do. Demand deposits (or of fixed duration) are used to lend
out for longer durations such as for 15- and 30-year real estate loans.
Balance sheets conceal this duration mismatch and give the false sense
that everything balances.
When the Federal Reserve creates currency to buy a Treasury bond
it is counterfeit credit, by its very nature. (On their books,
they create a liability for the currency issued and an asset for the
corresponding bond purchase. New money out of thin air.) Every time
the Fed expands its balance sheet, it is inflation. It is no exaggeration
to say that the very purpose of the Fed is to create inflation. Their
goal is to continue to expand credit against the ever-increasing market
forces that demand credit contraction.
Social Security is counterfeit credit. When the worker foregoes
16% of his wages to Social Security he is extending credit, by forcei.e.
unwillingly. The government promises him that in exchange, they will
pay him a monthly stipend after he reaches the age of retirement,
plus most of his medical expenses. Anyone who does the math will see
that this is a bad deal. The amount the government promises to pay
is less than one would expect for lending money for so long. For example,
someone working for 40 years contributing $10,000 per year toward
Social Security (on a $60,000 per year salary) would net over $3.5
million using a compound interest rate of 5%. Clearly, the government
dispenses considerably less than this on average per retiree.
Inflation is only possible by the initiation of the use of physical
force or fraud by the government, the central bank, and the privileged
banks they enfranchise. Deflation is only possible from, and is indeed
the inevitable outcome of, inflation. Whenever credit is extended
with no means or ability to repay, that credit is certain to eventually
become a deflationary crisis that threatens to harm the creditor.
Further reading: The
Writings of Professor Antal E. Fekete and Monetary
Economics 101 and 102.
Wars - The Four Horsemen of the Dollar Apocalypse (Jim Rickards
video interview - posted 11/18/2011)
Currency Wars. Jim Rickards details how a global financial crisis
would occur through a global currency war.
Jim Rickards outlines the
four potential scenarios for world currencies, or the 4 roads to dollar
- Multiple Reserve Currencies.
Where the U.S. dollar gets a smaller share of the world reserve currency
status (currently 60%). Instead of one central bank behaving badly,
many world central banks behave badly. Thus, it would spur a "Race
to the Bottom". In part, this is what is happening with the U.S.
Fed, the European ECB, Japan, and China. They are all steadily devaluing
- IMF Special Drawing
Rights (SDRs). SDRs have been around since 1969. A new world currency
set up and managed by the G20 nations via the IMF.
- Return to a Gold Standard.
Three keys to a Gold Standard: (1) What definition of money will you
use (M0, M1, or M2), (2) What percentage of money backed by gold (e.g.
20%, 40%, or 100%), and (3) Is the U.S. acting along (i.e. the gold
backing is to U.S. dollars alone) or are the currencies of the other
major nations included. The U.S. dollar is implicitly tied to gold
at about a 17% backing. A 40% backing would be the most likely. The
following is as of April, 2011.
| Flexible Gold
Price per ounce
|U.S. M1 with
40% gold backing
|U.S. M0 with
40% gold backing
|U.S. M1 with
100% gold backing
|U.S., ECB, China
M1 with 40% gold backing
M0 with 100% gold backing
|U.S. M2 with
40% gold backing
|U.S., ECB, China
with 100% gold backing
- Chaos. Systemic
Collapse + Loss of Faith in Paper Money. Rickards believes Chaos is
the most likely scenario to occur, because it is a result of denial,
wishful thinking, and "kicking the can down the road". On
a U.S. dollar collapse, the President would then have (dictatorial)
powers to restore order. Restoring order could mean any number of
things, including going back to a Gold Standard.
Punitive sales or capital gains tax
In a high-inflation / hyper-inflation crisis (i.e. an inflationary
spike lasting as much as a year), a punitive Sales or Capital Gains
Tax on the sale of gold is not likely to happen for the following
- No incentive to sell. Those holding gold are generally
wealthy individuals and don't NEED to sell in a crisis. They have
plenty of other assets to hold them through. There would be no incentive
to liquidate, other than in small quantities out of personal need.
Moreover, since few people hold meaningful quantities of gold anyway,
such a tax would generate little revenue for the government.
