MUST SEE CHARTS: The U.S. Govt. Financial Disaster vs. Gold & Silver

The financial disaster taking place at the U.S. Government costs one heck of a lot of gold and silver.  I doubt many precious metals investors understand the tremendous amount of gold and silver it takes to service the U.S. debt or supplement the massive budget deficits.

I was actually quite surprised by the results when I compared the calculations.  In 2015, the U.S. Federal Government paid $402 billion just to service the interest on its debt.  This figure can be found at TreasuryDirect.gov.  According to the Federal Reserve Q1 2016 Statistical Release, the U.S. Federal Government spent a total of $4.02 trillion in 2015.  Thus, the interest on U.S. debt consumed 10% of the total budget.

While this is not much of a surprise to most precious metals investors, when we compare it to the total value of global gold and silver production, it most certainly is:

us-govt-interest-on-debt-vs-gold-silver-production-newest

If we multiply the total global gold and silver production in 2015 by the average spot price (of each metal), the total market value of these two precious metals was $136 billion.

NOTE:  Actually I used $1,200 for gold even though the average spot price in 2015 was $1,160.  Furthermore, I rounded up the price of silver to $16 even though the average spot price was $15.68.

Regardless, the total value of global gold production in 2015 was $122 billion while the total value of silver was $14 billion.  Which means, the U.S. Federal Govt. could purchase three times the global gold and silver production in 2015, just to pay the interest on its debt.

Just think about that for a minute.  The U.S. Govt finance cost of its debt in 2015 would be able to purchase three years worth of global gold and silver production.

Let’s look at it another way.  Total global gold production in 2015 was 101.5 million oz (Moz), while total global silver production was 877 Moz (source: GFMS Gold & Silver Surveys).  Thus, the U.S. Federal Govt interest expense in 2015 would purchase 304.5 Moz of gold and 2.6 billion oz of silver.

Let’s put that into perspective.  The United States Treasury supposedly holds 8,133 metric tons of gold in its official reserves (again, supposedly… haha).  However, 304.5 Moz of gold equals 9,471 metric tons.

What the U.S. Federal Govt paid in just its interest expense of $402 billion in 2015, would purchase more gold in one year than its entire official gold reserves.  Furthermore, we can’t forget about the 2.6 billion oz of silver.

According to my article, How High Will Silver’s Value Increase Compared To Gold During The Next Crash?, I stated that the total available amount of physical silver investment in the world (bars and coins) was estimated to be 2.5 billion oz.  So, if we include the additional 2.6 billion oz of silver that could also be purchased (along with the all the gold), the U.S. Federal Govt could acquire more silver in one year, greater than the total amount of silver investment stockpiles in the world.

This reveals just how insane the financial situation in the U.S. Federal Government has become.

And… its even much worse when we include the U.S. annual budget deficits.

Take A Look At How Much Gold & Silver The U.S. Federal Govt. Deficits Could Purchase

According to the Federal Reserve Q1 2016 Statistical Report, the U.S. Govt budget deficits totaled $4.2 trillion for the past five years (2011 to 2015).  If we applied the same gold and silver values for 2015 to the five-year U.S. budget deficits, this would be the result:

us-govt-budget-deficits-vs-gold-silver-production-value

The total amount of U.S. Govt budget deficits from 2011-2015 would purchase 30 times the amount of global gold and silver production in 2015.  This turns out to be one hell of a lot of gold and silver.  How much?

Gold & Silver Production To Equal $4.2 trillion in Budget Deficits

Gold Production of 101.5 Moz X 30 = 3.04 billion oz

Silver Production of 877 Moz X 30 = 26.3 billion oz

Just to supplement the U.S. Govt deficits for the past five years, the amount would purchase 3 billion oz of gold and 26.3 billion oz of silver.  For example, here is my chart from my article linked above on the total official physical global gold and silver investment stockpiles:

Gold-vs-Silver-Investment-&-Central-Bank-Holdings

According to the official sources, the world has approximately $3.04 trillion in Central Bank and private gold investment stockpiles in the world.  The value of the 2.25 billion oz of gold is higher in this chart than shown in my figures above because this was based on a much higher gold price of $1,350 this year than the figure of $1,200 for 2015.

Regardless, the total sum of U.S. Budget deficits over the past five years could purchase ALL of the known Central Bank and private gold investment holdings in the world.  Furthermore, we also have to include the additional 26.3 billion oz of silver the U.S. Govt could purchase from the remaining funds to supplement its 2011-2015 budget deficits.

