Why no talk of $32,567/oz ?
Jason Hommel
What I learned at the San Francisco Gold Mining and Precious Metals Conference on Dec. 1-2, 2002:
I have been diligently studying the precious metals
markets through the internet and books for five years now. I've written
a few articles, trying my best to explain my understanding of the
fundamentals of the gold market.
But Dec. 1-2, 2002, was the first time I attended a
precious metals convention. It was a unique and incredible learning
opportunity. Reading the works of others is just not the same as being
able to question the authors in person. I already knew of several areas
where my views differ from many gold experts, which is why I have
already written on those subjects. The question I had was why virtually
nobody is saying the things I wrote about two years ago with my first
article for GOLD-EAGLE.com. I found my answer, and it's worth knowing,
because it helps to understand both where we are headed, why so few
will speak of it, and why my analysis is sound.
But first, I need to lay the foundation for why I
say a rational dollar price for an ounce of gold is $32,567/oz.
I think it's very important for precious metals
investors to know where we are headed so they don't exit the gold
market too soon. I fear the most for those who consider themselves
"long and strong" gold investors who think we are headed for only $600
to $1000/oz.
Today, the bottom of the gold market has clearly
passed, and now it's time to determine what the top will be. As I see
it, an investor needs to call both the bottom and the top. You have to
accurately call both in order to make the best trade to buy low and
sell high. For example, let's assume for a moment that gold will go to
a price in excess of $30,000/oz. What would happen if you invested in
gold at $300/oz. and sold gold for cash at $3000? You'd first make 10
times the original investment, but then get hit as your cash lost 90%
of it's value as gold went up the next ten fold increase, and you'd
just break even. Or, if the dollar continued crashing to zero, you'd
lose everything.
That's my fear: that people don't know what's
possible in gold, that they don't know the huge number of dollars that
are out there and their current purchasing power relative to the gold
market. (Of course, many gold bugs know that paper is worthless and
never need to be told that.) Consider the potential of U.S. dollar
purchasing power. There are 8.5 Trillion dollars (or near equivalent)
in U.S. Banks.
To put that huge number into perspective, let's look
at India. According to the World Gold Council at www.gold.org, India
buys about 855 tonnes of gold annually. India is the largest buyer of
gold per year in a market that consumes about 4000 tonnes annually. But
1% of the $8.5 Trillion U.S. dollars is $85 Billion, which, at
$350/oz., can buy 243 million ounces, or 7550 tonnes, which is almost 9
times as much as India! One percent of U.S. dollars can buy nine times
as much gold as India buys in a year. Stop for a moment and think about
that. One percent of U.S. dollars would completely overwhelm the gold
market.
Currently, the U.S. buys only about 400 tonnes a
year, according to gold.org. At $350/oz, 400 tonnes could be purchased
for a mere $4.5 Billion. To understand how small $4.5 Billion is in
relative terms, it's 1/1,888th of 8.5 Trillion. That means that only
one dollar, out of 1,888 dollars, is interested in buying gold each
year! Consider this: if 1/1000th of U.S. dollars bought gold in a year,
then U.S. demand would just about double to be about equal to India's
annual gold demand.
There are many corporations and investment funds
that have far more than $4.5 Billion to invest. Imagine if only one
such giant investment fund that manages in excess of $100 Billion
decided to allocate 10% of their holdings to gold, say about $10
Billion worth. One such purchase alone would be more than double
current annual U.S. gold demand, and would probably drive the gold
price wildly high. But, how high?
To predict a dollar price of gold is to assign
rational values to both dollars and to gold. Since the dollar is based
on fraud and has no gold backing, then rationally, it has no value. The
only way to assign a rational value to the dollar is to assume it could
be 100% backed by gold. If the dollar were backed up by less than 100%,
say only 5% backed by gold, then the dollar would be valued 20 times
more than it should be, and a rational price prediction would require
saying that the dollar price for gold should increase 20 fold, or
increase 20 times, or increase by a factor of 20, meaning that you'd
take the current dollar price for gold, multiply by 20, and then you'd
have your rational value figure for gold. But there is not 5% gold
backing, there is theoretically only about 1% gold backing, which is
why the gold price needs to go up by about 100 times.