- Gold would move out of the country. Why sell gold in a
country where most of its value is lost via taxation? The incentive
would be to sell the gold in countries with favorable tax policies
such as the UK, Europe, Russia, and China. Most of these already
have a 0% tax policy on gold. Flight of gold out of the country
would be the last thing a government would want when trying to rebuild.
- Encourages a black market. The demand for gold would be
EXTREME in an economic collapse (or similar situation). In such
an environment, a black market for gold would inevitably ensue especially
if it is highly taxed.
Understand that gold does not intrinsically produce anything.
It is capital which does not deliver capital gains. Governments don't
get rich by taxing capital, but rather by the economy activity produced
by the capital. To restart a failed economy (as a result of a
failed fiat currency) the government will need an infusion of REAL
capital. That is what gold provides. To curtail its circulation would
The taxation of silver may be a bit different than gold during and
after an economic collapse, in that silver has such a high industrial
demand as compared to gold. Governments would likely tax silver.
However, there may be leniency with taxation in order to help reboot
leasing of gold and dollar liquidity stress
Gold "lease rate" definition: The "lease rate"
(i.e. defined as Libor -
GOFO, or Gold Forward Offered Rate) is the net rate of interest
a bullion bank like JPMorgan (or HSBC) pays to a central bank like
the Fed to borrow gold. The bank then takes the gold and sells it
on the LBMA or the Comex. After painting the tape and initiating the
beatdown, the bank can then cover the new short position, thereby
reclaiming the gold it borrowed for return to the central bank. With
one-month lease rates at -0.5% (on 12/14/2011), the bank actually
gets paid interest by the lender to borrow the gold. Its a win-win
for JPMorgan et al. They make interest (which they like) and prop
desk trading profits (which they like even more).
European banks are in immense
dollar liquidity stress (as of late 2011). They have leased gold to
sellers or sold outright against the dollar POG (Price of Gold) in
order to raise dollars.
[The collapse of the lease
rate (on 12/14/2011) is indicative of high interest by the lessors
of gold, aka holders. Global banks are in the paper-(e)dollar world.
That is their god. If you have an account with them and you
want to hold physical gold, they do not care. They will lease,
rehypothecate, sell what you own, even illegally, to keep themselves
alive. Banks and hedge funds, even those physically holding
client assets which may be physical gold bars, will sell anything
they can for paper liquidity to stay alive. To them, "cash
is king" because those accounting figures are the difference
between being employed and operating and not.]
For further discussion
on this topic see Gold
Ten Reasons to Buy Silver
- Moving into True Money.
Would you convert your labor into Depreciating Fiat Paper or into
an appreciating tangible asset with intrinsic value? Silver offers
the opportunity to move into true money, an actual store of value,
with the potential for substantial gains in future years as its current
cycle continues. Protect yourself and your family by acquiring silver
with intrinsic value and insulate yourself from the wealth destructive
policies of central bankers.
- The Common Man's Gold.
Silve is affordable. The acquisition of silver is much more attainable
for global populations compared to gold.
- The Ultimate Insurance
Policy. Most episodes of printing have been followed by pronounced
periods of inflation or even extreme cases of hyper-inflation, either
severely destabilizing the nations political stability or culminating
in warfare, dictatorships, or a political collapse. At the current
silver price level, the cost of insurance is tremendously cheap in
relation to the wealth it would conserve if history does in fact repeat
- Silver: Much more than
a Monetary Metal: Industrial & Medical Applications. Unlike
gold, silver has hundreds of industrial and medical applications and
its usage is on the rise. It is the most electronically conducive,
thermally conductive, and reflective. In the last two decades alone,
usage has increased substantially to include an array of electronic
and digital products, medical appliances due to its anti-microbial
properties, and even clothing. Product such as cellphones, cameras,
laptops, mirrors, monitors, etc. all contain trace amounts of silver
which is never replenished or returned to stockpiles.
- A Dwarfed Physical
Market & Vanishing Inventories. The steady reduction in above
ground inventories had been unique to silver amongst virtually all
industrial and precious metals. Above ground supply is merely a fraction
of what it was when silver hit its all-time high in 1980.
