The Great U.S. Retirement Asset Bubble vs Physical Gold Investment

Americans are more deluded than ever as the total value of the U.S. Retirement Market hits a new record.  According to the data released by the ICI – Investment Company Institute, total U.S. Retirement Assets in first quarter of 2014 are valued at a stunning $23 trillion, up from $22.7 trillion in Q4 2013.

Not only are U.S. Retirement Assets reaching new record highs, so is the sentiment by its member participants.  This report put out by the ICI, “Our Strong Retirement System — An American Success Story” stated:

Americans Report High Levels of Confidence in the 401(k) System

Americans have a very favorable view of the employer-sponsored 401(k) and other DC plans.  Such confidence is a powerful indicator of the value American workers and retirees place on the 401(k) system.

In a survey of 4,000 households conducted for ICI in the winter of 2012/2013, 63% of respondents said that they have a “very” or “somewhat” favorable impression of 401(k) and similar retirement accounts (see figure below).38 That support rose to 76% among households that held a DC plan account or an IRA.39 Americans have expressed similarly positive views in surveys conducted since late 2008, despite the stock market decline from late 2007 to early 2009.

It’s nice to know that Americans have a HIGH LEVEL of confidence in their 401K plans.  Thus, it makes perfect sense that they continue to invest their hard-earned fiat money into a system that promises them GOLDEN RETURNS.  Unfortunately, Americans have no idea whatsoever that they are throwing good fiat money (if there is such a thing) into one of the GREATEST PONZI SCHEMES in history.

I assumed that it was mostly the middle-aged and older Americans that continued to invest in the retirement system.  Why wouldn’t they?  They see retirement not too far around the corner so it only makes sense to continue contributing.

However, Main Stream Media has also bamboozled the younger folks, as they too have taken the Paper Retirement Asset System….. HOOK, LINE and SINKER.  Here is another wonderful piece of propaganda from the same report linked above:

Importantly, enthusiasm for 401(k) plans appears to be high among younger workers. For working-age Generation Y or Millennials (those born from 1979 to 1991) there is a very high degree of confidence and participation in the 401(k) system. According to a June 2012 analysis by Fidelity Investments, 83% of Generation Y participants made recent contributions to a 401(k) plan,46 higher than people of a similar age a decade earlier.

We must remember, in order to keep a PONZI SCHEME going, you always need a new group of POOR UNWORTHY SLOBS to help payout the proceeds for those who have retired.  Those who do the best in any Ponzi Scheme are those who came in first.

Let’s take a look at the nice chart the folks at the Investment Company Institute put together.  Here we can see the growth in value of the U.S. Retirement Market.

 Total U.S. Retirement Market

Ever since 2008, the Federal Reserve and U.S. Treasury have done a wonderful job propping up the broader stock and bond markets — the two largest segments holding up the U.S. Retirement System.  After the collapse of the Housing & Investment Banking Markets, total U.S. retirement assets fell to $14.2 trillion in 2008, down 21% from the $18 trillion level in the prior year.

Then as the Fed continued with its easy money policy (QE to infinity), the total value of U.S. retirement assets increased steadily to record level shown in the first quarter of 2014.

The U.S. Retirement Market nearly doubled from $11.6 trillion in 2000, to the $23 trillion level today… a growth of $11.4 trillion.  Now, let’s compare that to the total current value of U.S. physical gold investments since 2000.

U.S. Gold Investment vs Growth of Retirement Assets

According to the data put out by the World Gold Council, the net total retail physical gold investment in the U.S. was 656 metric tons since 2001.  If we apply an average price of gold at $1,300 an ounce (when the chart was made), the total value would be $27.4 billion.

Just look at it.. it represents a mere smudge on the chart.

I am not including the rise of investment in Gold ETF’s such as the GLD, due to the realization that investors do not own real gold… just paper claims on gold.  And we have no idea how many claims were put on each ounce of gold that the GLD holds, if it in fact has the physical gold in storage.

This chart says it all.  It’s no wonder the Captains at the Fed and U.S. Govt steering the U.S.A. Titanic make damn sure that Americans continue believing they have invested in wise assets.  And it’s not just the retirement market that needs to be propped up.

Here is another chart from the fine folks at the ICI.  This is their Retirement Resource Pyramid.

Retirement Resource Pyramid

You will notice my added annotations as I guarantee they would not be included in their original chart.  The base of the pyramid is Social Security.  How many precious metal investors actually believe they are going to receive their social security?  I am talking about those 55 or less.

Most of us realize the U.S. Social Security System is a typical Ponzi Scheme because it didn’t put away the surpluses over the past several decades for a rainy day.  It used the surpluses to fill in the budget deficits… and continues to do so.

The next smaller section of the retirement pyramid is Homeownership.  How many Americans are still underwater in the homes they purchased before 2007?  And how many will be underwater when the housing market collapses again, forcing values below the lows seen in 2009??

What kind of retirement value will housing be when the U.S. Financial system finally cracks?  We also must remember, in a Peak Oil scenario, owning a typical suburban home (depending on location) may turn out to be more of a LIABILITY than an ASSET (even after most of the value disintegrated during the market collapse).

Then we come to the Employee-Sponsored Retirement Plans & IRA’s.  These are the next two sections of the chart… totaling $23 trillion.  Of course these supposed assets will succumb to the same forces of gravity as will the Social Security system and home values when reality finally returns into the markets.

Again, the values of these retirement assets are based on the Fed and U.S. Treasury continued propping up of the broader stock and bond markets.  Once the U.S. Dollar-Treasury-Stock Market Dam finally bursts, it will take down the values of all these so-called paper assets.

However, the opposite will occur with the value of  physical gold investment.  As we can see from the chart above showing the incredibly insignificant $27.4 billion (since 2000), very few Americans understand the WEALTH PROTECTING abilities of owning gold and silver.

Some analysts believe the value of gold and silver will fall during the collapse of the stock and bond markets, due to their superficial perceptions of DEFLATION.  While it’s true that asset values will implode during this time, I believe the over-leveraged paper claims on gold and silver will disintegrate as the value of the physical metal will skyrocket.

