While doing an interview a few months back with Turd Ferguson at www.tfmetalsreport.com , he made the comment “gold has never been more valuable than it is today”. This is so true and correct, I’d like to break it down into small pieces because from a historical standpoint there is no comparison to where we are today.
OK, I guess it would be best to first clear the air and address those who will say Turd’s statement is wrong because they paid $1,700 for their gold and are sitting on “losses”. Yes, from the standpoint of what gold will “fetch”, gold is “down”. Were you to sell it today or barter for a piece of real estate, it will take more ounces today than it would have two or three years ago. I get it and am not a stu-nod.
The key word in the statement is “valuable” with the root word being “value”. The other key word is “today”. I bounced writing this piece off my mentor and he said “very good quote but I’m not sure it is true”. He went on to the examples of France just prior to the Revolution and to Germany prior to and during WW II. This is very true if you were French in 1790 or a Jew living in Germany but …like the snotty kid in grade school who likes to correct his teacher, I pointed out the obvious. In these two examples, only were the French and German Jews affected. Today, everyone on the planet will be affected one way or another because the dollar’s global pervasiveness and reach. As for “value”, the key is to retain value. Gold is THE only money all throughout history to have done this. Gold is THE only money on the planet that cannot default and THE only money which cannot be debased (though this has been attempted 24/7 by central banks forever).
Digging into this deeper, even with many countries trying to distance themselves, the U.S. dollar is still a more widespread and all engulfing reserve currency than any before it (with the exception of gold). The dollar is held as “reserves” in central banks and sovereign treasuries all over the world. A “change” in the dollar for better or worse will directly and indirectly affect more countries, more institutions and more people than any previous reserve currency. We live in a world where everyone is “in bed” so to speak with everyone else. We live in a world of instant information made available by computers to any and all locations on the planet so a hiccup anywhere in the world will circle the globe in less than 24 hours. My point is this, how long would it have taken a devaluation in Dutch or Spanish reserve currencies to be known and understood 300 or 400 years ago? The answer is YEARS rather than minutes or even seconds today.
The point Mr. Ferguson was trying to make is the current scenario is fraught with more risk (and not just financial) than any time all throughout history. Dollar (reserve currency) risk? Yes of course, but the truth is, it’s about “risk” in everything. Never before has the entire world been as levered as it is today. Never have central banks been more levered than the grossest and most bloated financial institutions in the world. Never before have scores of sovereign treasuries been collectively insolvent as they are today. Never before have bond prices been so high, yields so low and financial ratios so poor. Collective PE ratios and “rent to price” of real estate have never been where they are today. Derivatives never existed and the “rules” were never changed to the extent they are today. Think about it, have banks ever before in history been allowed to suspend real accounting mark to market or not report losses due to “national security”? Please do not tell me this was common in communist regimes because they no longer even exist, they have already failed and were not the center of anything. The Soviet Union went down the path of falsely reporting economic numbers, bending reality and living under “laws” that applied to some but not others, where did it get them?
If you understand this very basic premise, “risk of everything” has never been greater than it is today then you understand the phrase “gold is more valuable today than ever before”. Think of it this way, if you absolutely knew 100% that an unstoppable forest fire or flood was going to strike your house, how “valuable” would your fire or flood insurance be? Would you be upset if you paid your premium and it took longer than a year for the fire or flood to arrive? Would you ever cancel your insurance policy at the end of the year, (still knowing a disaster was coming) and scoff at it while saying “I’m not ever doing that again, I lost money”?
Do you see? Mathematically, our fiat currency system will fail. Mathematically, the current system of “debt equals growth” will fail. This is not “Bill Holter’s opinion”, this is fact because it is math! In the above hypothetical flood or fire, they can never be known 100% in advance. This is not so with our monetary system. The way our monetary system is set up we CAN know with 100% certainty it will fail, we just don’t know “when”. It is the “when” part that has people so discouraged. I am here to tell you it does not matter “when” this happens, what matters is whether you have your monetary insurance policy in place …or not.
