Historical Official Records Reveal Gold’s Value Should Be 20 Times Higher

According to historical official records, the price of gold should be 20 times higher than the current market price.  While many precious metals investors have heard about the revaluation of gold to back the outstanding fiat currency, my analysis focuses on monetary gold stocks versus global GDP (Gross Domestic Product).

To understand how the global GDP versus monetary gold stocks has changed, we need to look at information and data published in the U.S. Bureau Of Mines 1932-33 Gold-Silver Mineral Yearbook:

As we can see from the text above, Britain abandoned the gold standard in 1931.  However, the most interesting part of the text above was, “It is surprising to learn that within a year 42 countries have abandoned the gold standard or are maintaining it artificially.”

Thus, in all actuality, the world abandoned the gold standard in the early 1930’s, even though the United States Gold-backed Dollar became the world’s reserve currency via the Bretton Woods Agreement in 1944.

Now, the Central Banks and Financial elite had a very good reason to drop the gold standard.  The financial and banking elite would profit immensely by printing money and charging interest, but only if money wasn’t gold or backed by gold.  Because, the increase in above ground gold stocks was limited to its annual gold production.  In addition, the industrial revolution had a profound impact on global economic growth.

In the past, international trade was mainly settled in gold or bills of exchange.  However, global economic growth was surging as the industrial revolution was now being powered by coal and oil.  These two energy sources enabled the world to increase economic growth at a massive scale and pace versus human and animal labor… which was the foundation of economic markets for thousands of years.

OIL ECONOMICS 101:  A Barrel Of Oil = 2,875 People Working An Eight Hour Day

For example, a barrel of oil provides the equivalent of 23,200 man-hours of labor (source).  If we divide it by the typical eight-hour work day, a barrel of oil equals the labor of 2,875 people.  By taking that a step further, let’s look how daily U.S. oil consumption equates to human labor:

19 million barrels per day oil  X  2,875 people = 54.6 billion people per day

The United States consumes about 19 million barrels per day of oil.  By multiplying 19 million barrels per day of oil by 2,875 people, that adds up to a staggering 54.6 billion people.  Thus, the U.S. is utilizing the human labor equivalent of 54.6 billion people via its daily oil consumption.  That is one hell of a lot of work when we consider the United States population is only 320 million.

Anyhow, you get the picture.  I am still amazed at the lack of interest or ignorance of energy by the alternative community.  If we remove OIL FROM THE EQUATION, then the entire world economy falls apart.

That being said, let’s look at the historical data that shows the gold price should be 20 times higher than its current market price today.

Global GDP vs Gold Monetary Stocks:  Gold Is Extremely Undervalued

According to another excerpt from the U.S. Bureau Of Mines 1932-33 Gold-Silver Mineral Yearbook, global GDP in 1929 was $32 billion versus $11 billion in world monetary gold stock:

The last sentence at the end of the quoted text above states, “This expedient has not met expectations.”  Basically what the analyst is saying is that “auxiliary mediums” of foreign bills of exchange, checks payable and day-today claims in foreign currencies were not enough to maintain trade and monetary expectations.

I took the data from text above and made the following chart to show the comparison of global GDP in 1929 versus total world monetary gold stocks:

As we can see, the value of world monetary gold stocks of $11 billion was a third (33%) of the $32 billion of global GDP.  So, for each dollar of monetary gold, the world economies produced three times the GDP.

Now, let’s look at the situation today.  According to the World Bank, global GDP fell to $73,892 billion ($73.9 trillion) in 2015.  As I mentioned in a previous article, this was down 5.7% from $78.4 trillion in 2014:

The huge 5.7% decline in global GDP in 2015 was worse than the 5.2% decline in 2009 during the U.S. and global financial meltdown.  There was no financial disaster that took place last year, but global GDP declined 5.7%.  Something FISHY this way blows.

Anyhow, if we compare the global GDP in 2015 to total world monetary stocks, this is the result:

What a difference in 86 years… aye?  Today, the value of world monetary gold stocks is only 1.7% ($1.28 trillion) compared to global GDP of $73.9 trillion.  I calculated the value of present monetary gold stocks by multiplying the current 33,250 metric tons of official gold holdings by $1,200 an ounce.  Of course, we don’t know the TRUE official gold holdings figure, but this at least provides us a guideline.

