Gold: Expensive or Cheap, it's Rare

gold vs silver

Gold: Expensive or Cheap, it’s Rare
(World’s Gold fills 2 Pools & the New World Order, Explained)
Silver Stock Report
by Jason Hommel, November 19th, 2009

The best witty observation this week came from Bill Murphy with www.gata.org.  Bill noted the irony of how media pundits who bash gold will argue that gold is in a bubble (gold’s expensive) in one breath, and then bash it again by saying it’s a bad investment because gold has underperformed (gold’s cheap) inflation rates since 1980’s peak.  Murphy’s main point is, “how can an asset be in a bubble if it’s underperforming inflation?”  Or, as I’ll put it, how can gold be cheap and expensive at the same time?

If the gold naysayers had the capacity to utilize at least three sets of neurons in their brains simultaneously and engage in rational logical thoughts, they might perceive the contradictory nature of their two arguments, and recognize that at least one of their assumptions might not be true.  In other words, gold can not be in a bubble now.

Therefore, gold must be cheap, which is why it’s good to buy as an investment, since investors should want to buy cheap things that have underperformed inflation, which then, later, after buying it, it should then outperform inflation, as gold has been doing quite easily since 2001.

It’s also dizzying to hear other gold bashers claim that “There is no inflation, and thus no reason to own gold.”  What?

Well, that’s fantastic to hear, because that must mean that all of gold’s recent gains from $250/oz. back in 2001, to $1145/oz. today, must be all pure profit, showing that gold’s recent 8 year performance is clearly outperforming inflation.

So that brings me to my main point that I’ve been asking for years.

Why are people happy earning 1% or less in their bonds, when gold has been going up so much for the last 8 years?

How much has gold gone up, on average, per year?

My favorite online compound interest rate calculator does the math.

http://www.smartmoney.com/compoundcalc/

From a $250 initial investment to a $1145 final amount, over 8 years, gold provided a 21% per year average rate of return.

So, which is better, 1-4% in bonds or 21% in gold per year?

You only need half of one synapse firing in your brain to recognize the clear answer to that question.

In case you were not paying attention, 21% per year in gold is better.

If you don’t own gold (or something better like silver) by now, after 8 years, you have not been paying attention.  So, if that includes you, then pay attention to the following.

I’m shocked to hear people think that higher interest rates will slow down this gold bull market.  Do they think that interest rates will exceed 21% anytime soon?

Wouldn’t 21% interest rates bankrupt many public companies who would not be able to refinance their debt, and thus destroy stock values, driving many to zero?

Wouldn’t such rates crush the housing market, as nobody would be able to afford a 30-year loan at 25% interest?

And wouldn’t the transition to such high rates destroy the bond market, as bond values move inversely to interest rates?

Wouldn’t 21% interest rates cause the national debt to increase so fast that they would have to print money to pay the interest which would further destroy the currency at those rates if not higher?

And if stocks, housing, and bond values and the currency are all cratering to zero, wouldn’t the only place left to put one’s assets be gold and silver?

Gold will thus be in a bull market until AFTER interest rates exceed 21% again.

I think it would be wise to assume gold prices will continue to increase at much higher rates going forward, because the gold price has been manipulated lower during this recent time frame, through central bank sales and leases, and the sales of many fraudulent paper gold products (such as “gold pool accounts,” allocated and unallocated accounts, certificates, and futures and options) which divert investment demand away from the real thing.  But when the manipulation ends, through recognized defaults, the gold price will go much higher, much faster.

Why is gold doing so well?  It’s rare.  It’s not created as easily as money on a printing press.

Pay attention now, gold is rare.

How rare?  The World Gold Council at Gold.org has estimated all the world’s gold that has ever been mined at about 155,000 metric tonnes.

How much is that?  We need context.  It’s said that this much gold would fit into two Olympic sized swimming pools.  Let’s review the math on that.

“Will all the gold in the world fill 2 Olympic sized swimming pools?”

http://en.wikipedia.org/wiki/Gold

Density of gold: 19.30 g·cm-3

http://en.wikipedia.org/wiki/Kilogram_per_cubic_metre

1 g/cm3 equals 1000 kg/m3

thus:

19,300 kilos per cubic meter for gold

http://www.google.com/#hl=en&source=hp&q=troy+ounce+per+kilogram&aq=0&aqi=g1&oq=troy+ounce+per+kilo&fp=8ec9ea851cee2c5b

1 kilogram = 32.1507466 troy ounce

620,509 troy oz. per cubic meter

1 tonne = 32,150.7466 troy ounce

19.3 tonnes per cubic meter, acts to check and prove the “kilo per oz.” and “tonne per oz.” math is correct.

19,300 kilos = 19.3 metric tonnes per cubic meter.

155,000 tonnes of gold mined in all of human history
divided by 19.3 tonnes per cubic meter,
equals 8031 cubic meters!

Volume of an Olympic Swimming Pool?
http://hypertextbook.com/facts/2005/JeffreyGilbert.shtml

25 meters by 50 meters by 2-3 meters deep
= 25 x 50 x 2.5 = 3125 cubic meters

8031 cubic meters / 3125 cubic meters = 2.57 pools

Thus, all the gold in all the world, ever mined in all of human history, will fill 2.57 Olympic Sized swimming pools.

Since the depth of an Olympic Swimming pool can be deeper, and since the 2-3 meter depth is a minimum, all the gold in all the world would easily fit into two slightly deeper than normal, Olympic Sized Swimming pools.

==========

The story of Tungsten Filled Gold bars continues to circulate.

http://news.goldseek.com/GoldSeek/1258049769.php

http://fofoa.blogspot.com/2009/11/is-dollar-good-as-tungsten.html

http://www.gold-eagle.com/editorials_08/willie111809.html

I believe I remember reading somewhere, probably at www.lemetropolecafe.com, that central bankers tried to get all the central bankers to agree to keep central bank gold among central bankers, prior to the beginning of their leasing scams.  If so, that would be the ideal conditions to float tungsten filled gold bars into the central banking network who would agree to never melt down such bars for public consumption.  Looks like some leaked out.

==========

I believe silver is better than gold, of course.  Not only it is more rare, but also, likely, more real.

Most silver has been consumed by industry over the last 60+ years, and is not economically recoverable, ending up in landfills at concentrations lower than most mining projects.  Thus, men such as Ted Butler, who have researched the subject thoroughly, believe that silver, in above ground refined form, is more rare than gold.

See
http://www.butlerresearch.com/index.asp

==========

The New World Order silver round appeared on the Jack Van Impe Ministries TV Show.  They seemed to find it alarming.  We emailed them to explain our theological interpretation.

http://silverstockreport.com/2009/nwo.html

On the show, Jack admitted he “re-thought” his prophetic views on the ten horned beast of Revelation 17-18, and now thinks it is a world government based on all the scriptural evidence, and also based on the views of several early Church Fathers.

You can see the New World Order round on TV here:

http://www.jvim.com/tv/
(MP4
file)
See the Nov. 7th episode, 6 minutes into the show

I strongly advise you to get real gold and silver, at anywhere near today’s prices, while you still can.

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