We know the central banks have every motive in the world to suppress the price of gold. We have seen several times where 50% of global gold production has been sold in less than two trading days, it is clear that actions have been taken to suppress the price. Can we do anything about it? Will “regulators” do anything about it? Of course not. However, if you understand this risk of financial collapse has never been higher than it is today then you then you know your insurance has never been more necessary or valuable. This risk will ultimately be borne out in the failure of what we use as money. If you are a student of history and understand what has acted as “financial insurance” time and time again throughout recorded history …then you understand what is meant by “GOLD HAS NEVER BEEN MORE VALUABLE THAN IT IS TODAY!”. This is not rocket science, chart mumbo jumbo or opinion, this is 2+2=4 logic, defy it or try to time it at your own risk!
Hi Bill,
I agree that gold is valuable but IMHO it is silver that is the most valuable. It seems very odd to me that everyone and mean everyone is talking about gold and almost no one is discussing silver. It’s almost as if everyone is being herded and the TPTB want demand to go into gold and away from silver. This tells me gold supply is still available and the silver supply must be extremely tight. I personally believe one should own both metals but it will be silver that breaks this thing wide open. Thanks for all you do.
agreed.
My issue with silver is portability. Unless it gets up to near gold in $ per oz (some people say it will, at least for a short while), then if SHTF it’s kind of hard to throw your net worth in your pocket and flee. I also like platinum since it also has industrial uses and apparently only Russia mines it, but it is similar to gold in $ per oz. Being a lesser known PM and also an industrial metal, it also may avoid attention after the collapse and fall under the radar of draconian rules imposed to make it difficult for gold holders to realize their worth. For me though I think it’s good to have all 3.
you could put the words “precious metals” in place of gold for this article.
On behalf of the boys at TF, thank for plug! 🙂
Turd is a great guy and very smart. I apologize I messed up the link on the original send, it is http://www.tfmetalsreport.com
gold bugs may be a <1% minority, but we got allot of sharp minds in play, and that's a good thing. Turd, Holter, Andy, etc, meh, these guys are so ON IT!!
Another excellent article, Bill.
I’ve decided to take a novel approach towards the US regulatory agencies’ incompetent attempts to “regulate” the PM market.
To wit: what if they are NOT incompetent? What if they are beneficent entities simply keeping the insurance policy low to allow more individuals to get “insured” against financial collapse? If I think like that, I don’t have to be disgusted with the whole damn bunch of them, and I can sleep at night “knowing” they are looking out for my best interest!
I figure that if I’m going to hide my head in the sand, I can at least do the right thing at the same time…
good thinking! …I think?
Bill, There is a mathematical certainty that the sun is going to burn out. That is the flaw in “our” argument. We just do not know when (I am referring to the price of gold as insurance). Now we are looking at gold perched right on the $1200 shelf with the payrolls number almost always destroying the price for the past few years. That is “our” or I will say my flaw. Being certain of an outcome but not thinking through the when and ignoring other investments. I never saw that I would be in this spot today with stocks at an all time high. I never ever ever thought the dollar could be where it is today.
which will burn out first?
“then if SHTF it’s kind of hard to throw your net worth in your pocket and flee”
IMO one’s location has the same value as Bill attributed to gold (PMs) in the above article.
One needs to have PM needs in hand NOW and one should be NOW where one needs to be after the SHTF.
Value….what is value? Gold at 1,200 or 10,000 has the same value, but utility, now that’s a horse of a different color……
By the way Bill, have you seen my horse? He got away last night. He’s a bay with 3 stocked legs, 2 on same side and 2 on same end.
if I see him I’ll let you know.
“One needs to have PM needs in hand NOW and one should be NOW where one needs to be after the SHTF.”
