Let’s have some fun today! For a change of pace I thought it a good idea to think way outside of the box and write about something that isn’t possible and wouldn’t really matter even if it was true. I’ll finish with my wife Kathy’s latest portrait of her son Jason at the bottom of the page.
Recently a question was posed to me by a reader, a really crazy question! He asked regarding the fact there has been no audit of U.S. gold since 1955, “what if the reason they refuse to audit the gold is because we have much MUCH more and they don’t want anyone to know?”. At first I just laughed and responded with a flippant answer, but then it dawned on me, would it even matter? Let’s break this down in several pieces and then make further assumptions to see if it would really matter.
First, the U.S. claims to have 8,400 tons of gold. For simplicity let’s call this amount rounded as one third of a trillion dollars or $350 billion. Let’s assume the vaults are actually bursting and have 3 times the amount of gold claimed. This would mean there is a nice round number of $1 trillion worth of gold sitting in the vaults. Would this amount “matter”? Would really and truly having “$1 trillion” mean or change anything?
Think about where we have come from and what has been done over the last 6 years to keep life as we know it going. The Fed has increased their balance sheet by well over $3 trillion while the Treasury has borrowed some $8 trillion more. You might also remember the Fed “secretly lent out” some $16 trillion all over the world and mainly to foreign entities. This was discovered in 2011 I believe, it was a shocker at the time but “oh well”, it means nothing now. My point being, in just the last 6 years, the Fed and Treasury have printed and borrowed over $10 trillion, so no, $1 trillion in the vault is no big deal.
But wait, “this is gold and not dollars” you say? Well yes, it is gold and we do know it can be pegged in price. If it is pegged too low, demand will outstrip supply and if too high then supply will come in to the bidders. Yes, there is a huge difference between sitting on $1 trillion worth of dollar bills and $1 trillion worth of gold, we can touch on this shortly but first let’s do a little more math. We have had several individual years where our fiscal deficit was over $1 trillion, so our 25,000 tons of gold would have already evaporated many times over. Let’s make another assumption that the rocket scientists in Washington D.C. decide to pull a “Roosevelt moment” and mark up the price of gold (since they have so much).
Let’s assume it is decided to mark gold up to $10,000 per ounce, what would this do? The flat out answer is “very little and certainly not enough”. Even if we truly did have three times the amount of gold we claim to have AND marked up the price nine or ten fold to $10,000, we still only cover the lunacy of the last six years! If we look at the big picture of Treasury debt and the Fed’s balance sheet combined, we are only halfway there. Looking at the entire picture which includes all debt and future obligations, the number is a staggering $200 trillion. This humongous stash of 25,000 tons of gold, priced at $10,000 per ounce is only equal to 5% of total current and future obligations!
Do you see what we just did here? This was a backdoor way of displaying how ridiculously cheap gold is currently compared to all of the debt that’s been underwritten. Yes I know, there will be those who say “Holter, you are an idiot. It doesn’t matter what the price of gold is because it’s not money anymore”. Really? (not the idiot part, the “money part”). Gold IS money. Yes, our government says it is not and does not want you to believe it is money …does that change the fact? Let me point something out to you, China believes gold is money, many other nations believe gold is money, can the U.S. “legislate” to foreigners? Foreigners are already “voting” their beliefs and pocketbooks by purchasing all the gold the world produces and quite a bit more.
To wrap this part up, let me just say that no, pigs do not fly unless they are in an airplane and no, the U.S. does not have more gold than we claim to have. Common sense tells you the gold supply and demand deficit has had to have been supplied from somewhere. This “somewhere” is obviously where the gold had been stored. ONLY the West, led by the U.S. had massive hoards of gold large enough to supply 1,000’s of tons of annual supply deficits. ONLY the West, led by the U.S. has had a motive to supply these deficits to support the value of the dollar and to depress the price of gold. Yet, all we hear from the U.S. when the topic of either the Fed or our depositories being audited are three things, either crickets, an audit is too expensive or “trust us”. As for the “too expensive” part, I think we can equate this to last year’s 5 tons of German gold… they didn’t get more because of transportation logistics. How funny!
As promised for several months, below is Kathy’s latest finished portrait, “Commanding Presence”. Forgive me if I sound like a cheerleader, I am her biggest fan! For those who have not followed my work and don’t know, Kathy now has a whopping two years of experience. She had never ever painted anything before and was basically self taught until last April when she began lessons once a week from a master portraitist. This portrait of her son Jason is her 5th portrait ever. Kathy plans to enter this in several national as well as international competitions.
I have never before seen in any occupation a learning and improvement curve similar to what she has done. She’s gone from zero to crazy good in only two years! Hopefully this particular portrait will win recognition in one these contests because of the “story” behind it. She will be competing with lifetime and internationally known artists. Any type of win amongst this type of international competition will be unheard of from someone of her experience.
Her website www.KathrynHolter.com is now up and still under construction, she can be contacted via the website should you desire a portrait done.