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79 Comments on "The Great U.S. Retirement Asset Bubble vs Physical Gold Investment"

  1. Good one Steve but a problem IMO : there is not enough gold available on earth IF gold is just hoarded even with gold at 5 times higher in terms of today prices. Buying one gram of gold at the price of one day wage is not more clever than buying real estate. For retirement the amounts of assets required are absolutely huge and it is logical that real estate would be a big chunck of the savins retirement plan.

    I think that gold is mostly made to circulate like blood and not to be kept Under the pillow waiting for 30 years. It could make some sense today because the world have lost the Financial sanity but it is not the normal state of affairs.

    Lastly, I believe that the west will experience ZIRP for many years and maybe décades if they succeed to keep the derivative games together. They can also decide to increase by stocks levels by 50% or 100% and can achieve this outcome in just few months/quarters.

    I hate to say that but the central banksters rule the world as they wish, if the system crash not far away from now it would be because they would have decided it. Today gold/silver smackdowns are friendly reminder that it is a highly risky bet to bet against them.


    • Yes,yes how right you are. Make no mistake if and when we see the crash and dollars demise it Is by design. The powers that be have big plans for our future and further servitude.

  2. We just took another $22 hit on gold today. Cartel busy at work after having a 3-day weekend. I don’t know how much longer they will suppress gold, but I’m sure that period won’t be measured in years. With all the instability in the Middle East and Ukraine you would think gold’s ‘fear premium’ would be kicking in.

    Maybe the big institutional banks are using this as a buying opportunity, no way, they don’t see cracks in the dam of the financial Ponzi scheme on life support.

    • Aaron,

      The S&P 500 hit new highs last week on RECORD LOW VOLUME. This is a BLINKING RED LIGHT for those who understand markets. I don’t know how much longer this TOTAL BUBBLE MARKET can be kept afloat, but when it finally pops… it will be absolutely breath-taking.


      • ROFLMAO. This site is starting to provide a nice comedy hour for me once in awhile. The only bubble that has popped was gold and silver. The 401 (K) system is sound and in no way represents a ponzi.

        Let’s see, though, Steve. You want the greater FOOL to come into the Gold and Silver market that is going to happen ANY DAY NOW. Well….tap tap tap. When is that day going to come?

        Never. Silver is headed lower. I’ve warned you of this for years. it continues to get pounded because silver is a bubble.

        Gold is a bubble.

        They yield nothing. They are worthless. They will continue to do nothing for decades…..whiile the S + P 500 continues to skyward. Let’s see? Should I bet on Warren Buffet’s advice or yours? Hmmmmmmm, that is a really tough one. LOL.

        Meanwhile, gas hasn’t been this cheap at the pump in what seems like forever. I’m just about ready for my new F350.

        And my costs of living keep going down in other areas too! Housing has gotten cheaper with record low interest rates. Borrowing costs way down…..will make that F350 an easy buy buy buy.

        You’re missing the greatest recovery on record. Things are awesome if you just looked up every now and then to take a look.

        Oil is headed WAY lower. Gold and Silver headed WAY lower. Meanwhile, my stocks will continue to make me filthy rich why you and your mindless followers get more poor by the day.

        How’s that silver thesis playing out, Steve? Just asking. I think AAL will keep outperforming Silver in a BIG BIG way.

        Sorry chump, you’ ve lost,


        • I think you should print your comment and place it on your desk with a reminder to read it next year. That should be fun!

          • LOL, Mark. I’ve been told this for 20 years now. So you must be right. Next year most certainly everything will change. LOL. Good luck to that one, man.

          • Lehman was a warning, it could happen again and stronger because desequilibrum are greater now.

            Moreover, cash flow, earnings and sales are quite probably higher than they should be because of inflated values and higher debt levels.

        • Nothing like being a willing victim of normalcy bias.

          You said gold and silver are “worthless”. Well, I will agree with you that today they indeed are worth less than yesterday but are a long, long way from becoming worthless.
          And in the history of the world gold and silver have always had great ‘worth’ and have always been a store of value which you certainly can’t say is the same for fiat, paper money.
          Since human nature never changes I will bet silver and gold continue to be valuable and a good store of wealth.

          • Is Jack not aware that even with the metals down the last couple of years that they’ve still done better than stocks since 2000.

          • Oh……jeesh. That is fresh. “Gold has been around for 6,000 years. blah blah blah.” The best long-term returns is in the productivity of mankind. Period. It is why stocks kill gold over the long tern.

        • DaleFromCalgary | September 2, 2014 at 6:48 pm | Reply

          Oil is headed way lower? I doubt it, said the man invested in actual wells in central Alberta (that would be me). Shale oil requires $85 to $105 just to break even. Offshore oil, Athabasca Tar Sands, and Arctic fields likewise. And all of that is before shipping costs.

          We can’t go back to $20 oil because it’s almost all gone. The Saudis have stated they need $80/barrel because of the cost of pressurizing their oil fields with seawater. Also, as Jeffrey Brown pointed out with his Export Land Model, oil that is produced is increasingly staying inside the producing country for their own use.

          • Yeah, yeah, yeah…..and housing couldn’t go down because of the cost of the building material and labor could never permit housing to go down (argument I heard in 2007).

            Of course, oil can go much much lower. And it will. I know the oil industry too. Wait until you see the gushers that are a coming.

        • Yeah, ain’t life grand! The greatest recovery on record,yet the Fed can’t seem to raise interest rates?

          Gold was a bubble with absolutely no Americans(or most Westerners) owning any to speak of? Oh, ok. A bubble with no human participation? Good one. A bubble with less than 2% OF ALL financial investments even in precious metals. Thanks for the tip. Sovereign wealth funds, hedge funds,central banks, day traders ,etc all hated gold but it was somehow in a bubble? Whew, thanks for the clarification.

          The US claims to hold 8,133 tonnes of gold worth about $340 billion dollars today while OTC derviatives are now north of $1 quadrillion dollars. Nothing to see here, I assume.

          Central Bank bond purchases and .25% Fed funds rate for 6 yrs and still no economic growth in the real economy.Record low labor participation, median wages below the yr 2000, and no velocity of money to speak of? Wow,Happy days must be here again! It only took doubling our national debt to get back to the 2007 DOW high of 14,164 in 2013.