If we look at another quotation from the U.S. Bureau Of Mines 1932-33 Gold-Silver Mineral Yearbook, they provide the exact figure of world gold and silver monetary stocks for 1931:

What is interesting about this excerpt was the inclusion of monetary silver.  According to the data, monetary silver accounted for 25% of total monetary stocks in 1932.  Of the $16 billion in world monetary gold and silver stocks, the United States held $4.9 billion or roughly one-third of global monetary stocks.

Now, where do I arrive at the figure that suggests gold is undervalued 20 times compared to 1929.  As stated above, the value of world monetary gold stocks in 1929 was a third of global GDP.  A third of global GDP in 2015 would equal $24.6 trillion.  If we divide $24.6 trillion by $1.28 trillion in current world monetary gold stocks, we get 19.2…. or 20, if we round it up nicely.

Which means, the current gold price of $1,200 multiplied by 20 = $24,000 an ounce.  Thus, the gold price would be $24,000 an ounce today if it were to equal the same ratio to global GDP in 1929.  While it is true that the Western Central Banks publicly regard gold as a “Barbarous Relic”, privately they quite likely believe the opposite.

So, what does comparing monetary gold stocks to global GDP really mean?  Well, let’s look at one more section from the 1932-33 Gold-Silver Minerals Yearbook:

Basically, money should be “a medium of exchange and a standard by which future obligations are determined.”  Well, money today doesn’t perform this function any longer.  If we just focus on the U.S. public debt, which is approaching $20 trillion, the supposed 8,100 metric tons of U.S. gold reserves at the current market price are only backing a fraction of that debt-obligations.

Most definitions of money are based on a medium of exchange or barter, but do not include “Future obligations.”  This is a very important part of the equation that has been left out in the present valuation of gold (or silver).

The highlighted blue part of the excerpt above states that over history, various mediums of exchange or barter were eliminated leaving gold and silver as the key monetary metals.  Why?  Because they are the best substances that are durable, homogeneous, divisible, recognizable and easily transportable.

The BIG PROBLEM the world is facing is that its supposed WEALTH is backed by DEBTS and not GOLD or SILVER.  In 1929, the world monetary gold stocks equaled one-third the value of global GDP.  Today, world monetary gold stocks represent a measly 1.7% of global GDP.

As I mentioned earlier in the article, the United States consumes roughly 19 million barrels of oil per day.  This equates to the human labor of 54.6 billion people.  The world consumes roughly 80 million barrels per day of oil.  Thus, daily world conventional crude oil consumption equals the human labor of 230 billion people.

Which means, daily global oil production provides the world with 33 times the amount of human labor for each of the seven billion people on the planet.  That is one hell of a lot of ENERGY SLAVES.

It has been the use of hundreds of billions of OIL ENERGY SLAVES that allowed world debt to grow to the current $230 trillion today.  Unfortunately, the global oil industry is in big trouble as its rapidly falling net energy delivered to the market will destroy future global GDP.

When the collapse of the Global Oil Industry coincides with the disintegration of the highly leveraged debt-based fiat monetary system, world GOLD & SILVER STOCKS will behave as real money once again.

Thus, when the value of gold surges to the $20,000 or silver to $500-$1,000, precious metals investors will enjoy much better options than the 99% who have their wealth tied into extremely overvalued STOCKS, BONDS and REAL ESTATE.

Check back for new articles and updates at the SRSrocco Report.  You can also follow us at Twitter, Facebook and Youtube below:

Enter your email address to receive updates each time we publish new content.

I hope that you find SRSroccoReport.com useful. Please, consider contributing to help the site remain public. All donations are processed 100% securely by PayPal. Thank you, Steve

48 Comments on "Historical Official Records Reveal Gold’s Value Should Be 20 Times Higher"

  1. Steve,

    Interesting correlation that the US dollar has depreciated 95% over the same time period so that the dollar is worth 1/20 of what it was then.

    As a late comer to the party (2008), I am thankful for the manipulation or I would have been priced out.

    The election of Trump appears to have bought some time (more time to stack cheap) but there is no way he can avert or avoid the coming collapse.

    Buy for cash and stash.

    SteveW

    • I read an article from a Silver miner. Depending on the price of fuel, silver net cost is $15.04 to $17 per ounce. So to me, I can buy silver at its manufacturing COST. Add to that the incredible silver to gold ratio.
      I believe that we will see the day when it is said “You could buy silver for $17.00 ?”
      I am 57. I believe silver will be the best investment of my lifetime.