- Uncertainties in Future
Supply. The majority of the worlds silver comes from nations
marked with political turmoil, labor unrest, and undeveloped economies.
- Emerging World Demand.
China and India represent two behemoth markets where populations have
shown a tremendous appetite for gold and silver. An awakening of emerging
market investment demand will contribute to a new demand dynamic for
physical silver bullion. Supportive of the monetary aspects are some
of the largest untapped markets for consumer electronic and industrial
usages. Within the next decades, demand for appliances and technologies
which require silver from developing nations is set to rise.
- End of Manipulation.
Evidence of price manipulation has been shown to occur through the
derivative futures contracts traded at the COMEX. This will end at
some point. See Gold
and Silver Manipulation--"High Frequency Shearing"
- The Paper Funds Exposed.
ETFs and other paper derivatives have funneled demand away from what
would be geared as deliverable silver and into non-redeemable paper
in the form of a prospectus or stock certificate.
- Gold to Silver Ratio.
While this ratio has historically oscillated throughout the last 2000
years, it has always revert back to its historical average of 12 to
1. Consider the tremendous upside potential given the current ratio
in the Bible>>.
G. White on savings>>. Includes a sample emergency fund
in Tennessee cost of living terms.
- U.S. national debt
doubling every 10 years. Weve been doubling the national
debt in this country every 10 years since 1980. That is, the debt
in 2010 is roughly double of that in 2000, and in 2000 it was double
of that in 1990, and in 1990 it was double of that in 1980. Can we
double it again by 2020? Not likely. The problem is with the interest
payments on the debt. By 2020 the interest payment will more than
quadruple to over $800 billion from the current $180 billion; and
this presumes a 3% interest rate on that debt, which is insanely optimistic.
In other words, at some point well before 2020 our debt load will
hit the wall and become unserviceable. --Reference
- President Garfield
on the reason behind inflation and depression. "Whoever
controls the volume of money in any country is absolute master of
all industry and commerce...and when you realize that the entire system
is very easily controlled, one way or another, by a few powerful men
at the top, you will not have to be told how periods of inflation
and depression originate." --1881, President James Garfield.
- U.S. debt burden. Our debt burden is quite substantial,
100% of GDP this month (September). Thats a daunting burden.
That doesnt even count the GSEs, now backed by the US
government, it doesnt count state and local debt and when you
add those in you are at 170% of GDP, which is higher than Greece.
If you add in unfunded social security and medicare you are at 460%.
If you add in unfunded medicaid youre north of 600%.
Historical Case for $960 Silver. At what price did Judas betray
Jesus? Also found on YouTube:
The Historical Case For $960 Silver. A denarius in the Roman Empire
at the time of Jesus was worth about one-tenth of an ounce of silver.
One ounce of silver would then represent 10 days of labor, and a 1,000-ounce
silver bar would be equivalent to 10,000 days or 40 years of labor
assuming a 250-day work-year (i.e. 5-day work week X 50 weeks). A
denarius was used to pay 1-day's wage or 12 hours of labor. At a minimum
wage of $8 per hour, that is equivalent to $96 per day (i.e. $8 an
hour X 12 hours). Thus, one ounce of silver in Jesus' day would be
worth $960. Since Jesus was betrayed for 30 shekels of silver which
is about 15 ounces (i.e. one shekel = half-ounce of silver), then
Jesus was betrayed for $14,400.
to Occur in an Economic Collapse>>. Largely excerpted
in a Greece default>>.
U.S. goes Ka-Poom in roughly 2013-2014>>. It has parallel
features to the Argentina's 2001 Economic Collapse.
Chris Martenson's presentation at the Gold & Silver Meeting in
Madrid. Posted 11/29/2011. A must-watch, one-hour video. Chris
Martenson explains why he thinks the coming 20 years are going to
look completely unlike the last 20 years. Martenson explains how exponential
growth works and why it is so scary that our economy is based on it.