          Gold and silver can’t go much lower because the free market will not allow it. I got it, let’s bankrupt all the miners and replace them with phantom metal from a make believe warehouse,call it Fort Knox.

          Oh sure, COMEX naked shorting, MSM propaganda,and the public’s aversion to metals exposure can keep prices subdued, but it will be impossible for the Fed to hit its target inflation number if deflation sets in, which you clearly think is happening. The good thing for folks like you is that the Fed will attempt to head off the deflation with more aggressive measures, thus accelerating the capital destruction in all markets,especially the bond market. After all, who needs those pesky free market drivers like capital,competition ,and labor when adding some digital zeroes to the bottom line now represents wealth?

          Why wouldn’t any prudent investor want to have some gold? You get he best of both worlds. When your paper is doing well, it’s just sitting there holding its value and protecting your wealth. When your fiat collapses again, it maintains its value in the debased currency it’s priced in. Even with the obvious manipulation, gold has gone from $275 in 2001 to $1,300 now,a 300% increase..You would now have an asset that can’t be printed into oblivion AND your precious Central Bank bubbles.But why have insurance when the whirlybird Janet has your back.

          Good Luck.

          • Wow, Scott!

            Some really original thinking there. Yeah, I’ve read Zero Hedge and Eric Sprott too. Heck, I’ve even watched some Mike Maloney videos.

            So at least next time try to say something creative when you post. The reason your are mad is because you have been programmed and conned by these snake-oil salesmen.

            Did you know we had artificial rates before? Oh my goodness. The Fed also created a lot of base money….in the 70s. And look, we’re still alive. And productive businesses have done wonderful. And the living standards of America are UP 7 times over the last 100 years.

            It’s called progress. Have we had rough times over this course? Yup. And we’ve made it through them in spades.

            Every single “problem” you identified was created by man himself. They will get fixed.

            If EVERY miner went B.K. the world will be a better place. It is absolutely reckless to spend resources on digging gold out of the ground. And you know what? The gold miner CEO’s as a whole should be taken out back and shot. They are the fools who sell their ONLY product at marginal profits and many at large losses. They are the suckers. And anyone willing to invest in miners will continue to have what is coming to them. Did you ever even notice Newmont and others would have lost you money over decades? Why do you think that is? Why do you think BUFFETT never invests in these pigs?

            And so you’re also predicting what all the other Baffoons are predicting. That the Fed will have to resort to more QE again. Good luck with that bet.. They won’t. Peter Schiff also said that they would NEVER taper. And here they are: winding QE down to zero.

            And no, they won’t need to QE again. Your prediction that you merely peddled off of all the other doomers will just be wrong just like them. Didn’t Turk and Richards also say they would never be able to end QE3? Oh yeah– they did.

            For crying out loud. Use your own voice!

            There is no need to own gold. Own quality oil companies like XOM if you are worried about inflation or the dollar, etc. I promise you if the dollar collapses XOM will still be around and protect your capital. But Gold? It doesn’t pay a dividend, it will not be legal even if you were right, and therefore it will never protect you.

            Seriously, don’t just read the doomers that have been wrong now for about 200 years. Betting against America is a really bad bet.

            Go long America. The ship will turn.

        • Cognitive Dissonance at it’s best!

        • Dancing with the stars, Jack?

        • @ Jack – it is you who is providing some comic relief in dire financial times. “Things are awesome?” – while the world is on the brink of a world war, economies are imploding and the only solution to all of our problems appears to be more money printing. Good luck with your warped, mis-guided perception of the world….

          Even Warren Bufffett understands what is happening which is why he buying companies with substantial hard assets. He has way too much money to buy Gold, of which very little remains….

        • Jack,

          Normally I’d be more polite and respectful, but you are such an ignorant arrogant ass I have to call a spade a spade.

          PLEASE. pour all your money into 401k, IRA, and/or ROTH, and by all means pour currency into equities right now! Even if you have to borrow to buy the equities!. Don’t own anything tangible; only dollars, preferably the ones appearing on a monitor; not physical ones in your possession. Buy a huge new home that requires a lot of natural gas and electricity to operate as they will be cheap for as long as you live, and for hundreds of years thereafter, as cheap energy is abundant. In fact all naturally occurring, non-renewable natural resources and elements on the periodic table are abundant. The price of food will go down too.

          You would be an easy mark for sales.

  3. Looks like other people are getting bored or amused with this non-sense too.

    • Jack,

      It’s always a pleasure for you to show up here so you can regurgitate your FEDERAL RESERVE HERO WORSHIP rant. I have to say, it’s nice to have at least one KEYNESIAN GADFLY to comment on the site.

      Keep up the good work Jack. I am counting on ya….. LOL.


    • Go long America? With no mfg base, diminishing FOREX dollar reserves, endless wars, $200 trillion in unfunded liabilities, unsecured borders, ZIRP, captured regulators,CB balance sheet over $4 trillion, M and As moving US corporations to foreign countries, debased currency, collapsing shale initiatives, $1 trillion in student loan debt, no rule of law, false flags, and a paralyzed and ineffectual Congress? The ship is turning,alright. It’s heading directly for the third world.

      • Scott,

        You have to love the term, “GO LONG AMERICA”. I don’t know anyone with a functioning brainstem that would go long on America. The United States only survives because we continue to export our inflation via our highly indebted U.S. Dollar. The day will arrive when Americans come FACE TO FACE with real inflation.

        That will be the day you will be glad you have a little gold and silver put away.


    • Why would gold be illegal if Americans don’t have any? And why would that suddenly matter?

    • Jack
      Who was the white night that bought all those treasuries in Belgium?

    • Jack
      When are these gushers coming on line and what company or companies own them and are you currently short oil right??

  4. We has an update, sportsfans.

    appropriate that on the 3rd dreary anniversary of the high, yet no end in sight or even diminishing of the hysteria from the same useless worthless ignoramus howlers on high aka “gurus” & “experts”, we now have a clear bust out of this ratio.

    wild thing is that the guy i first saw post this 2 years ago gave that correct “ultimate target” of 107 hit right to a fraction, but he also said then that if it did a fibo extension of that, it would head up to the 140 range i recall (that was a year ago)$SPX:SLV,uu%5Bd,a%5Ddaclyyay%5Bdf%5D%5Bpb50!b200%5D%5Bvc60%5D%5BiUb14!La12,26,9%5D&pref=G#

  5. indeed, this chart says its going to go into freefall again. I think it is headed to 12, easy. Mayber lower. Silver is the most over hype investment ever. And you have these morons that don’t know anything about good investing.