Amazingly, this would nearly equal all the cumulative world silver production since 1950:

world-silver-production-1493-2014

This is the first chart of a total of 48 charts in my THE SILVER CHART REPORT.  From 1950 to 2014, the world produced a total of 27.4 billion oz of silver.  This turns out to be more than half of all known global silver production to date.

So, the $4.2 trillion in funds to supplement the U.S. budget deficits from 2011 to 2015 would purchase all known Central Bank and private gold investment stockpiles as well as all the global silver production since 1950.

This is how completely insane the U.S. Federal Govt financial situation has become.  Now we hear from Fed Chairman Janet Yellen that the Federal Reserve may start to buy stocks.  While the Fed has more than likely been propping up the U.S. Stock Markets in private, they are now publicly stating they are considering buying U.S. stocks.

This is a sign that we are at the END GAME of the Greatest Financial Ponzi Scheme in history.  While many investors will see this as a green light to BUY STOCKS, instead they should be acquiring physical gold and silver hand over fist.

Lastly, to give you an idea just how insane our $402 billion of annual interest expense is, let’s look at the following figures below:

2015 U.S. Govt Outlays

Food Assistance = $104 billion

Education = $70 billion

Housing & Community = $63 billion

Internal Affairs = $41 billion

Energy & Environment = $39 billion

Unemployment = $36 billion

Transportation = $26 billion

Total = $379 billion

If we total all the U.S. Federal Govt outlays above from Food Assistance to Transportation, it equaled $379 billion in 2015.  The U.S. Govt forked out more money just to service its debt last year than it did in all eight government sectors  shown above.

Anyone investing in U.S. Treasuries for the long-term, you really need to get your head examined.

I will be publishing more articles on the ongoing U.S. Federal Govt financial disaster in the following weeks.  With the upcoming collapse of the U.S. and global oil industries, it would be wise for investors to consider increasing their allocation of physical gold and silver.  Holding ones wealth in most Stocks, Bonds and Real Estate in the future will likely turn out to be the worst investment strategy ever.

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33 Comments on "MUST SEE CHARTS: The U.S. Govt. Financial Disaster vs. Gold & Silver"

  1. The return on abuse will suffocate the future. It really is that simple.

  2. Great!

    Now put your Math cap back on,

    figure how much of that debt service / “interest” has been paid to China over the last 16 years,
    so we can see how many tons of gold American Citizens have added to China’s Stack
    versus adding to their own, or the Treasury’s mythical one @ Ft. Knox

    Cheers

  3. 103% of GNP to service the debt…7 trillion of that debt in the last 8 years has been added by A TREASONOUS BASTARD HELL BENT ON DESTROYING AMERICA…..Now…What were you saying?…I keep SILVER BARS as a reserve….Should need it fairly soon…For barter.

    • DisappearingCulture | October 1, 2016 at 9:29 am | Reply

      “…7 trillion of that debt in the last 8 years has been added by A TREASONOUS BASTARD HELL BENT ON DESTROYING AMERICA…”

      The deep state, the powers that be, don’t care if the president is a Reagan-type idealogue, or an Obama-type idealogue, as long as they support and protect the interests of too big to jail banks, etc.

      That is what staunch Republicans or Democrats don’t realize; all ideolofgies are accepted as long as they are a figurehead/protector of white collar crime as usual.

  4. Thanks Steve great work serving valuable education to investors appreciated please continue it and help mankind regards

  5. in 2013 hsbc spent 876million dollars to purchase the future production of KGHM ,the large silver producer from Poland.in 2012 KGHM produced 41m oz of silver, but I have never seen this disclosed as demand, or the supply decreased by this amount because its not coming onto the market.the only reason a large bank would make this deal is to manipulate the market to its own advantage, but have never seen this discussed since that deal was done.im thinking the stockpiles of silver are not what they are made out to.be.

  6. Anyone who believes that they don’t rig the markets, including gold and silver dream on.
    The only way they sell treasuries is by insuring them so they dont lose value if interest rates rise.

  7. What the jawboners don’t talk about is falling oil demand from China, India, and indeed the world. That’s what really determines price. – And then there’s China’s enormous SPR, which can also be used to influence the price.

  8. This post addresses indirectly the question I had a few weeks ago regarding the rate fiat money / debt is being created vs the amount of gold and silver physical reserves and current production to graphically show the divergence. Such a graph would also demonstrate the declining rate of silver and gold production which would tend to accelerate this divergence.
    This graph would also visualize why gold would have to increase to some fantastic amount in today’s dollars, some saying as high as $ 50,000/oz, to get some kind of floor of asset backing our currencies.