In an example he illustrates how unimaginably fast things speed up
towards the end of an exponential curve. He shows that an exponential
chart can be found in every one of the three "E's"--i.e.
the Economy, Energy (i.e. chiefly oil), and Environment (i.e. natural
resources, such as metals and minerals).
of the 'New Economics' by Henry Hazlitt. In 1959, Henry Hazlitt
wrote a line-by-line commentary and refutation of one of the most
destructive, fallacious, and convoluted books of the century. The
target here is John Maynard Keynes' General Theory, the book that
appeared in 1936 and swept all before it. This new economics
theory showed up in print in 1936 courtesy of economist John Maynard
Keynes. He posited a theory that supports what was accurately described
today by Goldman Sachs as help for the government to run large
budget deficits. The politicians of the day loved it.
and Liberty by Jorg Hulsmann. A shorter essay that gives an exhilarating
look at true capitalism in the spirit of both Henry Hazlitt and Michael
What Is a Gold Standard?
gold discoveries declining at accelerating rate. Posted 3/25/2013.
According to a study which covers announced gold deposit finds over
the past 10 years, this decline (in new global discoveries and in
particular in gold grades) has been accelerating over the past four
years and if the trend continues, which seems likely as the easier-to-find
deposits have perhaps mostly already been discovered, then the future
of global mined gold supplies will gradually become affected.
Knox, an Impregnable Monument to Security Theater. Roosevelt used
the construction of the vault to create an impression of permanence
and solidity that his other actions undercut: Fort Knox appeared to
protect the nations gold precisely at a time when that gold
had lost its redemptive function. It was a masterful example
of politics as theater.
Human Freedom Rests on Gold Redeemable Money. By Hon. Howard Buffett
(the late father of Warren Buffett), U. S. Congressman from Nebraska.
Reprinted from The Commercial and Financial Chronicle 5/6/1948.
Solar Silver Thrust. Posted 10/5/2012. The demand for photovoltaic
(PV) technology remains high and is expected to increase. PV uses
a lot of silver relative to cellphones and laptops, for example. Also,
other industrial demand for silver continues unabated. "Based
on their research, the Silver Institute forecasts that industrial
usage will rise to 665.9 million troy ounces by 2015 and account for
more than 60% of total fabrication demand."
Western Central Banks Have Any Gold Left???. Posted 10/2/2012.
Suspicion that the Central Banks (particularly Europe and the U.S.)
have negligible gold reserves.
Warren Buffett's "Gold Cube". Posted 9/26/2012. The
world's gold stock is about 170,000 metric tons, of which 84,200 tonnes
is in jewelry (or 50.5%), 31,000 tonnes is in private investment (or
18.7%), 29,000 tonnes is in the official sector (or 17.4%) , and 22,300
tonnes (or 13.4%) is in other. Below ground stocks is 51,000 tonnes.
Future of Silver Industrial Demand. Posted 3/1/2011. Commissioned
by the Silver Institute for the calendar year 2010.
Global Resources Stock Check Portrays World On The Edge. Posted
8/21/2012. Notably, due to run out just 17 years ( 2029) is the world
supply of silver.
One Years Of A Soon To Fail Fiat Currency Experiment. Posted 8/14/2012.
Forty one years ago, on August 15, 1971, the world's largest fiat
currency experiment was launched, effectively converting the dollar
and most global currencies into a debt backed fiasco. Debt levels
have escalated astronomically. As a result this burden is sure to
fall on all who hold fiat currencies, currencies directly reserved
and tied to a growing and un-payable debt load.
Casey's 10 Tips on Speculation and Life. Posted 8/1/2012. What
is the difference between an investor, a speculator, and a gambler?
and Realities of Returning to a Gold Standard. Posted 5/31/2012.
With a fiat money system, it is easy to deceive the public that you
are protecting the money's purchasing power. However, with a gold
standard, deception is much more difficult. Creating too much money
will lead to redemptions that drain away the official gold stockpile.
Everyone can see the inventory shrinking. If it shrinks to zero, then
the managers of the system have failed, period. There is no ambiguity
about it, and the politicians in charge at the time have little room
A Bad Market is Feeding on Itself Today - Rick Rule. Posted 5/22/2012.
A good explanation on why not to invest in junior miners.
Factors that will Impact Silver. Posted 4/30/2012. Among them:
(1) Increasing diesel consumption with decreasing supply (e.g. Mexico
is the classic case), (2) Declining average ore grades and a falling
EROI, (3) Future silver mine supply (i.e. Peak Silver), and (4) Nationalization
and monetization of precious metals.
