Q: Hey there, I’m a worker in the Alberta oil sands but live on the east coast of Canada, I worry about how the “patch” will be effected by a U.S. currency reset/revaluation as it’s so tied into the US economy as well as the rest of Canada. Also it bothers me being so far away, when I’m out at work, for my family if this were to go down while I’m away. Your thoughts please as I am a long time reader and respect your insight.
Bill Holter’s Answer:
These are different questions from the norm but very good nonetheless. First, Canada will probably follow economically the fate of the U.S. The question on oil is a tough one, does it drop in price because demand softens with weaker economies or does it strengthen as an inverse move to weak currencies? Also, being in the oil sands area, a lot will depend on their breakeven. Lower prices mean you may be out of work while higher prices may mean you are working when many others (in other professions) are not.
As for you question of “distance” from your family, you are not going to like my answer. I believe it is very possible for many areas to close outright in the midst of a reset, transportation included for a time. You are 2,500 miles from your family and cannot stock enough gasoline in a car to make the trip, if airlines, trains and buses are not running for a spell, you will be stuck. There is no getting around this possibility, you may want to keep a few ounces of gold on hand with you as a way to “pay the fare” back home. I would have the metal in smaller denominations like quarter ounces and 1/10ths as these may get you 100 to 200 miles at a time. Don’t laugh at this, Jim Sinclair has said on many occasions he will not travel without gold. Gold will “spend” when nothing else will, it got many out of Germany and harm’s way when it counted. A few ounces can probably get you across Canada when nothing else will. Hope this was helpful.
Q: Why isn’t the price of gold higher? With China purchasing 68 tons last week, Bill mentioned this is evidence of high demand taking advantage of weak prices. My first assumption was that the 2,200 tons of gold mined each year was essentially the same as the FED printing currency. But then I remembered that there is a finite supply of physical gold (I guess there is a finite supply of paper too). According to the USGS there remains 54,000 tons of gold yet to be mined. Assuming the world produces 2,200 tons per year as Bill mentioned, that leaves approximately 25 years until the world’s gold reserves are exhausted. What is keeping the price of gold so low?
Andy Hoffman’s Answer:
Actually, 2700 tonnes are mined each year, but I’m not sure I understand the connection to Fed money printing.
As for “why” gold is not higher, it’s not like China’s 68 tonnes purchase last week was an anomaly. They have been buying at record amounts for years, as has the world at large. The “reason” gold prices are lower – albeit, less so in dollar terms than other currencies – is due to manipulation. Part of this game relates to naked shorting (selling what doesn’t exist) on paper exchanges like the COMEX and LBMA, which we speak and write of each day. The other part is the secret dishoarding of Western Central bank inventory via leasing, swapping, and unreported sales. Simple math proves this to be true – much less, the reams of evidence presented by GATA, the Miles Franklin blog and countless others over the years.
Fortunately, as you note, gold (and silver) supply are finite – and all signs point to such “finality” being at the verge of being realized. Remember, we don’t “invest” in PMs, but “save” in them for the long-term. Personally, I think the “long-term” will be a lot shorter than most can imagine; but in the meantime, my metal just sits and waits for reality to re-emerge as it always does.