      • DisappearingCulture | January 25, 2017 at 5:20 am | Reply

        “I am 57. I believe silver will be the best investment of my lifetime.”

        I am 61. It depends on how long we live.

        • lastmanstanding | January 26, 2017 at 7:31 am | Reply

          I’m 55. I have no other choice.

          In this lie of a world that we live in now, you either believe in things that are of true earthly value or you don’t.

          A safe shelter, good land to grow and store your own food (or a place close by that you can trade or purchase it), water, a way to protect yourself and like minded folks in your locale.

          That is how the planet works…not this paper bs that a handful of bastards perpetrated to enslave the earth.

          • lastmanstanding | January 26, 2017 at 7:57 am |

            PS…I had a guy that I know who was working in the Bakken (that I thought was on the ball) tell me that break even on a barrel of fracked oil was $13.

            That totally explains why pm’s are so cheap!

            Sarc on/off? I grow so weary of humanity these days…

          • When someone talks about “breakeven cost” of oil, they mean marginal cost to lift from an already-drilled hole. The initial investment as well as the cost of the next hole is ignored. With free (near-zero interest) and unlimited credit, the oil will flow and SUV’s will sell. .

      • vlad the impaler | January 25, 2017 at 5:21 am | Reply

        What is the timing of this cataclysmic event bringing silver up to $500? One former banker said that the current monetary system can be maintained for the next 10 years. It is not a very encouraging perspective.

        • Who knows? We can´t barely skim through heavily filtered pieces of disinfo. To me, what a banker says about the “current monetary system” which is a rotten corpse kept away from the coroner, is plainly BS. Regarding silver, in my view, there´s already a big issue in place. Mexico, by far the world´s largest silver producer is now in tatters because of oil.

          It has ceased to be an exporter, production peaked in 2004 and never recovered. 75% of mexican oil production is offshore, their biggest onshore field (which they´ve known since the 1930´s is such a bitch that Pemex is considering to leave it alone, after every major oilfield service company, including Schlumberger, Halliburton, etc. refused to go there) Mexico is importing tons of gasoline from the US, partly because their refineries are in very poor condition. Their costs of production are going up so fast (once peaked, offshore fields decay very quickly, I don´t know why but it´s that way) that they are piling debt like hell.

          This is going to have consequences for energy-intensive businesses in Mexico, it can´t be any other way. The first salvo has already been shot (check “gasolinazo” in youtube)

          • james l fisher | January 25, 2017 at 11:30 pm |

            the mexican oil fields are in poor shape because of incompetent management and kleptocrat politicians who abscond with all of the money needed to advance production.

          • vlad the impaler | January 26, 2017 at 1:45 am |

            PMs experts are cunning. They talk about soaring prices, but fail to provide a timeframe. When it finally materializes let’s say in 7 years they will brag that they would foretold it.

  2. Only problem which I see with Steve’s present analysis is that
    NO ONE can accurately enumerate the existing Ex Nihilo Lines of fiat Credit
    which the counterfeiting Banksters extend to themselves
    and their sycophant stooges,
    plus every Country on the planet
    is also currently engaged in the Race to the Bottom
    Currency debasement.

    Kudos to G. Edward Griffin
    for at least attempting to address
    the solution to this predicament
    in Chapter 26 of his book
    ‘The Creature from Jekyll Island’

    For in that universal call,
    Few bankers will to heaven be mounters;
    They’ll cry, “Ye shops, upon us fall!
    Conceal and cover us, ye counters!
    When other hands the scales shall hold,
    And they, in men’s and angels’ sight
    Produced with all their bills and gold,
    ‘Weigh’d in the balance and found light!’”
    — Jonathan Swift, The Run on the Bankers

    “Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid.”
    Upton Sinclair

    Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, ‘Account overdrawn.’ – “Ayn Rand, Atlas Shrugged”

    “The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.”- Anonymous

    The issue which has swept down the centuries…and which will have to be fought sooner or later…is the people vs. the banks. – Lord Acton, Historian…1834 – 1902

    “We are all born ignorant, but one must work hard to remain stupid.” Benjamin Franklin

    Got “Lawful Money”?

    Cheers!

    • The real Issue – “The People vs. The Banks”?

      My kids say to me every time I raise this issue:

      “We don’t want to here it again DAD!!!!”.
      My friends generally just ignore me, pretend I never said anything and just talk over me.

      ignorance seems to be the order of the day on many issues today.

