THE WORLD’S GREATEST BUBBLES ARE BIGGER THAN EVER: When They Pop, You Better Own Some Precious Metals

In just the past few years, global asset values have risen to the biggest bubbles in history.  Unfortunately, this doesn’t seem to be a concern to the market because most people believe they are getting richer.  However, rapidly rising digital riches can easily turn into digital losses, just as quickly.  But, this will likely remain a secret until the major fireworks begin in the markets by this fall or within the next 1-2 years.

According to a recent update by Savills, a global real estate services provider listed on the London Stock Exchange, global real estate values reached a new record of $281 trillion at the end of 2017.  That is a BIG number because their last update in April 2017, stated that world real estate values were $228 trillion for 2016 yearend.  How could global real estate values jump that much in a year??

First, let’s look at my newest updated chart on the “Global Mainstream Asset Universe”:

Again, according to Savills for yearend 2017, global real estate values were $281 trillion, Securitized debt (treasuries-bonds) was $105 trillion, and total world equities were worth $83 trillion.  Now, if you notice that GOLD SMUDGE on the right-hand side of the chart, that represents the total value of global gold and silver investments… a measly $3.1 trillion.  And that figure really hasn’t changed in the past few years.

Second, when I went to the Savills website to find out the percentage increase in these bubble asset values, I noticed that they stated global real estate values increased 6.2% over the past year.  You can check for yourself here: 8 things you need to know about the value of global real estate.

Well, something just didn’t make sense if Savills showed that global real estate values increased from $228 trillion at the end of 2016 to $281 trillion by the end of last year.  Gosh, that can’t be a 6.2% increase… rather it was a stunning 23% increase.  So, I decided to email the author of the article and find out why these numbers didn’t jive.

Fortunately, she was kind enough to respond to my email and let me know that I was quite right.  Even though Savills stated that global real estate values only increased 6.2% year-over-year, the much higher $281 trillion figure was due to “refining their methodology and including value revisions.”  Basically, Savills revalued global real estate by an additional $39 trillion, not including the $14 trillion based on a 6.2% annual increase.

However, the big winner in the group was global equities.  Global stocks increased a stunning 22% in 2017.  You can get a much better view of the increases if I show you the following charts in order:

Published For 2016 Yearend

Published For 2017 Yearend

As you can see, Securitized Debt increased from $100 trillion to $105 trillion, but Equities shot up the most by $13 trillion… $70 trillion to $83 trillion.  So, if we add up all the values of global real estate, securitized debt, and equities, it equals a stunning $469 trillion.  Which means, total world gold and silver investment of $3.1 trillion now accounts for 0.6% of global assets.  That’s correct; it’s not even 1% anymore… LOL.

And… if we look at the change of global asset bubble values since 2015, it’s even worse.  I first published data from Savills back in 2016.  At the end of 2015, total global real estate, securitized debt, and equities were only worth $366 trillion:

Published For Yearend 2015

If we compare these global bubble asset values from yearend 2015 to the newly updated figures for yearend 2017, we have the following:

Increase In Global Asset Values 2015 to 2017

Global Real Estate = +$64 trillion

Equities (stocks) = +$28 trillion

Securitized Debt = +$11 trillion

Gold & Silver = PHAT ZERO

So, while global real estate, equities and securitized debt increased by $103 trillion in the past two years, world gold and silver investment has virtually gone NOWHERE.  Yes, it seems quite strange that gold and silver investment has remained at $3.1 trillion, but I have done the math.

In 2015 the average gold price was approximately $1,200 an ounce, and today it’s about $1,200 an ounce.  As for the silver price, it was about $15.50 (average) in 2015 and its trading at the same level today.  Even if we add two years of additional gold and silver investment demand, it doesn’t change the overall $3.1 trillion figure.

When I did the gold and silver investment figures back in 2016, it may have been something like $3.06 trillion and today its $3.12 trillion.  Thus, when we round up the numbers, it’s still right at $3.1 trillion.

But, we don’t need to round up the global real estate, securitized debt, and equity values as they have jumped over $100 trillion in just two years and are now in EXTREME BUBBLE territory.  How can global equity (stock) values surge by $28 trillion in two years ($55 trillion to $83 trillion), a massive 50% increase, if global oil consumption has only risen by 3 million barrels per day, or a lousy 3%???

