Gold Prices must go up! A lot! Gold Prices must go up! A lot!
Why?
Paper money is fraud, and paper money growth
has been tremendous.
M3, which is a measure of money in U.S. banks, was
last reported at over $10.3 trillion as of March 2006,
and is no longer reported.
The dollar, which is said to be a unit of account,
no longer has any accounting, and those who print it,
are accountable to no one!
So let's do some counting!
Central banks are running short on gold, and are starting
to buy gold again.
Currently, the U.S. (officially) has 261 million ounces
of gold.
If U.S. money, M3, were backed by U.S. gold, there
would be over $38,314 dollars for every
one ounce of gold!
The total value of all the paper money and bonds in
the world is about $100 trillion, and all the gold
ever mined in all of human history is just under
about 5 billion ounces.
That’s $20,000 per ounce!
But world central banks are running out of gold,
and some are starting to buy gold, such as Russia,
China, South Africa, South Korea, and more!
The central banks claim to have about 30,000 tonnes
of gold, but they may have less than half of that,
as most has been lent or leased into the market
over the past ten years.
In sum, at $700/oz., there is about $3.5 trillion
dollars worth of gold in the world, but there is
$49 trillion worth of bonds, and $40 trillion worth
of paper money!
So, bonds and paper money must go down,
and gold must go up!
Gold is money, because of its fundamental nature.
Gold is money because it is liquid and easily tradable,
with a narrow spread between the prices to buy and sell
(about 1%).
Also, gold is easily transportable, because it has a
high value for its weight.
This makes gold an excellent medium of exchange.
Gold is money because it is divisible, you can divide
it into coins, or re-melt it into bars, without
destroying it.
Also, gold is fungible, where each unit of .999 fine gold
(99.9% pure) is similar enough to another unit so as
to be easily interchangeable.
Gold is also nearly impossible to counterfeit, as genuine
gold is easily recognizable. When measured by weight,
gold is easily countable, and verifiable.
These properties make gold an excellent unit of account.
Gold is money because it is a great store of value.
Gold is not subject to decay, rot, or rust.
Gold has an intrinsic value, because it is rare,
highly coveted the world over, and is a luxury item.
Here's why silver is a better investment than gold...
Silver has all the same monetary properties of gold,
and more!
The historic price ratio of silver to gold shows that
about 10 ounce of silver would buy one ounce of gold,
a 10:1 ratio. Recently, the ratio is about a 54:1 ratio
(with silver at $10.70/oz., and gold at $578/oz.)
(As of September, 2006).
As the silver to gold ratio returns to historic values,
you may make over 5 times more money investing
in silver, instead of gold!
Silver prices may rise to exceed the 10:1 ratio,
for the following reasons:
Supply is price inelastic.
Higher prices may not cause increased supply (production).
Why not? Because most silver is produced as a by-product
of mining gold, copper, zinc, or lead.
Thus, higher silver prices will not substantially
increase the amount of silver mined each year.
In 1980, when silver prices went up to $50/oz.,
less silver was mined than in 1979!
Demand is price inelastic.
Higher prices may not cause reduced demand (consumption).
Why not? Because most silver consumed by industry
is used in such tiny quantities in each application,
such as in film or electrical contacts, that rising
silver prices will not easily slow down the growing
industrial demand.
Additionally, as paper money continues to fail, people
will buy silver and gold without regard to price, or
they will increasingly buy simply because prices
are going up!
Almost all of the silver produced by the mines each
year is consumed by industry, which leaves little to
no room for substantial investment demand.
The tiniest bit of investment demand will drive
prices sky high.
Silver mines produce about 650 million ounces of
silver each year, about 200 million ounces come
from scrap recycling, and about 100 million ounces
used to come from investor selling, or government
selling.
That's a total of about 950 million ounces. Of that,
about 42% is consumed by industrial use, about 28%
consumed by jewelry, 20% consumed by photography,
5% consumed in coins and medallions, and that's 95%
of total available silver each year!
This implies either a "surplus", or "investment demand",
of about 5% of the total, or about 42 million
ounces--for 2004.
Due to silver use, or consumption, lasting decades,
silver may now be more rare than gold, in above ground,
refined, deliverable, forms.
It is estimated that there is about 300 million ounces
of silver available to the market at the present time.
There are about 125 million ounces of silver at the
NYMEX, the big commodity exchange in New York.
(As of April 5th, 2006)
Each silver contract at the NYMEX is a promise.
There are too many contracts, too many promises to
deliver silver that may not exist.
Each contract is for 5000 ounces.
There are often over 175,000 contracts for 5000 ounces,
that's a total of 437 million ounces of silver, promised
to be delivered. Yet the exchange has about 1/3rd of
that in real silver.
How can they promise to deliver more silver than exists?
If they fail to deliver silver, according to the promises
and contracts that they have made, then confidence in
the world's entire financial system may collapse.
Industrial users of silver may have to shut down
their factories.
To prevent this, the users will bid silver prices
much higher.
Due to the risk of default in the silver futures contracts,
I suggest that you avoid buying futures contracts,
avoid options, and avoid storing your silver with
anyone else!
Despite silver's intrinsic properties as money, silver
began to lose its status as money starting in the
late 1800's, as nations stopped using silver, and
started using only gold as money.
Over 100 years of this "demonetization" has caused
a serious drop in silver's value, and this trend is
about to be reversed as investors learn about silver's
intrinsic properties (and market fundamentals) again.
The Silver ETF (exchange traded fund) has created
significant investment demand (about 100 million ounces
in the first four months) into the tiny silver market,
and now, many funds with hundreds of billions of dollars
are able to buy silver for the first time.
In the end, if paper money fails completely, the neglect
of silver’s use as money will be over.
Once again, silver will be valued based on other
measures of value, such as a day's wage, or a ratio
to gold. If silver exceeds its historic value, as
I expect it will, due to the scarcity, from its
importance in electronics and photography, then
perhaps a silver dime, silver quarter, or
silver dollar’s worth of silver will be worth far
more than a day's wage, as it once was.
How high will silver prices go? You do the math on
what a day's wage should be, and you tell me!
Will people be hurt if silver and gold prices rise?
Not for you if you own some!
But also, honest weights and measures used in
commerce produce prosperity for all of society, not poverty.
But you must act to benefit from this information.
Don't wait for silver to rise before buying it.
Silver prices could rise by over $20/day to exceed
$100/ounce at any time if large funds or billionaires
buy with desperation.
Surprisingly, most large, well-known, major
silver stocks are overvalued!
But certain stocks in small companies who explore for
silver may rise much faster than silver itself!
Some silver stocks could rise as much as five or ten
times more than silver alone!
But prices for silver stocks are volatile, changing
often--and that creates even more profit opportunities,
by Jason
https://www.franklinmining.com/Projects/HardRockProjects/CerroRicoPalivariIIAlternativeIIIBolivia/tab....
https://www.investorshub.com/boards/board.asp?board_id=2957
https://www.investorshub.com/boards/board.asp?board_id=5406
God Bless
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