Until and unless the dollar is backed 100% by gold,
then the dollar is fraud. You cannot predict a rational price for a
fraudulent piece of paper, other than zero! Fraudulent dollars may have
temporary value to buy things in the real world, but that value is
simply not rational, and is the by-product of deception, habit, and the
collective insanity of society. It is the job of a rational investor to
recognize and avoid buying insanely high values, and to buy undervalued
assets. Essentially, the dollar is a bubble based on irrational values,
and thus, it will and must collapse. The dollar has the potential to
collapse completely, since it has no rational value at all.
Theoretically, however, the dollar could stop
collapsing at the point where there were equal amounts of dollars and
gold, and then a collapse could be halted if all the gold available
were to be pledged to be converted equally into all the available
dollars.
Therefore, a rational dollar price prediction for
gold can be obtained by dividing available dollars by available gold.
The best official figures for these are M3 and the U.S. gold hoard. For
those of you who don't know, M3 is the best measure of the dollar money
supply that the U.S. Federal Reserve uses.
M3
http://www.federalreserve.gov/releases/h6/Current/ $8.5 Trillion or
(8,500,000 million) U.S. Gold www.fms.treas.gov/gold/index.html 261
million oz.
Admittedly, the official numbers are not very
reliable. There are more dollars available than is listed as M3 because
there are foreign bank accounts and many counterfeit dollars that are
used as money in the world.
And the U.S. gold has not been audited since the
1960's, and many suspect it is totally gone, and not available at all.
Nevertheless, the official numbers are the best figures available that
we have to work with. If the figures are wrong, M3 is surely higher,
and U.S. gold is surely lower. If either is the case, it would only
mean that the rational dollar price for gold should be much higher than
$32,000/oz.
At my web site goldismoney.com, I present a simple
calculation: M3 / U.S. gold. Since gold is money, each dollar in
existence could potentially buy gold. Current figures as of Nov. 2002
are: 8.5 Trillion dollars / 261 million oz. of gold. This ratio tells
us the level to which the dollar needs to devalue if it were to be
backed 100% by the U.S. "official" gold again. This number gives me an
idea of a potential top of the gold market. This number, at the moment,
is $32,567/oz--a number that I do not see discussed by anybody. Why not?
Two years ago, in my first article for
GOLD-EAGLE.com, this figure was only $25,000/oz. The difference between
$25,000 and $32,567 represents inflation of M3 from 6.6 Trillion in the
year 2000, to 8.5 Trillion in late 2002.
The question burning in my mind at the gold mining
conference was "Why does nobody mention M3 as a force that can drive
the dollar price of gold to about $30,000/oz.?"
This was an extremely important question to me
because I believe the excess creation of dollars is the biggest reason
why gold will go up in value as measured by dollars. I believe it is
this inflation that has already happened (the excess creation of
electronic money deposits and paper dollars) that will be the largest
driving force behind the rise to come in the gold price. I believe this
is bigger than secretive central bank selling, bigger than an impending
gold default in futures contracts, bigger than the supply/demand
imbalance, bigger than China or Japan or India, or any other factor.
The other reason these numbers are important is that
M3 and the U.S. gold are not secret figures, they are public numbers.
It takes no conspiracy theory detective work to deduce that they have
printed up and put into circulation in the banking system far, far more
dollars than is rational.
It is important to note that the chart of the dollar
price for gold tells us nothing about how many extra dollars have been
created and have yet to express themselves as price inflation, or as a
higher price for gold. In other words, the technical chart analysis
that we often read from other analysts can say absolutely nothing about
how high the gold price will rise in dollars. All they can allude to is
potential price movements that would be "off the charts", but that is
too vague and is not very useful.
It is important for my readers to realize that I am
not saying that gold will have the value that $32,000 has today. Most
likely, the dollar will devalue, and gold will rise in value. If the
dollar declines in value by a factor of 10, and gold rises in value by
a factor of 10, then that (or some variation thereof) could account for
the relative change in value between them which would result in the
increase in the dollar gold price by a factor of 100. Perhaps the
dollar will devalue by a factor of 5, and gold will increase by a
factor of 20. Or the dollar will devalue by a factor of 20, and gold
will increase in value by a factor of 5. I am not sure which way things
will be valued once the irrational dollar excesses are destroyed. But
that is a topic for another time.