According to the IEA – International Energy Agency, total global oil demand increased from approximately 95 million barrels per day (mbd) in 2015 to 98 mbd in 2017.  Please understand, the world isn’t producing 98 mbd of high-quality conventional oil.  That figure 98 mbd figure includes shale oil, oil sands, NGL’s – natural gas plant liquids and biofuels.

If investors paid attention to the ENERGY, they would realize these global asset values (not including precious metals) are severely overvalued.  I believe that within a decade, current global real estate, securitized debt, and equity values of $469 trillion will have lost at least 50% of their value.

If just $1-$2 trillion of this amount made its way into precious metals, it would push the value of gold and silver to levels never thought possible.  I am not talking HYPE here, but logic.  My analysis suggests that global oil production will begin to decline as U.S. shale oil production disintegrates, starting within the next 1-2 years.  I forecast U.S. domestic oil production to be down 50-75% by 2025.

If the country falls into a deep depression, with oil prices below $30, then we could see U.S. domestic oil production down by the 75% in just seven years.  But, if the economy enters into a recession, but still plugs along for a while, then I see U.S. oil production only down by 50% during the same period.  Regardless, U.S. oil production will continue to decline and it will likely be down 75-80% by 2030.

Thus, the United States will look like a much different place by 2030.  If Americans do not diversify some of their wealth into the “Safe Havens” of the precious metals, they will likely lose a great deal of DIGITAL WEALTH.

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26 Comments on "THE WORLD’S GREATEST BUBBLES ARE BIGGER THAN EVER: When They Pop, You Better Own Some Precious Metals"

  1. I agree. The prices of some things are absolutely preposterous and are reminiscent of the Dutch Tulip craze awhile back.

  2. Michael Kohlhaas | August 9, 2018 at 2:35 pm |

    Can’t wait to see all that crap going down with Musk, Bezos and all those assholes!!!

    • Not so quickly. Knowledgeble analysts claim that another great stock rally will take place between 2020 and 2025 lifting the Dow Jones to at least 30000. The rally in PM in 2019 will only be temporary.

      • DisappearingCulture | August 10, 2018 at 8:18 am |

        “Knowledgeble analysts claim that another great stock rally will take place between 2020 and 2025 lifting the Dow Jones to at least 30000.”

        The ONLY way that happens is by massive Fed + Treasury [plunge protection team] intervention, plus other governments & central banks, Plus another MASSIVE QE, plus a lot of lying to the public, and the continued ability [questionable] to control where $ is invested. This includes not only PM’s, but also controlling how much goes into cryptos.

  3. The money concept is changing. That’s for sure.

    • ROBERT A MIX | August 10, 2018 at 12:01 pm |

      Yes.

      I would like to ask Steve whether or not the Securitized Debt figures include US .gov debt (Treasuries), other foreign .gov debt as well as corporate and other debts (credit card, student loans, etc.). My rough understanding (could be wrong) is that all the DEBTS are a huge number, and the ones I mentioned are reasonably “mainstream”. Somebody is holding that paper…

  4. John Thomas | August 9, 2018 at 6:39 pm |

    I am thinking Pierre lasonde, who you mentioned in your last article regarding Franco Nevada purchasing some shale properties, is no idiot. I am thinking he has something up his sleeve and he has figured out how to fix all this.

    After all, Franco Nevada has the highest revenue per employee of almost any public company, so if he can duplicate what he has done in the Gold Royalty business model over in the shale oil industry, then we will have something big, haha.

  5. Steve:

    Could you also provide the data for oil too?

  6. When Janet Yellen(our recent Fed reserve head) stated for the record that “Recessions are a thing of the past” I really couldn’t believe it. Yes she really said it! Anyway who knows how long our casino stock market will continue to go up. I think when everything crashes it will come out of left field. No one will see it coming IMHO. The thing is the time to buy gold/silver is when no one wants it. It may retreat to even $1000/ounce for gold and that is the time to back up the truck to buy the precious metals. Thanks

  7. The 3.1 tril valuation on PM is paper assets? Including Comex contracts? I wonder how many investors actually have physical gold and silver? That percentage is most likely very minuscule.