    I bet Steve was a major investor in the tech bubble. Then he became a major investor in the silver bubble. Next, he will have a stock blog when the stock markets hits S + P 3000. That’s when I’ll then buy silver from him

    Too funny.


    Yeap, oil prices peaked alright! Yep, silver prices peaked alright! Meanwhile productive businesses keep making me rich!

    You know, when some smart investors buy silver I might take notice. But not until then.

    • jack youre joking right? Im reading satirical comments from you right now, correct? You sound like a lunatic giving absolutely no evidence to back up anything you say other than ‘oh yeah silvers the bubble LOL you guys are chumps.’

      Please tell me youre doing a Colbert impression or something?

    • They already have and you didn’t notice. Steve writes a very good story and I’m grateful for his sharing of his work and insight. Yes, many people are getting rich “playing” the stock market. And if you are one of them I’d like to congratulate you. It’s just that the system is programed for self destruction,it isn’t sound fundamentals that are driving the every other days markets highs. It will end badly for everyone. I havent heard anyone advocate completely abandoning positions in stocks, just that it would be prudent and wise to add some physical metal to ones portfolio. Sound advise I think.

    • I find your comments amusing because you *think* you understand how markets work, but you really have no clue.

      “They yield nothing. They are worthless. They will continue to do nothing for decades…..while the S + P 500 continues to skyward. Let’s see? Should I bet on Warren Buffet’s advice or yours?”

      Seriously? Warren Buffett (note: two t’s on BuffeTT) is a smart investor, and he sees the opportunities, but they are not what you see. Buffett isn’t throwing all of his money in the stock market, and he knows it would be unwise to do so. He is buying the VERY FEW companies that have gotten it right. Which companies have gotten it right? When the FED reduced its interest rate target to almost zero, many company’s borrowed cheap money. Makes sense right? But here is what you are missing. Most companies used this money for either stock buybacks, or to pay investors (of the baby boomer variety) higher dividends. Does this make you rich……you may think so, but in the long run, not if you are left holding the bag. Why Because these companies should be using cheap money to leverage-up. Yes, I said it. They should be leveraging up to their eyeballs in cheap debt, but not to pay investors, but to invest in productive assets and R&D, which will enable them to continue to grow into the foreseeable future. Productive assets is the name of the game. If you are borrowing cheap debt just to keep your investors happy, which 98% of public companies are doing, then you are not re-investing into your business, and therefore productive assets. Your companies may continue to do well in the short run, but in the long run, their productive assets will become economically worthless as they become obsolete, and the companies which did invest in productive economic assets, will keep chugging along. This is why Buffett bought Heinz, because Heinz has been smartly reinvesting in its business, making large capital investments, to continue to company’s growth in the future. Most companies are not doing this.

      That explains Buffett, but it does not explain the stock market’s pathetic performance. Why pathetic? Because companies are still “growing earnings” by cost cutting – NOT TOP LINE GROWTH. Gross revenues continue to be paltry, and this type of “earnings growth” is not a sign of a strong economic recovery. It is quite the opposite. It is a fragile recovery. The market will crash at some point. Why? Because the S&P and DOW are no longer valued, or even tied to REAL FUNDAMENTALS. Every analyst on TV talks about charts, and trading ranges, which are crap and tell you nothing. You are a hypocrite if you listen to these morons, but you say you follow Buffett because Buffett has a famous quote that whenever he turns a chart upside down, he sees the same thing. What are REAL FUNDAMENTALS? Well, if you know anything about the market, you should know that they are based on 1) Cash Flow 2) Growth Rate and 3) Risk Profile.

      The final fundamental explains the overvalued market and why Adam Smith’s Invisible Hand of the Market will eventually pay a visit and wipe out the major indexes. Going back to another one of your comments:

      “And my costs of living keep going down in other areas too! Housing has gotten cheaper with record low interest rates. Borrowing costs way down…..will make that F350 an easy buy buy buy.”

      The FED’s accommodative interest rates have driven down the costs to borrow in an attempt to spark corporate capital investment (which we already know they ARE NOT doing), and to get the country borrowing again to buy crap (which we also know isn’t happening as U.S. citizens continue to pay down their debt and credit cards to clean up their personal balance sheets since the 2008 shocker).

      If you ever learned about valuation, you would know that the best valuation model, far from perfect, but the best one out there, is the Discounted Cash Flow (DCF) model utilizing Capital Asset Pricing Model (CAPM) to determine the DCF’s discount rate. I won’t go into the particulars, because I’m sure your brilliant and you already know all this stuff. But if you use these models and methodologies to determine a basic company’s intrinsic value, you should notice that when the cost of borrowing is cheaper, your company’s Weighted Average Cost of Capital (WACC) is lower, thereby increasing the present value, or intrinsic value of the company.

      In short, because the FED is keeping rates low, corporate and market valuations will continue to march upwards. This is why the markets get so bullish every time quantitative easing occurs. Given that very few companies are actually experiencing top-line growth, and are only reporting decent earnings based on continued cost cutting and layoffs, the FED is not achieving its goal of corporate capital investment, which would also include jobs to go with the economically productive assets – hence why unemployment remains stubbornly high (it only improves as people leave the workforce, which is even worse for the economy because they are living off the government!!!). So, the major market indices are experiencing a bubble due to continued low borrowing costs, which are not having the intended effect the FED wants them to have, and is fueling the bubble bigger and bigger. NONE of these new market highs are driven by FUNDAMENTALS!

      Hopefully you can at least comprehend parts of this. There are many other variables that I am not even touching on that also have a major impact on the markets, but it gets even more complicated. For example, the United State’s addiction to borrowing, how it will eventually destroy the dollar and other fiat currencies.

      AND THIS IS WHERE YOU ARE DEAD WRONG in your comment about gold and silver…..”They yield nothing. They are worthless.”