However, it is possible that the value of gold and
it's purchasing power does increase 100 fold for certain items. For
example, if housing prices are inflated by a factor of ten today due to
the easy availability of government granted fiat money loans, and gold
is undervalued by a factor of ten, then housing prices, denominated in
gold, might swing by a combined factor of 100 when rational values
return.
As a real-world example of this, a bag of $1000 face
value junk silver coins, in 1980, when silver was at $50/oz., was worth
about $35,000, which could buy a house. Today, a house costs about
$350,000 and a bag of $1000 face value silver might cost about $3500,
or 1/100th the price of the house. I fully expect that a bag of silver
will be able to buy a house once again--but this time it will be a much
nicer home, simply because there is less silver in the world today than
there was in 1980, and therefore it will have more value. The point of
this factual historical example is to show that silver has decreased in
value by a factor of 100. And if commodities and asset classes move in
cycles, then it is not out of the realm of possibility to suggest that
gold, or silver, or both, will move up in value by a factor of 100. And
thus, there are now two entirely different and solid reasons behind my
analysis showing that gold will increase in value by a factor of 100.
Back to the occasion for this article. I had the
wonderful opportunity to personally question several people at the
mining conference last month who are in the newsletter writing business
who have each been commenting on the gold market for well over 20
years. These guys know their stuff. They are well respected in the
mining industry, and they make money by selling their advice and
knowledge. So, they must be doing something right. They each had booths
at the conference, and each spoke several times over the course of the
weekend in the large conference hall. I'm a smart man and I did very
well in school, but I was very impressed with the verbal ability that
these men all had, and how they were able to easily recall in
conversation many facts and figures relative to the gold market and the
market in general. These men were all absolutely brilliant thinkers and
analysts--even if they occasionally did buy into and repeat one or more
of the many gold myths that I have identified and debunked in my last
essay for gold-eagle.
John Doody and James Dines each mentioned at the
conference that gold could reach $3000/oz. Richard Russell (who was not
at the conference) also recently wrote of gold hitting $3000/oz. Those
predictions alone are very bullish factors for gold, because two years
ago, most analysts had a hard time saying $300 was a possibility, and
GATA was brave, and virtually alone, in advocating $600/oz. as a
possible gold price.
But is $3,000/oz. a rational price for gold, simply
because several experts now say so, or is my number more accurate?
I was thinking about indicating by name what each
newsletter writer said to me personally, but I decided not to report
names, for two reasons. First, given the nature of what some said, I
think they would rather remain private. Second, I'm reporting
conversations from memory that took place over a week ago, and I might
misquote someone slightly, so I will speak about what I learned from
the conversations in general, without quoting individuals by name.
When I approached the first expert, I asked, "If you
divide M3, which is over 8 Trillion dollars, by the U.S. gold supply,
you get over $30,000/oz. gold. (Little did I realize that the number
has actually increased to over $32,000 in recent months.) Why is it
that nobody seems to mention that number?"
He began, "You don't need to tell me what M3 means…"
He continued by saying it will be foreigners who dump dollars for gold
who will push up the gold price, and so therefore, M3 is not a factor
compared to the dollars and bonds held by foreigners.
So, again, I asked bluntly, "You mean you don't
think Americans will sell dollars for gold as I have?" This question
seemed to fluster him a bit, but this time he replied about how he
knows a dollar is fraud and that it takes only pennies to print them,
but that it's a confidence game. He said as long as people have
confidence in dollars, the paper dollar will continue to have value.
And the conversation ended.
I don't think his answer really answers my question,
because I know that the confidence game is continuing rather well right
now. My question concerns what happens when the confidence game ends!
I asked a few further questions, such as "Given that
1% of that $8.5 Trillion still represents a huge amount of buying
pressure related to the gold market ($85 Billion dollars, which is
about the current valuation of the U.S. official gold reserves), what
do you think would happen to the price of gold if 1% of that $8.5
Trillion started buying gold?" He replied by saying that he didn't
think 1% would buy gold any time soon.