Fiat money inflation in France. Also see: Fiat
money inflation in France - Part 2: Assignats. The fiat monetary
role in the French Revolution and the rise of Napoleon. See the book:
Money Inflation In France by Andrew White.
Education Hub. Series of videos on how silver is mined and minted.
Silver? Posted 9/28/2011. Very thorough discussion of the rarity
of silver today.
Sales Up As Supply Slips. Posted 1/23/2012. In 2002 both countries
produced 87.5 million oz of silver and sold 11 million Silver Eagles
and Maple Leaf coins. These coins sales accounted for 12.6% of U.S.
and Canadian silver production.In 2011, just nine years later,
the U.S. and Canada are estimated to mine only 53.6 million oz of
silver combined, while their total Silver Eagle and Maple Leaf coin
sales are to surpass approximately 62.5 million. Thus, their coin
sales are 16% greater than their total domestic silver mine supplies.
Great Silver Market Myth! Posted 1/16/2012. The saying that "everyone
should own a little" silver is a myth. Not everyone can. For
example, if everyone in the United States bought 2 ounces of silver
or about 700 million ounces, that represents the entire amount of
silver mined in the world in one year. But most of the silver mined
is already tagged for industrial and other uses, so not everyone can
own a little. Also, the United States represents about 5% of the world
population. The whole world deciding to buy a little silver would
overwhelm the futures markets.
$U.S. Dollar Centric Derivatives Complex: Progenitor of Parasitic,
Ponzi Price-Fixing. Posted 1/13/2012. Goes into great detail on
derivatives and price-fixing.
media reporter's ignorance about gold. Posted 10/1/2011. A mainstream
media journalist stating on live Canadian television, that gold isn't
backed by anything while the U.S. dollar is backed by "the government."
Sales Up As Supply Slips: For the first time in history, Silver Eagle
& Maple Leaf sales will surpass domestic silver production in
the U.S. and Canada in 2011. Posted 1/4/2012. In 2011, the U.S.
and Canada are estimated to mine 53.6 million oz of silver combined,
while their total Silver Eagle and Maple Leaf coin sales are to surpass
approximately 62.5 million. Thus, their coin sales are 16% greater
than their total domestic silver mine supplies. While the domestic
production of silver has been on a multi-year decline, its demand
has been on a multi-year increase.
COT Update for end of 2011 (PDF). Posted 12/30/2011. There are
decade-long record lows in short positions everywhere expect the top
4. However, the top 4 commercial short concentration did fall to 43.5%,
the lowest reading since September 2005.
Embarrassed By Butter Shortage. Posted 12/19/2011. An example
of how manias occur. A demand for butter in Norway explodes
as a results of a recent low-carb, high-fat diet craze and then a
drop in milk production supply because of heavy rains affecting
the grazing for cows. The price of butter has gone through the roof.
Hawkers have been offering Swedish butter on the Internet for 400
kroner a kilogram ($32 a pound) -- about six times the normal shop
price. Also read: Let
Them Eat Margarine: Norway Butter Shortage Brings Blue Christmas.
and Silver Bull Market - 1970s vs. Today - Mike Maloney. Posted
12/20/2011. There is one hundred times or more the investment potential
United States Notes Were Once Issued Under JFK And The U.S. Government
Still Has The Power To Issue Debt-Free Money. Provides solutions
to the U.S. debt-based currency and the current U.S. debt.
Is A Physical Silver Shortage Spike Imminent? That imbalances
in the supply and demand of precious metals, particularly silver,
could lead to a shortage of physical product in the future should
not come as a surprise to many.
Thinking in Terms of Gold Price. Our entire world is being devalued
from groceries and gas to cars and college. Investments have
not kept up with inflation.
Make The Clawback Risk REAL. The bankruptcy "reform"
law in 2005 placed derivative claims in front of depositors in a business
failure - including a bank failure. If a major bank blows up this
claim (of preference over holders of cash), supported in existing
Bankruptcy Law with the changes signed by George Bush in 2005, will
be used to steal the entirety of your bank account, and if you detect
the impending blowup shortly before it happens -- say, 90 days before
-- you're still exposed to the risk through clawback.