Agree and I am in a pretty good location (not the USA) but if things go really bad, as in nukes going off in major cities, you don’t want to be anywhere near civilization. If anyone will survive, it will be me. Luckily, my whole family including inlaws is on board (my brother in law actually was into this stuff years ago when I was towing the MSM line and thought he was wacko).
I am great at wilderness survival and I’m in the process of getting a 25′ speedboat and I live right at the edge of the Inside Passage to Alaska, so if SHTF I’ll load her up with all the gear, hundreds of gallons of fuel, PM’s, and say goodbye to the carnage to the south. I’m pretty lucky I think to be where I am. I think it’s always a good idea for people to be adept at wilderness survival, you never know when you’ll need it.
stay warm!
Bill,
A hit out of the park with your so true article.
I just can’t believe that Warren Buffet doesn’t take his father’s view on gold as Warren states his father was his hero.
And of course Ben Bernanke wants you to believe that the paper money is superior. I hope old Ben believes his own bullshit and does not own any gold so when the ponzi paper currency goes to zero he will be screwed, but I personally believe old Ben really owns more gold than we realize. Old Ben just wants main street American to get screwed; not him.
And what about those Chinese buying pretty much the world’s gold production annually. Throughout history the Chinese have been shown to be very wise.
I’m putting my money on the Chinese and not Old Ben or Warren Buffet.
And finally for the Christains that still have their head on their shoulder, the Bible is very clear to what money is, which is gold and silver. I can’t find mention in the Bible of paper money, the stock market, etc.
The central bankers can keep their so called money (i.e., monopoly paper money) as I believe the Bible has it correct.
We were taught to “think for ourselves” in school in the 1950’s. Today it seems “Common Core” teaches the kids to let the government to do their thinking for them. I’m not letting any government that has 18 trillion in debt and 230+ trillion in unfunded liabilities do my thinking for me.
Well time to go see what truth (really bullshit) the MSM is trying to sell today (not really, going to take a nap).
I think Buffett does truly know.
“GOLD HAS NEVER BEEN MORE VALUABLE THAN IT IS TODAY!” : that’s not the commuy guy who decides that, that’s wall street guy…
I give up on you, you do not get it. Spam Spam Spam.
You will be right for sure one day, but when…
Mr. Bill,
I’m beginning to think “RD” above enjoys pulling you chain for the heck of it, or if not, his IQ is can not be measured.
I think he went off his meds.
RD – Email him a can of SPAM (Hormel) every time his mouth is open. The grease will soon run out of the goose!!
good’ern Rich!
Bill
If even half of Yamashita’s Gold was really in the Philippines it undoubtedly still exists somewhere on earth. This would mean there is probably one hundred times more gold above ground than silver ore. Gold mines go deep into the earth and so there is undoubtedly much gold a mile or two deep that has not been located. Silver is found close to the surface of the earths crust, where men have been able to search more easily.
Gold may be as valuable today as ever in history, but silver’s value due to scarcity and new uses will put it into orbit well before the Sun burns out. Or sooner when the Feds have to loosen the straight jacket control.
Bill, how much is enough? Will $100k be enough insurance for the average middle class family or 200k or 50k enough? Not looking to make a buck, just want to make it to next system intact. I heard 10k in gold should protect 100k of dollars during a reset
whatever amount you start with will carry over and and be your capital for a fresh start. The “amount” all depends on your net worth, 10% is an absolute minimum in my opinion.
100k in pm’s I meant to say
PM’s come in ounces amigo!!
Aye, I now think of even my wages as: (X)OzT Ag/hr.
good idea.
Hi Bill
Hopefully you meant “net” worth not “bet” worth !
Not really a “bet” more of a sure thing but that is only my opinion.
keep up the good work
yes Nick thanks, I have corrected the typo. (“b” is the key next to “n” on the keyboard)
No risk. The ONLY risk that owning physical gold carries, is the risk of having it stolen. There is NO other asset known to mankind to carry such a degree of risk, as none.