Again, that did not really answer my question. I did
not ask about the likelihood or timing of when 1% of $8.5 Trillion will
buy gold. Instead, I take it as a given fact that will occur at some
point rather soon, whether it happens in a year or two years, I don't
care, and it makes no difference to me. Therefore, I did not ask when
that will happen. I essentially asked what would happen to the gold
price when roughly $85 Billion dollars tries to buy gold? At a gold
price of $340/oz., that would be the equivalent of placing an order for
250 million ounces, or 7775 tonnes in a gold market that has annual
supply from the mines of 2500 tonnes! Obviously, if a mere 1% of
dollars chased physical gold, it would completely overwhelm the gold
market and push the dollar price sky high, which is my entire point! I
know that current market psychology is against gold in America, and
that Americans are mostly ignorant about gold and how many dollars have
been created and are now in the banking system. My question represents
a hypothetical "what if" scenario, considering what might happen when
1% of that ignorance starts to end!
I went up to the next expert and I said that the
various newsletter writers at the conference have begun to predict a
$3000 gold price, but I asked why not $30,000? He seemed amused by my
suggestion of such a large number. He said plainly, "Let's worry about
getting to $3000 first." And he also said, "Besides, by that time, I'll
be retired on the beach." I suppose that was a fair enough answer.
I asked a third expert the same question. He said
essentially the same thing, but in a different way, and he gave more
reasons. First, he also indicated he would retire in comfort by the
time gold hit $3000. But he also said that by that time, he would
probably no longer be a public figure in the gold market trying to make
a living, but rather, he would retire in privacy. This is why I decided
to not mention any names, because of the private nature of the
conversation.
But he gave another very interesting reason.
Essentially, he said, "What benefit would there be to calling such a
top so long in advance? Who would want to be remembered as the person
who made such a call by the time it turns out to be right? The world
tends to shoot the messenger." Again, I think that is a fair enough
answer.
Note, in none of the cases did the experts say that
$32,000 was not a rational number, nor did they refute it as a
possibility.
At the conference in a lecture, an important point
was raised: The market commentators and newsletter editors are not
necessarily in the business of "being right". You can be right, but the
market might have a different answer. These guys are in the business of
selling newsletters, not "being right". People who buy newsletters
simply will not subscribe to a service that makes what might appear to
be outlandish predictions. People who buy newsletters that are bullish
on gold are also the type who have witnessed the 20 year bear market in
gold. The average age of the person at the conference seemed to be
about 50 or older. The conference attendees, and likely newsletter
subscriber base, are not dummies. They all have heard and know that the
dollar can potentially become worthless, and the dollar value of gold
can go sky high, since that's the essential factor that sets gold
apart. They would much rather know the answer to the much bigger
question, which is the agonizing, "When?!"
Now, related to this question of "when", a number of
experts predicted that if gold went through $327 or $330, or $340-$350,
then gold would "break out", and really take off. I spoke with one man
who was making this kind of prediction, and I asked another very
important question. I said, "In 1971, before the default, gold went
from $35 to $43, and then it was pushed down again to $35 and then the
default happened. Might the same thing happen today, where gold is
pushed down to $300, and then the default will happen and you might not
be able to get gold at any price because the market would be virtually
closed due to limit up days until a much higher price is reached?"
First, he objected to my phrasing, "gold was pushed down". He said that
was a judgment call on why the price moved, so he said let's just say
the price "went down". Ok, fine. But basically, he agreed that a
default could happen at any price at any time, and the market could
virtually close down at any price, just like last time. But he didn't
believe that was likely to happen.
Now, back in 1980, I believe people were predicting
that the price of gold would rise to $5000/oz. I believe the reason for
that prediction was because M3 was about 1.8 Trillion, not the 8.5
Trillion we have today. The M3 to U.S. gold ratio in 1980, at 1.8
Trillion dollars, gives $6896/oz., which is close to the $5000/oz.
prediction of the times.
So, my perspective then, is not that the gold price
has been manipulated since about the middle of the 1990's, as GATA has
been arguing. This is why GATA predicts a gold price rise to about
$600-$1000/oz, and why I'm predicting a gold price rise to about
$32,000/oz.
My perspective is that the gold price has been
manipulated and held back since 1980, when the government used every
deceiving trick available to stop the rapid rise in the gold price.
They lured people back into bonds by paying around 20% if I'm not
mistaken. This was a high rate, sure, but I do not believe it should
have been enough to get people out of gold because gold rose 34% per
year from 1970 to 1980.