Bank Runs And Underestimated Physical Gold Demand. The Great Credit
Contraction has been in relentless advance for years. This is a massively
deflationary period as capital, both real and fictitious, burrows
down the liquidity pyramid into safer and more liquid assets. The
fictitious capital that does not move fast enough evaporates. Poof
goes trillions of wealth!
the World Waiting for QE3, is The Fed Preparing for Gold Revaluation?.
Gold revaluation is Ben Bernanke's final monetary policy tool to prevent
the greatest depression after QE is proven ineffective. Bernanke's
5 Monetary Policy Tools to prevent deflation given by the chairperson
at his famous 2002 speech Deflation: Making Sure "It" Doesn't
Happen Here as well as present the entire speech for your review.
Research: Is Gold Still the Answer for Investors? Posted November
22, 2011. Long report detailing current economic conditions and prospects
for gold. Sets possible gold price targets in three different scenarios.
In inflation adjusted numbers, using the ShadowStats CPI numbers instead
of the flawed government numbers, the 1980 peak of $850 would represent
a $7,000 gold price today. Casey is projecting a modest 25% increase
in gold to $2,500 by the end of 2012.
Debt Sustainability: Which Countries Are Beyond the Point of Return
and Why. Posted November 13, 2011. In this video, Kyle Bass, Managing
Partner of Hayman Capital Management LP, is interviewed by Darden
Professor Ken Eades. He describes how a dwindling current account
surplus in Japan, US welfare economics, and the peripheral-to-core
European stressors are all Madoff-like and unsustainable.
Greatest Shortcoming of the Human Race Is Our Inability to Understand
the Exponential Function. The most important video you'll ever
see. The presenter is Albert Bartlett, a retired Physics prof. at
the University of Colorado-Boulder.
the Difference Between Registered & Eligible COMEX Inventory?
Registered silver means that the silver is fully available
for delivery to longs who stand for bullion delivery. (One contract
represents 5,000 ounces of silver.) Eligible means it is being
stored in the COMEX warehouse for a private party, but it is NOT available
for delivery to contracts. As of November 15, 2011, the Registered
inventory was 33,194,595 ounces and the Eligible inventory
was 73,901,153 ounces, for a Total Comex inventory of 107,095,748
Lead Us Not Into Temptation. Until individuals win the lotto,
they are subject to external controls. They may have wanted
to blow all their money on big houses, nice cars, and fancy clothes,
but they had to eat. They literally could not afford to spend foolishly.
But once they win the lottery, that external control of not having
enough money has been removed. Now they have all the money in the
world, or so they think. All that is left is internal controls,
or in other words, their own will power to control their spending.
If they did not have sound money management skills before, those internal
controls are most likely nonexistent.
Beginners Guide to the European Debt Crisis. Posted November
10, 2011. Excellent beginnner's summary of the debt problem in Europe.
price rising on increased investment demand. Posted October 28,
2011. While 667 million ounces of silver were produced in the past
year, global demand reached 986 million ounces a stunning gap
of 319 million ounces. Also, silver investments only amounted to a
negligible share of 0.007% of worldwide assets held by investors at
the end of 2010. However, silver holdings accounted for 0.34% of worldwide
assets held by investors in the record year 1980. This is theoretically
providing silver with a further upward potential of 48 times from
its current price level in order to reach the same figures recorded
Pay Tax for the Privilege to Have Currency". Posted October
24, 2011. Layman's description of the creation of the U.S. money supply.
Five Myths of Silver Investing. Posted October 20, 2011. The five
myths are: (1) Silver is an economically sensitive metal,
(2) Silver coins and bullion are more plentiful than gold, (3) The
high price of silver will drive down demand from industry, (4) At
the right price, billions of ounces of silver will get recycled, and
(5) Retail silver investors are fickle/ there is no plan to remonetize
Meltzer's Decoded - Fort Knox. History Channel, posted October
5, 2011. The gold at Fort Knox is protected by some of the tightest
security in the world, but what if there's nothing there?