  9. As we look at the rise in valuation of metals we see the opportunity to profit ,will the stock of mining companies that produce these metals also rise in value?

  10. Gold is a commodity. Silver is a commodity. Valuing these commodities as the
    ancient relics they once were is a faulty investment strategy.

    • Boyd Haff,

      While gold and silver are currently priced as commodities, they are not. Commodities are for consuming. Gold and Silver have been STORES OF VALUE or MONEY because they don’t corrode, spoil, rot or disintegrate as do most commodities or paper money.

      So, you are incorrect. They may act like a commodity due to the way the current financial system is treating them, but this will not last long.

      I gather you are new to my site and the dire ENERGY SITUATION we are facing. So, I don’t blame you for assuming that at gold and silver as just mere commodities.

      steve

      • Since you brought up the energy situation steve, the EROI for government spend is as close to zero as it can be with actually being zero. Well maybe it is zero.

    • Boyd Haff

      Some clarification is required as to what exactly money is:

      1/ Medium of exchange and a unit of account
      2/ Portable
      3/ Durable
      4/ Fungible
      5/ Long term store of value

      Fiat money is a currency established as money by government regulation or law.
      The term “FIAT” derives from the Latin meaning;
      (“let it become”, “it will become”)

      To be classified as “money” it must satisfy all five requirements listed above. Gold does.
      Fiat currency always fails without exception, point number five. It is NOT a long term store of value. Whereas physical gold and to a lessor extent physical silver, always preserve value.

      Money is gold and silver. All the rest are nothing more than fiat currency.

      • “5/ Long term store of value”

        g/s store nothing. they merely facilitate the extended barter of existing goods and services.

  11. Buying gold and silver to help insure against a currency collapse seems a sensible argument. However If every currency collapses and the banks cease to operate how will I be able to release the value in these assets? Even If it is in a secret vault being held in my name how can I be sure I would ever see it or be able to access it again? What would happen if every government defaulted on debt repayment. Or every citizen refused to pay their personal debt? Are we heading for a correction in economies or the third world war?

    • Gold and Silver shouldn’t be used to insure against an extreme type of emergency, post apocalypse type of scenario, etc. For that you would want guns, ammo, food, and an underground bunker. Gold and silver would do very well in a high inflation / very high inflation environment.

    • DisappearingCulture | October 2, 2016 at 3:56 pm | Reply

      “Buying gold and silver to help insure against a currency collapse seems a sensible argument. However If every currency collapses and the banks cease to operate how will I be able to release the value in these assets?”

      If you are alive, and we aren’t in a pure survival mode, and you have small-denomination gold or silver, the opportunities will present themselves

      Even If it is in a secret vault being held in my name how can I be sure I would ever see it or be able to access it again?

      You can’t be sure. Hold it where you have hidden it.

  12. Steven, institutionals can’t buy metals outright, so they should be piling into mining stocks.

  13. Currency / paper money is only as good in value as the country or countries who create it , are strong in their developing and industrial might.
    Once this area starts to drop off the value of their currency begins to lose value. It will not fall off a cliff all at once as we have seen with the U.S. Held assets and manipulative practices see to this safeguard. Physical gold and silver are shunned for their true value by the fledgling empire as they are a direct threat to their sovereignty . This control will stay in place for as long as possible. That’s been proven. The one fact that will never be taken away or controlled is the fact that physical g&s are the real money and owe nothing to anyone. By holding physical , an individual holds true security which will rise like a zenith out from the ashes in the not too distant future. Rest assure !

  14. OL, Haff et al, you forgot binary code, which is the common denominator in what money is today. Money is a means of exchange that elimintes the need to barter, and can be anything that we agree upon. In other words, money just facilitates the exchange of goods and services.

  15. I’m curious as to why US govt outlays for 2015 didn’t include military and foreign aid?

    • Kitty,

      I did not include ALL the Govt Outlays, just some of them. Actually, Military and Foreign Aid were not that much compared to Social & Welfare Outlays.

      steve

  16. Really steve, the most expensive military in the world is no big deal? They can’t afford it, but they’re addicted to the power they think it gives them. The US govt routinely leaves big items out in order to make stats look good.

  17. DC, many institutons can’tbuy metals, therfore mining stocks.

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