The other trick used to halt the rise in the gold
price was introducing futures and options. They introduced futures
trading on Dec. 31, 1974, the very day before they legalized physical
gold ownership in the U.S. on Jan 1, 1975. Futures contracts and
options lured people into believing that you could invest in these
"paper bets" to take advantage of the rising gold price, instead of
investing in actual physical metal. I believe buying futures contracts
is about as foolish as buying a "gold backed dollar," the kind that
Nixon defaulted on in 1971. In essence, futures contracts siphon away
investment demand and keep potentially large buyers away from buying
actual metal. Even those who don't buy futures will falsely reason to
themselves, "When the time is right, I'll invest in gold futures
contracts, or options on those futures, if I see gold going up and if I
think that trend will continue." These people are deceived because
paper contracts are prone to default, and physical gold in one's
possession can not default. Therefore, a paper promise can never be a
substitute for gold.
I believe futures contracts will soon default. My
perspective on futures contracts, therefore, is that when the open
interest increases, it is not a bullish sign for the gold market. Every
time the open interest increases, that represents more deceived
investors who want to go long on gold, but think they can do it by not
owning actual gold.
My point is that the 20-year bear market in gold
discredited the idea that a rational gold price could be calculated by
looking at M3 size and growth. For 20 years, this statistical
calculation became meaningless to everyone, as mass deception set in on
an entire generation of investors. This is probably the main reason why
so few speak of this today, but instead speak vaguely and generally
about how inflation will cause the gold price to rise.
It is not future inflation that will be the cause of
the rise of the gold price. It is the inflation of the past that will
drive the price.
But just because M3 hasn't been useful in the past
as an accurate predictor, does not mean that it won't be useful in the
future to predict where we are headed. If it's not a useful predictor,
I invite people to email me and correct me where they think I'm wrong
on any of this.
So, why am I writing about $32,000/oz. gold if the
idea is mostly discredited and scoffed at? Probably because I'm young
(age 32), brave, and I'm not in the business of selling a newsletter. I
still "just want to be right" and give people useful information. As I
understand it, the higher gold can potentially go, the longer you can
afford to wait after buying gold! More importantly, I take it as a
given that a default in the gold futures contracts can occur at any
moment, and the gold market could literally shut down for days or weeks
at a time during which time there are limit up days and you can't trade
or get into the metals market at any price. Therefore, from my
perspective, I believe it is best to invest in the precious metals
market with nearly 100% of my portfolio, and I don't believe it would
be wise to wait for a break out to invest in the metals market, and I
don't plan to do any trading in and out of the precious metals market
by selling any rallies or buying any dips. The stakes and destination
are simply too great an opportunity to pass up. Although I don't plan
to trade out of the metals market anytime soon, I will re-allocate my
portfolio within the sector, by selling stocks of mining and exploring
companies if I find another mining company that looks like a better
opportunity. I also plan to buy more physical metal as the price rises.
Furthermore, I write about $32,000/oz. gold because
I have no basis and no rational reason to predict a $1000-3000/oz.
price, or any number lower than $32,000/oz. The only rational dollar
price for gold is the one that takes into account the essential
difference between dollars and gold, and that is that the dollar is
fraud. This is my bias. I can't help it. The dollar fraud would only
end when there is an equal amount of dollars and gold. Therefore, it is
only pure logic that dictates the $32,000/oz. price, and not hype, not
wishful thinking, not pie-in-the-sky dreaming, not irrational hopes,
not emotive speculations, and I'm certainly not pandering to
sensationalism. It's pure logic based on the best available data, and
nothing else.
Also, I believe there is no better reason to be in
gold than the rational and logical realization that the dollar can, and
will, and must, eventually devalue all the way to $32,000/oz. gold or
even further. Normally, it takes about a 45 year time period for one
dollar invested to grow to a hundred dollars. Investment advisors often
say that if you invest $10,000 when you are a teenager, and it
compounds at 10-12%, then by the time you retire, you will have
$1,000,000, or a hundred times as much. Investing in gold, now, quite
literally, is the investment of a lifetime! And since there is no
better reason to own gold, then it makes no sense to me to ignore
presenting the best one.
