Has this latest correction within the larger 1 year+ consolidation scared the bejesus out of you? Have you been thinking that maybe you should sell your Gold and buy Faceplant instead? Or better yet, something really safe like U.S. Treasuries? The above 2 links do a little bit of math, the first one concludes that if the Dollar were to be backed 100% by (supposed Ft. Knox) Gold it would need to be $10,000 per one ounce. The second says that with the current QE of $85 billion per month, under the original Bretton Woods plan the ratio would be $20,000 per ounce by 2015. Please keep in mind that these calculations are strictly done on U.S. money supply and not total indebtedness.
$10,000, $20,000… what’s the difference? What is the real pinpointed mathematical number? Does it really matter? In fact, one cannot even truly pinpoint a number because of total “future benefits and current guarantees”, if these were used you would be looking at a 6 figure number. But, like I just said… “Does it really matter?” All we really do know is that the “ratio” of Dollars to Gold is MUCH higher than it is currently “fixed” at now. To put it bluntly, exchanging Dollars for Gold now is like “picking money up off of the street!” Have you ever done this? Walk down the street and found a $10 or even $20 bill just laying there? Did you pick it up, look around to see if someone was close by or digging in their pocket looking for lost money? Did you feel bad because someone lost it and you didn’t know where to return it? THIS, right now is your opportunity to “pick money up off the streets” …and not feel bad about it!
With this opportunity, no one “lost” the money. No, the global central banks have been trying to fool Mother Nature since the 1944 Bretton Woods agreement and all you would be doing is taking advantage or “their” so called free market. Yes I know, the markets… ALL markets are manipulated today but what says you can’t take advantage of the situation? After all, isn’t that exactly what “free markets” are all about?
To get back to the $10,000/$20,000 numbers, are these for real? Yes, do the math yourself. Does it matter if you are “exact” in your calculations? No, not at all and in fact all you need to know is that the number is multiples of the market current price. Actually you cannot do a truly accurate calculation because the “numbers” provided by the government are probably not exactly correct AND we cannot accurately forecast what “money supply” will do going forward. Yes I know “going forward” doesn’t come into the equation for “current” value but… wait, shouldn’t it? If you knew that next year the Fed was going to double the size of their balance sheet and double money supply, wouldn’t you need to give current Dollars a 50% haircut? Of course you would. This is akin to a PE ratio where stocks trade on a multiple of expected future earnings.
No different really except that Gold had traded at a deeper and deeper “discount” to total debt and money supply from 1980 to 2001 until investors figured out the discount was too much. The pendulum has been swinging from too much of a discount and will probably not stop until it reaches the level where it fully “balances” with money and debt. This balancing act happened in 1980 and some would say also back in 1932 when it was revalued. Please keep in mind that Gold traded at “par” with the Dow Jones industrial average twice before, 1933 and again in 1980. In both of these eras, times were bad really bad. And now? Do you see “bad” times coming? Do you see bad times already here? If you don’t… you should. The Dow is now 13,000 mas o menos, can you see it go higher in a hyperinflation? Of course you can, just look at the stock markets (in local currencies) of every nation that has gone through a hyperinflation, they go down first and then POW…they exploded higher because people wanted to put their money in “something”… ANYTHING, other than the local currency that was collapsing.
So, relax and chill out. You don’t know the “real” number, I don’t know the real number… no one does. What you do know is that the real number is higher, MUCH higher and in fact multiples of where it is now. “Pick the money up off the street,” only you can do this for yourself. No one is going to bend over, pick it up and hand it to you. THIS you have to do for yourself, do it with confidence!