      Gold and silver serve a very special purpose as far back as the earliest civilizations. As RD mentions, they are a vehicle of exchange. They are scarce, and they HOLD value. You may not think gold appreciates, but it sure as hell doesn’t depreciate either. The supply is finite, and Gold and Silver will once again occupy center stage once fiat currencies collapse. This is why China is accumulating it like CRAZY to hedge against all of the U.S. treasuries it holds, because the Chinese know everything U.S., unfortunately, will eventually become worthless.

      When fear hits, and the U.S. dollar and U.S. treasuries are no longer investment safe havens, people will stampede into gold and silver to maintain their wealth, and the demand will push the value of these precious metals higher. This is another Adam Smith Invisible Hand of the Market moment, when the derivatives markets collapse and gold and silver are valued based on supply and demand, not manipulated paper spot prices. We’ll go back to some sort of gold/silver standard of some sort as INFLATION soars (another one of those variables that also play into this gigantic puzzle). You will wish you would have bought these investments.

      Although I will give you the fact that nobody knows when this day will come………there are too many variables, and collusion between governments to save their currency and the financial systems, some doing it with selfish intentions (i.e., JP Morgan) and others to save the country (i.e., I’d like to hope the FED and Treasury Departments of the World).

      But this day will come. The Laws of Supply and Demand cannot be manipulated forever, and the Invisible Hand of the Market will come hard to correct market inefficiencies, and you’ll be selling that F350, or maybe living in it…..or maybe you’ll be old and poor because you’ll be one of the fools left holding the bag.

      • Amen, brother. Just don’t expect this troll to understand what actual price discovery is,or the suspension of this mechanism to enrich the Buffets of the world. In his fantasy, America will always be number one, the USD will always drive the global economy,and inflation of the currency with no productive means to buttress it creates wealth.

      • Oh Hector,

        I will post a more detailed post tomorrow. But you are wrong in more ways than I can count. For now since it is late I’ll keep it brief:

        “He is buying the VERY FEW companies that have gotten it right.”

        IBM is Buffett’s largest purchase of any publicly traded companies other than WFC in decades! IBM. This alone nullify’s every word you wrote in your first sentence about spending on cap-ex and not buy-backs via cheap borrowed money. And IBM is the poster child for revenue NOT growing and EPS going gangbusters on the back on share-buy backs. Everything you “warn” against and the exact reason why the market is doomed according to you.


        So that alone diputes everything you were saying. I’ll go into detail why you are wrong, why Buffett is right yet again tomorrow when I have more time.

        I also understand DCF perfectly. Also where you are wrong is the only thing that matters is interest rates, inflation, and the fundamentals of a company. I get discounting back to present value using a discount rate (risk free interest rate). Over the long-term, the interest rate is not what sets multiples, it is cash flows. Period. That decides the fundamental paradigm. A company that increases its per share intrinsic value over time will make you money. You can have this with DECLINING revenues! This is something the mining CEO’s will never understand, and their economics will ALWAYS be long-term crappy.

        Gold and silver had their day. They had a great run from 2000-2011. Unfortunately all you suckers jumped on the rear view mirror and started buying PM’s after their huge bull run, and instead you should have been buying stocks while they were beaten up. I’m guessing Hector like Steve you were a big tech investor in the 2000s. When you finally get giddy again over stocks when they hit 3000 I’ll be selling.

        People aren’t stampeding into gold and silver. And that is not going to happen, at least in your lifetime. What people are stampeding to do is travel, buy Coach bags, and enjoy their lives instead of investing it in non-productive assets.

        Since you own non-productive assets that sit in your vault, earn nothing, do nothing for you other than you can fondle them, I can see why your so pissed at corporate America where their earnings go up and up over time while gold does nothing for mankind.

        Good luck,

        • “You know, when some smart investors buy silver I might take notice. But not until then”

          They are buying silver. You are too naive and arrogant to realize it. Many are Asian, but Asian investors apparently don’t matter to you.

    • “You know, when some smart investors buy silver I might take notice. But not until then”

      They are buying silver. You are too naive and arrogant to realize it. Many are Asian, but Asian investors apparently don’t matter to you.

  6. Everything you write about could be the gospel truth and could happen. Gold and silver to the rescue…again. I think everyone understands that part too. But why is everyone so sure the govt is even going to let you keep your gold and silver under such a scenario?? We know what they think about guns and what they’d like to accomplish there. So if they get your guns…. Anyway if they don’t confiscate your PM’s then how about a so called “windfall profits tax” on every piece you sell (legally)?? If you could find somewhere to sell it. And they talk about the unknown with your IRA’s, stocks and bonds etc etc… If you think that crooked govt is going to just sit back and watch these evil “gold speculators” fuck with and be a threat to “national security”, while you and your neighbor who are financially wiped out starts screaming at the govt to go after “terrorists like you….stackers”….anyway I don’t think anything is written in stone on this subject quite yet. But as a stacker myself it’s better and certainly more fun than the…alternative.

    • Silverado,

      There are no guarantees in life. However, I would rather chance it with owning physical gold and silver than staying in a system that we KNOW WILL COLLAPSE.


      • Oh….Steve. You don’t KNOW the system will collapse. You only *think* the system is going to collapse. And you’ve been very wrong so far. Just like all the doomers that came before you. People will continue to put one pant leg on at a time, they will continue to have kids, the population will continue to grow, the economy will continue to grow, will will continue to find more and more oil as we also begin to substitute over the next few decades, and the world is going to move on.

        Will stocks decline again. Of course. And when they do you’ll all be ranting and raving like lunatics about it. But let me give you some advice: when stocks finally have a big correction, and they will one day, you should buy productive businesses with you money. You should get out of the gold business. And you should join the greatest bull market of all time: the plight of mankind.

        The world is not going to collapse. the world is going to be great. The world will be a better place 5 and 10 years from now than it is today.

        The only thing collapsing are the doomers. They are going broke, investing in idle assets, and spreading cancerous thoughts.

        Good luck to that.

        • French assignats dissappeared causing great turmoil for décades but the french people survived for sure but it will not be the time to be long on the markets on being stuck with paper promises…

  7. Jack’s last name is ASS. His head is up it.

  8. steve,that troll was so convincing.i think I will sell all my Pms right now,for what I can get,sob,sob.
    why didnt you tell us it was going to be this hard?
    jack-ass-shyt you are my hero,i think i love you man.

