The Western U.S. Dollar based monetary system is headed for a train wreck. This isn’t a matter of IF, it’s a matter of WHEN. Investors lulled to sleep by the low paper price of gold are losing out on the best buying opportunity of a lifetime. The precious metals will be one of the best insurance policies to own when the U.S. Dollar finally catches on fire and burns down the entire system.
There are several gold theories circulating around the alternative media on how the global financial situation will play out going forward. While it’s impossible to really know how events will turn out in the future, there are some that I can guarantee, WILL NOT TAKE PLACE.
I will not get in to the particulars in this article, but rather provide two charts and a bit of common sense that will destroy some of what I label as FAULTY GOLD CONSPIRACIES.
There’s this notion put forth by some very intelligent people that the world has a great deal more gold than stated by official sources stashed away, hidden in vaults around the world. All we have to do is take this gold and back the U.S. Dollar…. and then everything will be OKAY.
I have read estimates from 500,000 to 1,000,000 metric tons (mt) of gold stored in different vaults throughout the world. I find this claim simply astonishing as a bit of 3rd grade math would totally destroy this lousy conspiracy theory. Let’s take a look at the next two charts:
NOTE: I made an error with the previous chart that only showed 1,904 mt for 1800-1900. Instead of a total of 1,904 mt for 1800-1900, it is 11,61 mt… a much bigger number.
According to the figures put out by the U.S. Bureau of Mines in their 1930 Summarized Gold Production data, the world produced 714 mt of gold from 1493-1600, 897 mt from 1600-1700, increased significantly to 11,641 mt mt during the next century, and went completely exponential from 1900-2014 at a staggering 151,482 mt. Thus, 92% of all the gold mined since 1493 came after 1900.
Some readers may think this information was manipulated by the so-called POWERS THAT BE. However, if governments were manipulating gold production data prior to 1930, I would imagine they were INFLATING the figures, rather than underestimating them. Why? If you read over some of these older U.S. Bureau of Mines reports, you will see just how detailed and meticulous they were.
We must remember, gold was still the King Monetary Metal prior to 1930, and countries with high production saw it as bragging rights to share this data. So, I believe the estimates of world gold production put forth by that report is very trustworthy… even though the figures may not be 100% accurate.
In addition, there just weren’t many places in the world that had a great deal of easy to find and extract gold before 1900. It wasn’t until Americans expanded to the west of the country did we find a lot of gold and silver. One such place and event was the Great California Gold Rush.
This following chart came from the article The Bakken Boom: Modern Day Gold Rush, which compared peak production during the California Gold Rush to what would take place in North Dakota Bakken oil production:
Gold production in California started in 1848 and peaked just four years later at 3.9 million ounces (Moz). Production continued to decline, even with using high-tech techniques of hydraulic mining by using massive amounts of water to wash away mountain sides to get the gold.
The California Gold Rush from 1848 to 1888 yielded approximately 57 Moz of gold. How much is this in metric tons? It turns out to be 1,773 mt. This was one of the biggest gold discoveries in the world at the time, but it only accounted for 15% of the total 11,614 mt of gold mined in the world in the 1800-1900 time period.
Folks, there just weren’t that many big gold discoveries in the world prior to the 1900’s. Of course the huge gold discovery in the late 1800’s in South Africa was another, but again… these were few and far in between.
It wasn’t until oil was discovered in the late 1800’s were we able to seriously ramp up gold production. Here is the breakdown since 1900:
1900-1960 = 47,242 mt
1960-2014 = 104,240 mt
In the first six decades, the world produced 47,242 mt of gold, but it more than doubled in the next 54 years to 104,240 mt. I discussed this in a recent interview titled, “Mad Rush Out of Paper Assets Coming “The Data to Prove It!” You can find this topic in PART 2 towards the last third of the interview.
The official sources such as GFMS state there were a total of 177,000 mt of gold mined in the world, with approximately 12,780 mt of gold mined before 1493. I say this is pretty accurate because if we make a plot on a chart over the past 2,000 years and input world population, gold, silver, lead, copper and oil production, they will all look flat up until the 1700’s. Yes, of course oil production did not come in the picture until the late 1800’s… but you will catch my drift here in a minute.
By the 1800’s world population, gold and silver production started to move up higher and it wasn’t until the 1900’s did ALL OF THEM GO EXPONENTIAL. Why? You can thank the exponential rise in oil production that impacted the same rate of increase in world population, gold, silver, lead and copper production.
So, don’t count on some group to magically save the system by taking the supposed 100,000’s mt of gold hidden in vaults around the world to back the soon to be worthless Dollar. There’s a hell of a lot less gold in the world than we realize.
And….. when the Dollar finally does die, I would imagine there will even be a great deal less to buy.
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