Several well-meaning people have suggested that I
should not write about a number such as $32,000/oz. for gold in my
articles because people can't conceive of it, and it may turn people
off. Further they say it might harm my credibility, and even prevent
people from investing in gold because I (and gold bugs in general)
would be seen as portraying something insane or improbable. Well, the
truth is more important to me than what other people think. I am trying
my best to make the truth palatable for people, and I do not think
telling the truth hurts my credibility at all.
I will not do or say what is wrong to make other
people happy. I consider a $3000/oz. prediction for gold to be wrong, a
lie, misleading, untruthful, less than the whole truth, not telling the
full story, and deceptive. If I predicted a $3000/oz. price, I would
feel that my prediction would be a support or endorsement as if that
represented a rational price. I cannot endorse that as a rational
price. If I said that $3000/oz. was a rational price that gold should
move to, then I feel I would be helping to perpetuate the dollar fraud
scheme. I would feel that I would be suggesting that a 10% gold backing
for the dollar would be ok. Let me state quite frankly, I do not think
a 90% fraud is ok. It would still be fraud and theft, and I cannot
support that in any way, shape or form. Again, this is my bias.
I do not even think a dollar that is 100% backed up
by gold is ok. I think that a paper claim on an asset held by another
is one short step away from allowing fraud to take place, and is almost
an invitation to allowing that fraud to take place. If you wouldn't
leave your car unlocked in an unsavory neighborhood, you likewise
shouldn't trust a banker with your gold and agree to hold a 100% gold
backed dollar based on his word alone. Holding a dollar backed up 100%
by gold is literally a refusal to take responsibility to protect the
wealth you own. Holding a dollar backed 100% by gold is wrong on so
many levels. The person holding the dollar has confidence that he has
an asset, but he does not have an asset. The person holding a dollar
backed 100% by gold is holding a liability! The person holding a dollar
backed 100% by gold is actually a lender of wealth, not a possessor of
wealth.
Therefore, the battle between currencies and gold is
not a battle between "competitive asset classes". Fiat currencies such
as the dollar, the yen, and the euro, are not even assets, they are
liabilities! And the dollar is a liability that has already been
defaulted on, twice! When I think in those terms, it's hard for me to
imagine why defaulted promissory notes still have value, but that's the
insane bias of this stupid, stupid society I live in.
Therefore, even if gold were being traded at
$32,000/oz., I still would not trade my gold for dollars unless I
needed to do so in order to eat food for the day.
So, given the fact that a dollar backed 100% by gold
rattles my conscience, then I cannot support something that is so much
worse, such as a dollar backed 10% by gold. Thus, I cannot endorse (by
predicting) a price of around $3000/oz. gold. I simply cannot.
To declare the dollar is fraud is to declare that
the only rational dollar price for gold is M3 divided by U.S. gold
holdings. Currently, given the official numbers, the figure works out
to about $32,000/oz. There is no other rational price that can be
calculated by looking at official figures. Holding dollars when gold is
trading less than $32,000/oz., therefore, is irrational, and is
literally investing in fraud. It is irrational to knowingly invest in a
fraud such as the dollar or any fiat currency.
Most of the other explanations of what is going on
in the gold market are merely side explanations and comments and
speculations on how and why the dollar fraud has managed to continue
for as long as it has. Those other topics, such as bonds and their
interest rates, gold futures contracts, central bank leasing, and the
like are certainly interesting, but they all ignore the big question
which always must remain, "How many excess dollars have actually been
printed and/or put into circulation that will eventually show up and be
reflected by a higher dollar gold price?"
Therefore my dear readers, when people ask you, "Why
is gold going up in price?", or, "Why will gold go up in price?" I
believe you should say: "Because the U.S. has created over 32,000
dollars for every ounce of gold they claim to have."
Now, although this article is mostly focused on a
particular question I had about how the gold market is discussed
(and/or not discussed) by the experts, I'm far more bullish on silver
than gold. Silver has everything going for it that gold does, and much
more. The 8.5 Trillion in dollars held by people could just as easily
begin to chase after silver as gold. In fact, about 70-80% of the
people at the conference raised their hands when David Morgan asked,
"Who here owns actual physical silver?" It was truly a unique and wise
crowd.