  8. It would be quite a trick for financial assets to rise faster than real assets forever.

  9. Carl Richardson | August 10, 2018 at 6:41 am |

    If world oil production declines , why wouldn’t the price of oil rise? The world will still need oil for Industry and transportation .

    • And oil rising from sub 30 to around 70 in just a few years ??? That qualifies as a solid rise of price in my book (and is against Steves call around 40 that oil was about to plunge down to 12). They have to inflate the oil price to keep the US oil ponzi alive (but on debt-life support that will prove lethal in the end).

      • CHX13,

        I stated the oil price would fall to $12 by 2022-2025. During the next market meltdown, watch as the oil price falls back towards $30.

        steve

        • Humm… seems to me Steve that on numerous occasions you have stated that PM’s will go up as energy costs rise. So gotta tell ya, sure don’t like reading ya saying, “…watch as the oil price falls back toward $30.”

          • 4 oz,

            Yes, I have said that the Gold & Silver price has risen over the past 15+ years due to rising energy costs and falling ore grades. However, I have stated for several years now that at some point, the Gold and Silver price will DISCONNECT from the price of oil due to the collapse in oil production.

            You must remember, 99% of the world is invested in STOCKS, BONDS, & REAL ESTATE. These assets derive their value from BURNING ENERGY in the future… and more energy. Once energy production declines, so will the value of these assets. Thus, investors trying to protect wealth, will start moving out of these assets and into gold and silver.

            So, the future value of Gold & Silver will not be based on COST OF PRODUCTION, but rather due to investors moving out of FALLING ASSETS and into the Precious Metals to PROTECT WEALTH.

            steve

        • DisappearingCulture | August 10, 2018 at 9:09 am |

          I guess lower oil price could also be an “intervention” that will help consumers consume more stuff [more $ left for other things.

          • Consumers want a lower price of gasoline. If you get less finished product per barrel (falling EROI) then your feed stock (oil) would fall in value compared to finished product; demand destruction notwithstanding.

            Price is a measurement of value. But how do we perform that measurement? Labor, beads, Au, FRN?

            The FRN is the weak link in any formula. Unlike an hour or a pound, it’s not a contestant. Due to massive inflation, from every conceivable invention (e.g. deivitives), an inflection point is mathematically inevitable. FRN will short to ground, currency event, hyperinflation.

            Is housing going to crash? Very likely. Crash in relative value. Will real estate prices fall? It depends when it happens and how you measure it.

        • “I stated the oil price would fall to $12 by 2022-2025.”

          I agree with the reasoning here – always have – how about this modification:

          By 2022-2025 the oil price will fall to $12 FRN August 2018 dollars. Which could be $12-1200 FRN 2025 dollars. Meaning, due to collapsing EROI, the oil value must fall (in agreement with Hills Group). Value must and will drop; price, however, in future FRN is unknown.

  10. Steve,

    When are we going to see the moonshot??? HAHA

    Get ready ole boy Rothschild just made his warning yesterday that the NWO is at risk. WOW

    I hope you are ready. May god have mercy on our souls.

  11. Over the last few years I have been able to understand what Steve says about stocks, bonds and real estate falling, but at some point the precious metals rise in price.

    The financial assets and real estate rely on a stable or increasing economy to hold their value and a growing economy needs energy input to grow. At some point there will simply be not enough energy input to grow the economy.

    But gold and silver coins and bars have already benefited from past energy expenditures in the mining process and in that sense in a way they represent stored energy. The mining of them has already used the energy necessary to produce them, in other words, so they would potentially rise in value exponentially as the other assets fall in value due to non-availability of energy resources.

    At least that’s the way i now understand it.

  12. Richard K Redemske | August 11, 2018 at 8:29 am |

    Steve. Do you see the nationalization of the worlds gold and silver mines ?

  13. The stored energy in your silver bars is energy already spent, it becomes a write off. Now it’s only value is what you can get for it – when you sell it. Bubbles don’t really pop as much as they deflate.
    RE is already taken a hit with higher interest rates but RE is like gold, it’s a tangible asset, but people also live in it, they don’t care what it’s worth or what it will sell for. But, now investors dominate some RE markets, I believe this changes the dynamic. It’s not easy investing in PM’s, it’s a long haul investment, and for some of us it’s a hobby too. I’ve kind of given up on silver as this point, which is hard for me, but don’t mind acquiring gold instead.

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