  9. Amen, brother. Just don't expect this troll to understand what actual price discovery is,or the suspension of this mechanism to enrich the Buffets of the world. In his fantasy, America will always be number one, the USD will always drive the global economy,and inflation of the currency with no productive means to buttress it creates wealth..

  10. Great discussion. All of you have some valid points. I know I will never be 100% right, but this is what I do: diversify and dollar cost average. Yes, I have a certain percentage of my networth in precious metals. And yes, I also hold some dividend paying stocks, some cash and some real estate. I buy small amounts on a regular basis (dollar cost average). Even if the price of precious metals keeps going down, I know it will not go to zero. Eventually I will buy at the bottom too. If you own high quality dividend paying stocks, you participate in the company’s profits. Today I might get paid in dollars, tomorrow I will get paid in the medium of exchange of tomorrow which might be SDRs, ameros or dineros. My point is , I don’t know what the best performing asset class of tomorrow will be, nor am I able to time the market. But with diversification I am increasing my odds to have some exposure in the best future assets, and with dollar cost averaging I am minimizing my risk of buying a potentially great investment at the wrong time

  11. Thanks for the report, Steve. I was wondering if you included allocated ETFs such as CEF and PHYS, or if you left those to the side the same way you left GLD. I realize that the overall point of this article would still be the same, as these allocated ETFs wouldn’t make a big difference in the tiny size of gold investment vs. investment in traditional retirement funds.

  12. I just came across this very interesting site. From where I am sitting it does seem the world is running up against limits, which no amount of clever manipulations can disguise.

    The laws of thermodynamics cannot be overturned and so nor can the laws of mathematics. It is abundantly clear that the levels of debt created by the group who are collectively referred to as bankers is on a path to destruction. It is the failure, or unwillingness, of these people to countenance the principle of the exponential function and its consequences.

    By creating new currency out of thin air they have given people what they want today, and it seems so easy, but there has been no prior production and so there is a disconnect between the so-called financial markets and the real economy.

    There is one of your contributors above (Jack I think) who makes a desperate sounding argument for the continuation of the growth in debt. It seems this approach is flying in the face of math. It also defies the physical laws because there is a direct link between oil prices and debt. For example, when your markets crashed in 2007-2008, the price of oil collapsed from $147 to $25 or so.

    So the world appears stuck with oil producers needing an ever higher oil price to make extraction profitable and yet if this price goes too high, it causes economies to go into recession. And as the remaining oil is in difficult places to extract, producers need a higher price or they will just leave it in the ground.

    The so-called ever ending rise in stock markets (and other asset values) which Jack (?) calls for are utterly dependent on the world being able to carry on extracting oil cheaply. Even Saudi Arabia is now struggling to maintain production and the US shale boom will be over much sooner than its advocates suggest, given the huge depletion rates after only 2 years or so.

    So I think it makes sense to protect yourself by holding real precious metals outside the banking system. After all, why do nations like Germany want so much to have their gold bars back on sovereign territory. It is likely the US does not have the amount of gold stated in official data, with this gold having been leased out into the markets over the years to keep real prices suppressed.

    Gold and silver requires energy to extract from the ground, while bankers can press a few keys and create billions of paper currency in a second. This massive disconnect is what will cause a profound readjustment, however much Jack (?) above protests —ever more loudly it seems with each post.

  13. I am He,

    I am not protesting. I’m making the argument that Peak Oil has been claimed since the early 1900s which is a fact, not an opinion. Just look at history to see how many times we were going to run out of oil. There have been four points of particular interest when the Peak Oil theories really crested.

    I don’t believe in Peak Oil. I have been right for three decades. My research tells me I’ll be right again–and so far the prices in the auctions markets suggest that I’m right. Oil has tanked the last two months. That isn’t because we’ve peaked. And it isn’t because Shale is two years or more away before peaking before it declines. It is because the oil markets are discounting that there is going to be more oil than we know what to do with. It is why I’m looking to buy a F350 with my stock market gains, pay off my house, and buy another house for yield.

    Credit growth has been humming along and will do so for the foreseeable future. There is massive pent up demand for homes by the 19-34 year old group. Cars on the road have never had longer duration….so auto loans are going to go through the roof in the next few years.

    I’m not desperate at all. I’m making the argument and have been right for years now that SIlver peaked at 49 and oil peaked at 147. We will NOT see those prices again in your lifetime.

    Bank on it.

    I’m arguing that if you really believe you need a non-productive asset as insuarance, then you should really think about buying GM and AAL as insurance that you might and probably will be and have been very very wrong about gold and silver.

    Gold based on all my analysis isn’t interesting unless it hits 1000 an ounce. Gold based on history is basically just trading in a fair value range between 1100-1300.


    • Jack,

      If you were going by information stating a PEAK of global oil production in the early 1900’s, then you are as silly as your comments. M.K. Hubbert figured that the United States would peak at about 1970… and he got that right in SPADES. Then he forecasted a peak of Global oil production to occur in 2000. Conventional Crude peaked in 2005. So he was off a few years. He made the forecast in 1953.

      The Shale oil and Tar Sands will not be able to hold off the Global Peak including Unconventional sources much longer. And they are not considered Conventional Crude which is the standard of the oil industry.


    • “There is massive pent up demand for homes by the 19-34 year old group.”

      Really? The same demographic that can’t find work and is loaded down with student loan debt?

    • shallow Jack you are apparently not aware that China and Russia are planning on creating a new currency that will put the U.S. dollar out of business. At the same time will crash the market and the U.S. will really become a third world. So you can drive your F350 over roads filled with pot holes that is if you can afford gas.

      The new currency will be backed by, guess what? Yes that useless metal gold and silver. I can imagine the value of those metals will sky rocket. That is why China and Russia have been hoarding the metals. Be smart and hoard some for yourself. What am I thinking, you play it smart? Never mind.

      Did you wonder why in your infinite wisdom why Obama has been demonizing Russia. Slapping sanctions on Russia left and right. He is the one who had the duly elected President of the Ukraine thrown out of office so he could plant his neo-Nazi puppet in his place. Now he has the gall to accuse Russia of meddling in the affairs of Ukraine?