Your Bank Doomed? Good track record of the Weiss Ratings on potential
bank failures in the U.S. You can check to see how your bank rates
It's free to register. Of the 68 institutions that failed so far in
2011 (as of September, 2011), 66 or 97% were rated E+ or lower (Very
Weak) by Weiss at the time of failure. See Failed
Bank List from the FDIC for banks that have failed since 2000.
Fed Pays a King's Ransom to China. Posted October 5, 2011. The
Feds recent Operation Twist is ultimately designed
to swap China's long term U.S. Treasuries for short-term, effectively
giving China a huge profit in the process and allowing the eventual
sale of short-term Treasuries to not affect interest rates. (Note:
Short term treasuries will not go down in price if sold. Indeed, they
can only go down if the Fed raises rates, and even then they quickly
adjust back to a par price of 100.) At that point, America can dare
China to sell the dollar, because pushing the dollar down is our policy.
The FED is paving the way to devalue the dollar in the next QE3 and
beyond. Just remember the downside of a falling dollar will be higher
import prices and higher inflation.
Biggest Banks in America have Huge Leverage. Four U.S. banks have
$235 trillion of OTC derivative leverage: JP Morgan Chase ($78.1 trillion),
Citibank ($56.1 trillion), Bank of America ($53.15 trillion), and
Goldman Sachs $47.7 trillion). Considering that the total assets of
these four banks are a little more than $5 trillion, that's nearly
a 50 to 1 leverage.
European Nations. Germany's exports are roughly equal to
that of China ($1.2 trillion) even though Germany's population of
82 million is a mere 6% of China's 1.3 billion. (Germany and China
are the world's top exporter nations, while the U.S. trails as a distant
GoldWhat Matters Is Copper. Posted September 24, 2011 by
Gonzalo Lira. Copper fell close to 25% these last 3 weeks and historically
can fall roughly 40% during an American recession. The 10% drop of
gold is nothing in comparison. As a predictor of future economic performance,
the copper price is suggesting a recessionary/deflationary event is
just ahead and for the next 9 to 18 months at least. Bernanke will
likely be forced (per his own mandate to fight deflation) to introduce
another liquidity injection scheme comparable to QE2 or bigger.
the US Monetary System on the Verge of Collapse? Posted September
20, 2011 by Casey Research. Compares debt to GDP ratios of various
countries and gives a brief history of U.S. monetary policy from the
Civil War forward.
the Definitive Article on Why Gold is Going Even Higher.
Argentina's Economic Collapse. Where the U.S. will be in 2-3 years.
Documentary on the events that led to the economic collapse of Argentina
in 2001 which wiped out the middle class and raised the level of poverty
to 57.5%. Also read: The
Argentina Collapse on survivalist ideas from that experience.
Driver for Gold Youre Not Watching. Fund managers as a group
hold roughly 0.30% of their assets in gold. Global pension assets
are estimated to be over $30 trillion. If all they did was double
their gold asset allocation (i.e. from 0.30% to 0.60%), that would
represent a roughly 40% increase in new money to this sector. If these
funds allocate 5% of their assets to gold which would amount
to $1.5 trillion it would overwhelm the system and rocket prices
skyward. Also read: Western
'Pension Crisis' Reflects Investment Incompetence.
Secret of Oz. Educational video on the history of the U.S. monetary
system. The main thesis: "It's not what backs our money, it's
who controls its quantity."
Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff. The
author calculates the U.S. fiscal gap at more than 15 times the official
debt, or $202 trillion. The gargantuan discrepancy is because Congress
over the years has been careful to label most of its liabilities as
"unofficial" to keep them off the books and far in the future.
For example, our Social Security FICA contributions are called taxes
and our future Social Security benefits are called transfer payments.
See video interview: Boston
University's Kotlikoff on U.S. Deficit, Debt
Paul: When Will Bernanke Admit That His Monetary Manipulation Has
Failed? Dated April 28, 2011.
drag. The US dollar is at its lowest level in real, trade-weighted
terms since it first freely traded in 1973 - even as Federal Reserve
chairman Ben Bernanke and US Treasury secretary Tim Geithner said
this week they want a strong dollar. Dated April 28, 2011.
Silver Intersection. Posted on 11/3/2006.