I hope you enjoy this portrait, I will enjoy her next one… for my birthday we did a photo shoot with my amigo Principe’ and got a fabulous shot I’d like to call “Hi Ho Silver!”. “Nothing doing” she said, it will be called “Rarin’ To Go!” because she hears the words silver and gold too often living with me!
Please click on the image if you have dropbox and I urge you to expand it as much as possible because the detail is AMAZING!
Commanding Presence
Hummm,,,,,I guess size does matter.
the portrait is nearly life size.
Actually I was responding to the article and still admiring the portrait.
Very nice work Mrs. Holter and most difficult to work with angle lighting.
You captured the minute details of the shadows perfectly. Very impressive, I think you can quit you day job.
Kudos to your wife on her artistic abilities!
She is really, really good (but, of course, she knows that and doesn’t need my approval).
thanks, she only has 2 years experience and will accept any and all compliments!
Enjoyed your column as always. Your wife is one talented woman!
a prodigy!
That is amazing,wow
every piece is a giant leap, this was only her 5th portrait if you can believe that!
Is Martin Armstrong crazy?
…he does not believe gold is money, “dollars ” are.
Bill, she is amazing. She is very talented because I am having trouble believing that is not a Photograph! The two of you are an amazing couple. Beauty, brains along with talent. My Mother painted & found it so relaxing & rewarding. So glad your wife discovered her talent because she is downright AWESOME! Simply Amazing!!
thanks Patricia. I went out downtown one night and asked people to look at the picture on an IPhone and tell me whether it was a photo or painting. 1 person out of a dozen said it was a painting …because he was an artist and looked at the background!
Wow. Your wife is good. Great portrait.
thanks Brad.
Love to see Hi Ho Silver {;=) when she’s finised it Bill.
Your wife is truly professional.
mark
thanks Mark, maybe in two months.
I agree with you Bill, it doesn’t matter how much gold the US has in the current financial system, but when it gets remonetized it will. But there may be something to the claim that the US has more gold than originally thought. They could have been accumulating over the last few decades when demand was low, in anticipation of the events we are going through. This may be why the scheme seems to be lasting longer than the math suggests possible. Not saying if this is true or not, just saying that it might be a possibility.
demand was not “low”, it has exceeded supply for at least 25 years.
Oh I wasn’t sure about that. I thought maybe in the 80’s and early 90’s when people weren’t very interested in it, supply may have exceeded demand.
possibly in the early 80’s after the peak in price but not since then.
May NATO invade Greece to enforce EU debts?
really?
Lovely to see Kathy’s portrait of her son. What a wonderful work and you are justly proud. Kathy has a similar story to a friend of mine (won a major art award after struggling with overcoming a learning difficulty to learn how to airbrush). Kathy might like to check out Wendy’s website http://www.slowhandart.com
Keep up the good work! Both of you, in your respective fields!
your friend does excellent work!
hi bill. i have been a long time “lurker”.
am a 100% gold and silver maniac.
i couldnt resist logging in for the first time ever to ask you to pass on my huge congratulations to your wife.
i zoomed into the downloaded portrait. unbelievable detail. very impressed … kev
thanks Kev, I will pass it on to her. The eyelash shadows and beard freaked me out when I enlarged the picture 600%. Please feel free in the future to comment, and welcome aboard!
What a gift you wife has ! She may also try still life, it fits perfectly this hyperealism art.
Very impressive especially when beginning as an adult.
Bill,
Your wife surely already this organization but they are making some promotion and competition on art realism :
http://www.artrenewal.org/
It looks like 1280 is their new line in the sand : nothing above.
this is the biggest competition she is entering, she has no expectations to win anything but it’s the type of art she is striving for. $1,280 may be a line in the sand but it will fall.
It will fail someday but first 1000/1050 or even 850/900 may be seen before 1300 or a little more again.
really? How do you know?
I do not know it is just a real possibility. I should have used might instead of may (sorry for my poor English).
she has done still life and has a rose in competition right now. She does portraits now as nothing else is challenging enough!
Very talented Bill.
I just recently bought my first two original pieces of work and both are done by female artists.
On another subject. This morning PMs are under attack again and at this point I now simply see the effort as laughable…
Do these people not understand that the jig is up. Soon the East will cause PMs to go through the roof.
I see zero evidence that the USA and Canada are increasing their holdings of PMs.
To see more gold sold in 1 minute of the paper market than what a major producer mines in one year is nothing short of a joke.
How stupid do they actually think we are….
very stupid!
Soon ? How do you know ?
This morning the Canadian Foreign Affairs Minister is resigning.
What has really motivated him to do this at this time is the question that I would like an answer to…
Regardless of his true reason…his timing to get out of Dodge is likely very good.
In my mind the person that resumes his role will need to have broad shoulders.
whoever resumes his role will be the bagman.
Holy Smoke Bill that picture almost looks real. If you did not say it was a painting I would have thought it was a from a camera. Nice work. Wow!
hyper realism!