      From the FOREWORD “Web of Debt” Ellen Hodgson Brown, J.D.

      Henry Ford said it best:

      “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”

      It is getting closer!!

      Good article Steve

  3. an interesting analysis. but, if the thermodynamic collapse of oil leads to a shrinking gdp, then the ratio stated of global gdp (decreasing) / gold reserves (increasing annually) will fall. so one can say that would traditionally be where the price of gold should reside – but then, who is to say that the ratio in the future will not be abused by manipulation as it is today? the same people that are pulling the strings in a position to control the valuation will still be in a position of control then, too.

    • Shawn walker,

      Yes, I can see you aren’t suffering from BRAIN DAMAGE like most people. While it is true that falling oil production will cause a declining global GDP, we must also consider that the majority of ASSETS in 1929 were based on BOOK VALUE. Basically, what they were worth of they were sold. Today, most ASSETS or STOCKS are based on PRICE PER EARNINGS or their INCOME STREAM.

      Thus, we have to remember, it’s just not the GDP that provides gold and silver their value, but future obligations. As I mentioned, there are over $230 trillion in global debt in the world. This is three times the global GDP of $74 trillion. So, when the financial and economic markets disintegrate, the value of gold and silver will rise to a level that will buy a great deal more goods and services than most can imagine.

      This is what the precious metals community fails to understand.

      steve

      • Yet isn’t the current Derivatives Death Star currently running @ 1 Quadrillion + ?

        Plus, if every other Central Bank controlled Country on the Planet
        is currently debasing their Currency (which still spends/ can purchase PMs)
        & as well most likely has unfunded future liabilities,

        who would argue otherwise that a present “20X” figure is nevertheless still very conservative?

        Cheers!

      • DisappearingCulture | January 25, 2017 at 5:32 am | Reply

        ” Today, most ASSETS or STOCKS are based on PRICE PER EARNINGS or their INCOME STREAM”

        The values [like stocks] are inflated value over that. Wall Street analysts, the SEC, and the financial media takes the corporate statements of companies largely at their face value [like Amazon] and ignores inflated and questionable or dishonest accounting practices that have been changing over the last several years and decades, to make the companies look more profitable or solvent. Few are doing forensic accounting, and the ones that are get largely ignored or called nuts.

        Here is one brief overview example of that: http://investmentresearchdynamics.com/why-i-just-shorted-ibm/

  4. Dear Steve,

    Thank you for a nice explanation about energy slaves. It’s unbelievable!

    Concerning the undervaluation of gold, aside the entire discussion is more of an entertainment, isn’t in your article “global trade” confused with “global GDP”?
    To me the “total value of goods sent from one nation to another” (as says the provided excerpt from the U.S. Bureau Of Mines 1932-33 Gold-Silver Mineral Yearbook) sounds more like “global trade” than “global GDP”.

    According to WTO’s “World Trade Statistical Review 2016”, the 2015 global trade (“merchandise trade and trade in commercial services”) was about 20 billion USD. That would imply the gold today is “only” five or so times below it’s “historical value”.
    Regardless, who knows what the fair price of gold is anyway?! One thing certain, we will all sooner or later learn the fair price of fiat. Well, they already learned in Zimbabwe, Venezuela, India…

    Regards,
    P.

    • P,

      Good point. Yes, you are correct. I assumed the Global Trade in 1929 was the GDP. It wasn’t. I found that global GDP was actually $104 billion in 1929. Thus, the ratio in 1929 would be something closer to 10/1 GDP to World Gold Holdings. Thus, that would impact the gold price ratio today.

      Which means, instead of gold being 20 times higher, it would only be 7 times higher using the GDP-World Gold Holdings ratio. But, this does not include all the massive debts and derivatives in the world.

      steve

  5. As always, a very intriguing perspective which I can not dismiss, especially at my level of financial knowledge/ sophistication.

    I think another factor that has to be taken into consideration is an increasingly impoverished population which may not be able to buy gold or silver and eventually be forced into barter.

    Therefore I think it might be most instructive if there are any analyses(in graph form) that show the number of PM purchases on the x axis against the amount of each purchase on the Y axis. This would include data from mom and pop bullion dealers.

    In other words, are there gold purchases being made by millions of little guys, or are people like Rob Kirby / Eric Sprott or big banks which account for relatively few, but nevertheless massive purchases for the whales which make the cumulative amount under the curve of the small retail purchases, insignificant? I Again, not talking paper ETS, purely physical.