The “value” of gold will NEVER fall to zero. There is zero third party risk in it’s physical ownership. Period.
At one time in history, silver was more valuable than gold, because of it’s rarity. This situation has been developing again in the world. As recently as 40 years ago, the US held a very large physical silver stockpile, as did other countries. This is now all gone. Used up.
Scientists have predicted that silver may very well be the first element listed on the periodic table, to go extinct! There simply is not enough physical silver to nearly cover the amount of “paper” silver sold. Physical silver is a tiny market compared to that of gold.
This is what absolutely terrifies central bankers. That the price of silver will “get away” from them and in doing so, will show the world just what the paper fiat world is backed by. Empty promises and full faith, when all faith will be lost.
Very astute.
Gold is a sapling, silver is an acorn.
Lately, “the gold price” has been falling against EVERY currency, more or less…
How is this possible? All I can surmise is that physical gold must be absolutely FLOWING from west to east now…
…until it doesn’t.
A brief and pointed explanation of the term, “More Valuable Today.” The plain common sense reasoning is overwhelming to even the most casual observer. A timely and prescient observation. Thank you Mr. Holter.
thanks Andrew.
Just another PM pushing article. Silver price is down OVER TWO-THIRDS since 2011.
I bought nearly 100K of silver in 2011 and I was “lucky” enough to purchase at 15% below spot during that time but I have watched silver lose OVER two-thirds of its value since. How in hell can you call that “financial insurance” or “wealth presrvation”? And I don’t want to hear the ridiculous reply of “you don’t lose money until you sell.” because you have to sell sometime AND when you have to you will pay a heafty fee to sell it.
if you bought 15% below spot you should check to make sure it was really silver that you bought? If you do not understand why you bought it or why should own it now then …maybe you should sell it?
Perma Bulls are dangerous to your wealth….
Read Martin Armstrongs blog for what’s really going on and why these perma Bulls are wrong for so long but can’t admit it. You are quite right in your assessment about gold and silver as wealth preservation. There is a time and place for everything, these guys are telling you where they THINK gold should be according to THEIR fundamentals….which are hugely lacking. Once you read Armstrong for a while you understand it’s much more complex than these guys can ever imagine. Gold and silver still have a ways to go….DOWN. These guys have no idea…so they cry manipulation. If that was so how could Armstrong possibly factor in that manipulation from years ago and still get it right? And yet these people have berated him for being right on the money and still worship Sinclair who has been dead wrong all these years! AND as I warned here a month or so ago when Sinclair AGAIN called the bottom at $1175 it was a bearish signal, here we are at $1168 AND FALLING! Don’t fall for the perma bullS…
manipulation is not “theory”, it is fact.
As Armstrong explains there has always been manipulation With the trend in all markets but it is impossible to systemically manipulate the trend for years on end, which is what you and others are saying. If this was possible why did G.S and JP Morgan, among others, require bailouts after 2007? If they have so much power why do any of them need a bailout? If you beleive they can push and pull the price anyway they wish why would you promote owning the metals, especially after calling it so wrong for so long? Why do you disparage the writings of one who has been spot on in his calls for a gold correction and who has more experience on a world wide level than most commentators combined? There are perfectly logical and sequential reasons for gold, silver and other commodities to be dropping against the dollar…and the dollar rising against them. The manipulation is within the trend, it doesn’t dictate the trend. That’s a cop out. One day the trend will reverse back up and you will proclaim vindication, just as the proverbial clock is right twice a day, but the truth is you’ve missed a huge move down and the chance to profit even more on the way back up…so who is really manipulating whom and who is profiting from such manipulations? The gold sellers!
so selling 50% of global gold production on the COMEX in 36 hours with less than 4 day’s worth to deliver is not proof enough? The manipulation has “forced” the trend, not gone along with it. Even Paul Volcker admits it was a mistake in the late 1970’s for letting the gold trend “get away from them”. This is where you and I differ. We will see how it all shakes out in the end.