The U.S. economy has gotten considerably weaker since the investment banking collapse in 2008. Nothing has improved, except the fundamentals for owning gold and silver. However, there are many conspiracies that confuse people if you don’t look at the numbers.
One such conspiracy is the one claiming the world has a great deal more gold hidden in huge vaults. We continue to read and hear about the infamous Yamashita’s gold hoard or Karen Hudes statement that there are 170,000 tonnes of gold stored in Hawaii. I have even seen estimates of 1,000,000 tonnes of gold in the world.
I sat down with Will Lehr at Perpetual Assets and discussed why I don’t believe there is a great deal more gold in the world than official estimates. Sure, there might be more than claimed, but not the 100’000’s tonnes stated by several in the industry.
This is Will’s write up about the interview:
Steve dissects his opinion as to why PM prices will likely go down in the short term. The commercial traders activity can be studied historically to show patterns. Regardless of short term gyrations the long term picture is very bullish for gold and silver.
We are being lulled to sleep with what has been 2 years now of $20 silver or below. Precious metals investors have been disillusioned by shock and awe. The real truth lies in the fundamentals. Currency collapse and Comex default are mere byproducts of a bigger picture scenario. Falling productivity and availability of energy will ultimately collapse the system.
Physical silver sales have surged relative to fund flows into silver ETFs. Investors are buying the physical. EROI is energy returned on invested which reflects the amount of energy it takes to yield a unit of energy- essentially energy extraction productivity. It takes energy to produce energy.
The collapse of EROI in the US in the last 100 years is unprecedented. We used to produce 100 units of oil per unit spent, now it is down to 10/1 or less. The Roman Empire collapsed and never recovered due to these same factors. The fall of the US Empire will not ultimately be due to a currency collapse, it will be from collapsed EROI.
The central banking facade and toxic debt system cannot survive without an increasing energy supply. When it declines the whole fiat monetary system that is based on leverage and debt starts to implode. A fiat monetary system needs a growing energy supply to sustain. It’s not a coincidence that we went off the gold standard soon after our energy productivity peaked.
In the 1960’s, for every dollar that gold exploration companies spent, they returned $105 in gold. In the 1970’s it fell to $83, in the 80’s it fell to $57, in 90’s it fell to $23, and in 2000 it was a whopping $11. Here we have a double edged sword effect: falling EROI and falling gold availability, yield, and ore grade.
Stocks, bonds, and paper assets are based upon net present value, NPV- it’s one thing they teach you in finance school. Energy must be spent to deliver the asset. When you hold gold or silver in your hand, no energy must be spent to deliver.
We cover gold conspiracies from Karen Hudes to Yamashita’s gold. Steve breaks down global silver production and ore grades in the earth’s geological makeup. More than half the gold produced in the history of the world was produced after 1940. Steve shares the math on why he believes this is not logically possible.
“EROI is the most important fundamental principle for life… it determines if one is going to starve to death or if a company is going to continue” ~ Steve St. Angelo