  14. Jack, Whatever credibility you think you had, you lost it on that comment alone.

    • Exactly, this Genius has still a loan (ie he is poor) and his plans to buy one of this stupid car !

      In a deflationnary collapse I would be pleased to see the GM/AAL profits even if oïl is 0…

  15. @Jack: on Peak Oil:

    Actually, you may find that some oil may be just left in the ground because producers can’t extract it unless it rises so much in price that it causes a global recession. So rather than it being a matter of physical limits, it seems more a case that producers will not be able to extract without huge losses.

    @Jack: “Gold based on all my analysis isn’t interesting unless it hits 1000 an ounce. Gold based on history is basically just trading in a fair value range between 1100-1300.”

    You are so transparent – it is now clear that you are either “JPM” or “Goldman S” or their ilk. i.e the Too big to Jail banksters. So much for their “slam dunk sell” 🙂 re Au. Clearly you represent those who need debt to expand, as you get an override commission % on the extra fiat produced out of thin air. How noble of you. not.

    It is your ilk that has led the world to this mess, where now there is record margin exposure as traders load up on debt to drive the Dow and S&P to totally unrealistic levels. And I guess you “hate” silver because from the information before me, you have a huge naked short on the metal – soon you and your marginal ilk will have your “day of reckoning”

  16. @ I Am He,

    You are very wrong about me. I want to point you to a really good Gold valuation analysis by a guy that has been in the business since the 70s. He made a mint on gold equities in the 70s. He was buying gold equities late last year. Him and his team are great value investors and they put out a piece titled Gold Analysis that breaks down the value of gold into 5 different viewpoints based on inflation, based on the price of oil, based on other factors as well. I really suggest you take a look at it. It’s hard to argue with logic.

    Look, I can’t stand the banks frankly. I think they have caused massive damage both physically and psychologically to this nation. They have jumped the shark. But this too shall pass. Go to the following link and you’ll find the gold analysis easily. I’d love to hear your thoughts:


    • @ I Am He

      First, please make sure you read, really read, the gold analysis on Secondly, I’ve been saying that I do believe stocks will have a big correction. Corrections are normal. I am thinking a 20% correction or so is coming at some point, maybe soon. So no, I’m not a shill.

      In fact, if the Russell 2000 breaks down here under it’s 52 highs then shorting the Russell 2000 is probably a good idea. Lower highs and lower lows could definately be in the cards for the 2000. Plus, the mortgage market will come unglued again in the next 6 months now that the largest buyer of MBS (the Fed) will be completely out of the market next month. Who will provide the liquidity for the loans?

      So, no. I’m not a shill. Or a paid troll. I am a realist. For those that criticized me on the pent-up demand you are just missing something elementary: a contraian viewpoint that says this demographic will figure it out over time–and begin household formations again. Of course, it might take much much lower home prices first!


  17. Today is 3 September 2014. 85 years ago today the Dow Jones hit an all time high (3 Sept 1929), and a few weeks later (Black Thursday, 24 Oct 1929) the market fell (though recovered by end of day.)

    Over the weekend investors must have had some serious soul searching, so that by Black Monday the cracks opened, so that Black Tuesday, 29 October 1929 will for ever be recorded in history.

    Are we about to see a repeat? Spectre of 1929……

    • The longer the market goes up on fumes without any real pullbacks increases the odds of a fast, violent down-turn exponentially.

      So either the market is indicating hyperinflation has started, or it will indeed have a gigantic and fast correction. That’s the nature of markets.

      P.S. When the market realizes there is NO entity currently set-up to begin buying billions in MBS once the Fed steps out, the market is going to go insane. This is much bigger than Peak Oil that may or may not emerge.


    • I will not happen so close this way except if the financial oligarchy decides to provoke a krach by indirect and direct interventions in ther markets.
      On a longer term basis, the western anglo system could be exploding because of a serious competitor which still do not exist today but which is maybe on the verge to come (5/10 years).

  18. Your right jack
    People never like to admit their wrong. You are also in the majority by far, so i’m sure that makes you feel even better. Everything is just fine. Our government would never intentionally put it’s citizens in harms way.
    One day soon , they will also prove how an office fire can result in the freefall of a forty story building.
    Have a nice day– zoom zoom

    • I don’t know about MA….. His cycle of war seems to be right on target, but does he suffer from Stockholm syndrome in regards to Gold?

  19. I don’t claim to know much about financial markets.

    What I do know is if one reads certain public government documents, it is a disclosed fact the Government is engaged in manipulating Gold and Silver prices. Not for debate. Look it up.

    How they do it now days, is pretty simple to understand. If you can control supply, you can control price. Supply is controlled by paper. It’s that simple. The current system is completely manipulated. The concept of supply and demand no longer applies in today’s market.

    It doesn’t take a genius to understand why they would do this and if you can’t figure it out, I’m not willing to explain. Besides, what do I know?

    I do understand that:as long as the current system functions, much of what some say, applies and is true. However, as the Trust is broken, the current system will be abandoned and another one set up. I suspect that is when Gold and Silver have their moment. The only question that will remain is if there is anything left worth celebrating? Most people will finally realize they have been robbed. And the Government is doing everything in its power to convince the American people who the guilty party is or try and disarm America. I’m not buying it. My Kingdom is not of this world……yet.

    Got Jesus?

  20. If all paper contracts had to be 100 % backed by on hand silver the price would be much higher. The paper market is nothing more than a control system to prop up fiat money in my opinion. If everyone wanted to take delivery on all the outstanding contracts there is not enough metal to cover them. That in itself indicates what is going on.

  21. the US dominance in tech business is ending:
    1. chinese huawei out-competes csco in many countries
    2. chinese has developed server technology to replace IBM’s powerful servers in the financial/banking industry. trial deployment has quietly started.
    3. chinese software developer has its own version of Office suite of applications
    4. chinese own social media has quietly gone global ( anyone using weichat?)
    5. the list can go on…

    apple’s success in smart phone is very much inflated! the popularity of smartphone has greatly harmed eyesight! smartphone has forced a game console into every kid’s hands.

    smart phone considering the above harmful effects could turn out to be the worst invention since the internet revolution.

    my eyes are hurting! steve jobs, thanks to your goddamn marketing genius!

    iphone have quitely lost favor with many fad-chasing young ppl in china due to its small-ish screen!

    chinese smartphone makers are dominating the low-to-mid-end markets.

    this nasdaq top could very well be the last chance to unload the overbloated US tech stocks!