  6. Check the concepts: GDP is not the same as Global Exports (“Total value of goods sent from one nation to another). GDP considers also all production consumed in the countries and not exported which is higher than exports in almost all countries.
    Having said that I agree that Gold should be a lot higher (3x at least)

  7. You can rationalize, chart and graph, all you want, as to why gold and silver should should be at much higher $ values, but until the current system, of rigged artificial paper trading, government and corporate bank intervention is brought down; nothing will change. There could be just one ounce of physical gold left to purchase, right now; and you would still be able to buy it at current levels. I feel sorry for folks that bought gold at $1900/ oz a few years back; we’ll probably never see that price again in my lifetime.

  8. Golds value IS 20 times higher. Golds price is, well, what can i say…

  9. Excellent info Steve
    Nobody in my 40 years of trading has analyses like this ever been presented..
    I truly hope it manifest into reality and it forces the hands of the controlled central bank system worldwide and finally we get true market pricing of all assets especially precious metals.

  10. I am biased and believe in the pm’s. However I have a few questions:
    1- if the all in sustaining cost of silver is ~12/oz and gold is ~1200 an ounce, how the heck are they going to sell it for the implied price in the article? I know this question puts aside the fall supply (decrease in mine exploration and new mines built) we will be experiencing, but nonetheless you can’t (assumption) sell silver at 500/oz if it’s being mined at 12/oz.
    2- is there a direct correlation of m1 to the price of pms? Obviously the more the money supply grows (including credit), the assumption is inflation will cause these hedges to increase in value. But would it be a fallacy to assume that?
    Any response is greatly appreciated!

    • The bankers got the miners by the balls (via debt). The miners have to produce to stay in business or shut down operations. But they are hurting badly. Maybe it slipped your attention, but their shares were (on average) down by roughly 60-70% from their peaks in 2011/12 to their bottoms about a year ago. And many did go out of business, and some stocks got so diluted, their price is down 99%. The miners are the ultimate gamble – assuming that they a) survive, b) do not get nationalized, and c) that the stock exchanges also do survive the coming storm and c) that your bank/broker survives as well…

      M1 et al. IMHO are meaningless now, since should the fiat currencies be ever (officially) be (even just partially) backed by PMs (gold), they will gap up and become de facto money again. As long as dollars, euros, yens etc are the main unit of account, the current insanity will just continue.

      Anyway, *they* admitted a few years back that silver is a 5 Trillion (paper) market. How is that possible, if the market cap of 1 year of fizz ag mine supply is $17 billion? A: 300 paper ounces for every fizzical oz. 50k au / 5k ag target in todays $.

  11. I noticed that you recently gave an interview w/ Craig Hemke, but discovered this only after going to his tfmetalsreport website. I didn’t see any update blog-post about this w/ cross posting on this website & probably never would have known. It might be a good idea to post here on this blog as well, if you’re interested in more people hearing what you have to say.

    • Theravaida,

      Yes, thanks for reminding me several times that I have not yet promoted that Turd interview. It has be a very busy week here, and I did not post anything until my recent article. However, I will post a link to that interview in my next article.

      thanks,

      steve

  12. The Dow Jones low in September 1932 was around 40.60.
    This index (generally) increases exponentially by 100% every 10 years
    For simplicity the numbers below give an exponential number every 10 years.
    If gold and silver were to keep pace with the DJA Index then silver would be around $119.52 and gold $13440.00.

    Note: Gold and silver (generally) increase exponentially every 15 Years.

    Year DJA DJA Actual Silver $ Gold $
    1932 40.60 40.60 0.28 35.00
    1942 81.20 109.10 0.56 70.00
    1952 162.40 270.60 1.12 140.00
    1962 324.80 578.90 2.24 280.00
    1972 649.60 953.30 4.48 560.00
    1982 1299.20 896.30 9.96 1120.00
    1987**** 1948.80 2596.28 14.94 1680.00
    1992 2598.40 3271.66 19.92 2240.00
    2002 5196.80 7591.93 39.84 4480.00
    2012 10393.60 13437.00 79.68 8960.00
    2017**** 15590.40 20068.51 119.52 13440.00
    2022 20787.20 ????? 159.36 17920.00

  13. quidproquocoins | January 25, 2017 at 6:42 pm | Reply

    $24,000 / 70= $342.00

    70 is the Gold/Silver ratio.