Silver is so out of favor, so scarce, and in such
demand by industry, and so undervalued compared to historic norms, that
when the silver market seizes up, some experts have theorized that the
gold/silver ratio could swing well past the historic ratio of 1:16 and
even hit 1:1 for a brief time. Currently, at $350 oz. Gold, and $4.70
oz. Silver, the ratio is 1:74.
So far, we have looked at what might happen if
dollars are invested in gold. Well, how many dollars could potentially
buy silver? The obvious answer is an infinite amount of dollars could
attempt to buy silver and drive the price incalculably high. But using
available known silver supplies in the world, at available prices, we
can get a dollar figure. Ted Butler has written extensively that there
are only 150 million ounces of silver in known verifiable places in the
world, and that is shrinking due to the ongoing supply/demand deficit
in the silver market. At $4.70/oz., that silver is valued at only 705
million dollars.
There are stocks of silver mining companies that
have the potential to rise in value even faster than silver. The three
silver companies mentioned repeatedly and positively at the mining
conference by several analysts were Pan American Silver (PAAS), Silver
Standard (SSRI), and Apex Silver (SIL). I was invited to the conference
by SSRI because I'm a shareholder in SSRI. Two other silver mining
companies are Hecla Mining (HL), Cour d'Alene Mines (CDE). Two smaller
silver explorers are Wheaton River Minerals (WHT), and Cardero
Resources (CDU.V or CUEAF.PK) This not an exhaustive list of silver
mining companies. Do your own due diligence. I hold shares of SSRI,
PAAS, SIL, CDU.V and also various other gold mining companies.
Disclaimer: I am not a licensed investment advisor.
I am not a broker. I hold positions in precious metals and mining
stocks, which are subject to change without notice. I am biased against
what I consider to be the fraud of fiat money, which are false weights
and measures, and an abomination. I am biased against the fraudulent
practice of creating money out of nothing. I am biased against debt:
particularly when money is lent at any interest rate whatsoever, a
practice called usury.
For a list of many other reasons why I believe now
is a very good time to buy gold and silver, see my web site at
www.goldismoney.com
Jason Hommel
jasonhommel@yahoo.com
2 January 2003
Other essays by Jason Hommel:
25 Reasons To Support The Sound Money Bill - 08 July 2004
I'm Insanely Bullish On Silver - 19 June 2004
Silver Stock Evaluations - 22 May 2004
The Silver Bull Is Back - 04 May 2004
Late April Silver Update - 22 April 2004
Silver Juniors With Cash Flow - 04 March 2004
Major Frauds of the U.S. Monetary System - 26 February 2004
Market Perspective & Cabo Mining - 12 February 2004
Usury Enslaves - 19 January 2004
Sterling Mining - 29 December 2003
The U.S. Trade Advantage With China - 17 December 2003
Rising Gold Prices Will Help The Economy - 02 December 2003
Miners to Use Silver as Cash - 27 November 2003
Private Placements in Silver Companies - 20 November 2003
Is the Silver Market Too Small to Buy? - 13 November 2003
Inflation & Deflation During Hyperinflation - 06 November 2003
Silver Price Expectations of Silver Stock Investors - 30 October 2003
Buying & Tracking Canadian Silver Stocks - 29 October 2003
Canadian Zinc--Silver Potential - 23 October 2003
Silver Stocks--Comparative Valuations - 4 - 13 October 2003
Silver Stocks--Comparative Valuations - 3 - 06 October 2003
Silver Stocks--Comparative Valuations - 2 - 29 September 2003
Silver Stocks--Comparative Valuations - 1 - 22 September 2003
Silver and Cardero Resource - 08 February 2003
The Moral Failures of the Paper Longs - 22 January 2003
CFTC Response to Silver Problem - 14 January 2003
People Talking About $32,567/oz - 10 January 2003
Letter To Authorities of Silver Markets - 06 January 2003
Why no talk of $32,567/oz ? - 02 January 2003
Refuting Myths about Gold - 28 October 2002
Controlling Gold with Paper - 10 June 2002
Impending Gold Futures Default - 29 May 2002
Certain gold stocks are still cheap - 07 May 2002
A Few Supply and Demand Fundamentals of the Dollar and Gold - 06 May 2002
New DROOY Institutional Holdings - 21 February 2002
Hommels View of Gold - 23 March 2001
Gold Price Under Differing Scenarios - 24 June 2000
Goldismoney.com
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