    • The US has now exported 3 things for the last decades :

      1) banking fraud via dollars
      2) wars
      3) marketing (apple, shale oil, hollywood and other POS).

  22. post-911 USA has squandered its fortune in wars!
    i was working in NYC when 911 hit. the economic depression after 911 was severe!
    i sensed something seriously wrong with US government.

    6 trillion dollars has been wasted in wars! no economic return, only destruction!

  23. all major chinese banks sell paper silver to their clients. i believe the total outstanding paper silver in china could very well be billions of dollars! these paper silver exposure are then hedged in international OTC markets. the chinese banks must be taking long postions in internation OTC markets to hedge their domestic short exposure! so western counterparties have to take up the short positions from the chinese banks if not the chinese banks have to hedge directly in comex futures!

    there are also fraudulent paper silver exchanges set up in jianjin and several other second-tier cities around china. they were set up to boost up the local financial industry. but in reality, all they do is to fleece innocent public or run a ponzi scheme. several exchange members of the infamous tianjin exchange has fled with billions of RMB missing.

    shutting down these fraudulent paper silver exchanges could be a boost to the much more legitimate exchanges in Shanghai and help the physical silver price recovery!

    rumor has it that tianjin exchange has connection to the former premier of china, whose hometown is tianjin!

  24. Jack,
    Great comments you are very articulate. Do you work in finance by any chance? I am a stacker who must live in the real world, and the world you describe is much more attractive than the one we doomers live.

    It pains me to pay 50K per year for my kids college when I know they will have limited work opportunities. My common sense says invest the 200K per kid into gold and silver and have them learn a useable trade like plumbers.

    The reality is that all the jokers that hoodwinked the US are gone bernanke, paulson, geithner, etc. The new jokers are holding it together better than expected. So we are 17 trillion in debt? Who says that can’t grow to 50 or even 100 trillion? That gives this party 10 more years anyway. And there will be new jokers after Hillary takes over. No one will take the blame and none of the current problems can be fixed until the system folds, be patient fellow doomers looks like we could be in for the long haul.

    This Ponzi has only begun to roll. This is the time to roll down the windows on that F350 (sweet vehicle) and crank the tunes.

  25. You Bet, Ed. The system has a long long way to go. First, all the major central banks are in on it together. The ECB, the FED, the BOJ, the BOE all work closely together. Look at gold today right! Draghi comes out and says we want the money supply to grow, we want inflation, and we’re going to target it. And Gold and the miners absolutely get flogged on that news.

    This is clear orchestration by the central banks. I’ve decided to go massively long stocks internationally because they are cheap and they will absolutely rip higher in Europe as inflation goes from 0% to 2%. You’d think gold or silver would be a good play on the ECB’s goals, just like you would have thought QE3 being good for the PM’s. But nope. They will DO EVERYTHING to channel everyone into stocks. Everything.

    So gold and silver will continue to be a waste of time. Silver will continue to head to 12 as I’ve been saying forever.

    The only way to play this is long stocks. Unless inflation tips over 3.5-4%, I wouldn’t touch the doomer metals. I’d much rather be long GM, JCP, AAL, C, and VXUS BIG TIME.

    If you doomers were making money in the stock market I’m guessing you would not be so doomy.


    • You’ll be eating those words about silver going to $12.

      You are right about the collusion supporting the system status quo.

      Here is an article for you:

      And the first line:

      “Encouraging and supporting asset bubbles is essentially the only force remaining to keep the system intact as we know it”.

      I’m guessing you see the Fed et al as omnipotent in maintaining the bubble ad infinitum.

    • “They will DO EVERYTHING to channel everyone into stocks. Everything. ”

      Have you ever read a financial book about the federal reserve for the last century, they can change their mind without telling you if their interests have changed.

  26. charles hugh smith! Too funyny ROFLMAO. He’s been calling for a stock market correction for 5 years! The market is up 200% since then! The market could fall 50% and you’d still have made an absolute fortune.

    Meanwhile Charles Hugh has made HOW MUCH selling doom? And how much have you made following his advice?

    That guy is a joke.


  27. And David, just so you know, when silver was in the 40s, then 30s, I was told I was a complete dumbass and that silver could NEVER go below 27 because of the all-in mining costs. Do I still look like a dumbass? Silver in the 40s was a clear bubble.

    Now that silver is 19, a stones throw away from 12, I’m being told, while less frequently, that silver will NEVER hit 12. Never! Just watch and see Davey boy. Just watch and see.

    Oh, and now that silver is sub 20, which Maloney also said would NEVER happen, the miners have lowered their ALL-IN costs big time, where a company like First Majestic STILL makes money on silver at 19. And as a primary by-product of other core miners, they could give a shit what they sell silver for.

    Silver’s bubble is over. Reminds me of the douches that invested in the tech bubble, and as it crashed 90%, all the idiots kept claiming IT WAS GOING TO TURN THE CORNER. But it never did. And neither will silver.

    That bubble has popped and sailed.

    Now, you should not be listening to the Drivel by Smith! Listen to the legendary investors for crying out loud.

    • You can have the last word. You have a driving need to have it; to feel right and good about yourself and your opinions Jacky boy.

    • I think there is quite high probability to see silver at 10+ but you have too much certainties exactly when those said that silver cannot go below 27.

  28. “Retirement savings of $120,000 is right at the median 401(k) balance for households headed by baby boomers, according to 2011 data from the Center for Retirement Research.” Presumably people under 50 have less retirement savings than people aged 50 – 68.

    23 TRILLION in retirement accounts??? A whopping 137% of US GDP? More than the Total Market Cap of publicly traded US stocks ($ 21.2 Trillion). More than the national debt? How is this possible? Assuming there are 100 million US households with a retirement account (unlikely), then the AVERAGE (not median) account would be $230,000. This seems waaaay too high. Perhaps Warren Buffet’s and the Walton family’s retirement accounts are skewing the average?

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