    $342 an ounce for silver.

  14. A recent interview with Steve St. Angelo in case anyone missed it:

    http://www.tfmetalsreport.com/podcast/8108/a2a-steve-st-angelo-srsrocco-report

  15. Another perspective that might apply when there is no more oil and thus no more “labor slaves” to do all the work needed to create a world domestic product.

    Rob Kirby calculated a 40 to 60 oz annual salary for the yrs in the last 3,000 when PM’s were the money of choice.
    if one considers $50,000 an avg annual salary today, silver would be $1,000/oz.

  16. The ‘value’ of money is a confusing concept to define but seems to have a socially accepted component and can accommodate almost anything tradable that gives ‘kudos’
    (social standing) to the accumulators and it allows them to buy the labour and allegiance of others. Originally a labour component of the production of the “money’ was also a major component of its value (as in bitcoin and gold)
    https://archive.org/stream/surveyofprimitiv033390mbp/surveyofprimitiv033390mbp_djvu.txt

    In Industrial economies the surety of money was backed by gold and silver to keep the bastards honest but even then the bastards manipulated the price (even before 1930)
    In todays increasing post Industrial world where knowledge and technology magnify the return on energy (for instance by manipulating matter at the atomic level and biology at the DNA and protein structure and Moores law increase in machine intelligence https://en.wikipedia.org/wiki/Moore%27s_law), all bets are off and the past may not be sufficient to project the future desirable means of exchange.
    I suspect we are heading for something valuable in the nature of the biosphere that we are currently steadily eroding as we progressively construct only a man or machine-made environment.
    So back to a something closer to primitive money or rights to nature? – Just a way out thought 🙂 Meanwhile precious metals might be pretty good in a panic.

  17. First they (the CBs of the world) monetized the every growing debt. Now on top of that they monetize the capital markets. What will happen when the CBs of the West run out of gold (all leased out and gone to stackers, elites, and the BRICS) ? That’s the million dollar question. If they try to buy back even a fraction of what they leased out (to suppress the price) then what? $250 Trillion global debt / 180k metric tons of aurum = $43k per ounce and that is not factoring in the $500-1k Trillion derivatives. Or will all the debt be defaulted upon as interest rise up into the double digits? We do not know the path that will be chosen to deal with the outstanding debt load. In the near term, I think more of the same, so within 4 years we may well will see a 30T national US debt. Either way, at some point the monetary metals (gold and silver) will reflect this inflationary debt insanity, one way or another.

    • You bring up an interesting question concerning the debt load.

      Who owns these debt instruments? Not the bankers, they created and then sold them with a large portion being bought by the huge retirement funds across the country, teacher retirement funds, state worker funds, police fireman retirement funds, etc.

      IMO we have a very strange thing happening, voters put in Trump to clean house; however many of those same voters will suffer the most if the house is truly cleaned.

      Again, it is my opinion that those who will suffer the most in the future are those who have built their present and future standard of living on a future “retirement check” from one of these huge retirement funds.

      • Actually i think the banks own quite a lot of treasuries and debt to maintain the collateral (daisy) chain in the derivatives casino; which is why I do not believe that interest rates are likely to spike into double digits – if they pull a volker all will collapse very quickly… but then again, maybe that’s their plan of action??? all paper is their domain, they own the system and will bend the rules as necessary. time will tell how this all will be resolved; my hunch is that nothing good will come of it, no matter how they decide to play it.

  18. My first thought, bail ins……..the little guy still takes the hit.

  19. In the 1930’s and earlier, gold and silver were the units of “money”. thus, they had more relative value than today and comprised a much larger fraction of monetary reserves. the only way for gold and silver to rise to $500/oz silver is to remonetize it all. The only way for this to happen is an economic collapse.

    Seriously, does anyone here really want that to happen??? NO!!!!!!!!!!!!!!

    The peak oil EROI scenario is a path to collapse. Unless, electric vehicles can bridge the gap in time. Ive read the Bedford Hillls report. There is not much time left. Ten years at the most.

    We need at big buildout of:

    electricity transmission – lines, transformers, etc.
    electricity generation – if necessary fossil fuels at first and then solar, wind and wave
    electric car production and mass transit buildout.

    even still its going to be rough. there is no easy solution for air planes and big trucks except rail. gobalization will end.

    I’m nott optimistic about such a replacement system being built in such a hurry. I think the collapse will occur at least to some degree.

    regarding gold.
    In the end, the gold eagle coin may be the bedrock of the system. it has $50 stamped on it. The system could be renormalized to $50/oz. Forget the big, big, big numbers. The price is all relative.

    • “The price is all relative.”

      bingo.

    • $50 gold Eagles are too precious relative to $1 ASE. If a middle-wage worker earns 60 oz of silver a year, they will be nearly $1000frn’s each. He’ll still make payments, have kids, ex-wives, and be broke. A gold Eagle will be a post-tax annual income, 20-50% down-payment for a house/in-full for a medium sedan/2 years of real university.

      Will there be 2 systems with floating value between gold and silver money? We already experience “bi-paperism” with many people carrying EBT as well as FRN’s, who prefer to keep the more-useful FRN’s and buy/trade with the EBT value.

      “Current value” is one thing, but “future value” (contract payment) is an interesting question for lawyers. What about US Treasury Bonds payable in 2040? House mortgages fixed at 4% in 2015 FRN’s that complete in 2045? Every debt is an asset for someone.

      Who takes the hit on a currency default/revaluation? The politically powerless.

      • $1000 FRN ASE is why you want silver dimes. 0.0715 ozT is about 1/14 of an ozT. That’s ~$71.50 in the kilobuck-ounce regime.

        A dime will be good for getting fuel and some motor oil.

        Look for local currencies backed/redeemable in dimes to emerge so you can get a cup of coffee and a sandwich. There won’t be change. .22 cartridges? Rolls of nickels? Bar tab? All are a PITA compared to local script payable in trust and dimes.

        With a breakdown in credit, labor is going to get cheap. When you work, you eat. Poorhouses and defacto food warlords. These are the good old days.

        • “Poorhouses and defacto food warlords.”

          not likely, it will be too difficult to exert controlling physical authority over large numbers of people – too many guns and too much ammo out there, that probably will be around for many decades if not centuries.

  20. When gold shows it real face to the world, there won’t be any fiat currencies left. So what is the point? Ratio’s however, like gold/oil and debt/gold, are good ways to see what’s happening. And what we see is rather obvious.

  21. “As we can see, the value of world monetary gold stocks of $11 billion was a third (33%) of the $32 billion of global GDP. So, for each dollar of monetary gold, the world economies produced three times the GDP …

    Today, the value of world monetary gold stocks is only 1.7% ($1.28 trillion) compared to global GDP of $73.9 trillion …

    Gold Is Extremely Undervalued”

    no, it’s not. the error in your observation is in calling gold today “monetary”. it’s not. gold has limited utility except as money, and since it’s no longer being used as money it therefore has little valuation other than sentimental.

    and if the world economy crashes it will have little valuation then too, because very little production goods will be for sale and there will be little call for money of any kind.

    • Gman, physical gold and silver is the ultimate intermediate.

      The medium of exchange between the ‘lots of chicken’ and the ‘potatoe shortage’.

      • “physical gold and silver is the ultimate intermediate.”

        yep, absolutely, fer sure, true dat, A+.

        when there is something to intermediate.

  22. If miners can mine at $12/oz silver, how can the price go above that?

    A: Demand for “real money” when all the fiat money of the world becomes untrustworthy. Miners CAN NOT ramp up production much beyond current output for several years, while demand can go 5x (or 50x, if the price is suppressed) in a few months. Some recycling will be found, but the limit is the mines. You can TRUST that in-hand metal will not be easily made worthless, and that you can defend it with hiding and/or guns. Currency can be made worth-less by dilution or taken with a few mouse clicks.

    Add a crumby general economy with low copper/zinc production (silver is a by-product of many metal mines), and cost to get real pm’s in-hand can go up fast.

    Gold is different from silver in that HUGE stockpiles of metal exist to be drawn from. There is not very much available silver vs. regular consumption. There is plenty of gold vs. regular consumption (jewelry does not destroy gold, it temporarily diverts it from central bank vaults – it’s not “gone”). Used silver is “gone”, coined silver has enough premium (usefulness as money) that it doesn’t come back to be melted. Low-premium .999 bars (100oz, 10KG, 1000oz) will be sold to industry at the right price by investors/speculators. Apple will always have enough silver for the next iPhone that a worker pays 3 weeks gross income for (every 18 months).

  23. thanks Steve.

Leave a comment

Your email address will not be published.


*