Let’s have some fun today! For a change of pace I thought it a good
idea to think way outside of the box and write about something that isn’t
possible and wouldn’t really matter even if it was true. I’ll finish
with my wife Kathy’s latest portrait of her son Jason at the bottom of the
page.
Recently a question was posed to me by a reader, a really crazy
question! He asked regarding the fact there has been no audit of U.S.
gold since 1955, “what if the reason they refuse to audit the gold is because
we have much MUCH more and they don’t want anyone to know?”. At first I
just laughed and responded with a flippant answer, but then it dawned on me,
would it even matter? Let’s break this down in several pieces and then
make further assumptions to see if it would really matter.
First, the U.S. claims to have 8,400 tons of gold. For simplicity
let’s call this amount rounded as one third of a trillion dollars or
$350 billion. Let’s assume the vaults are actually bursting and have 3
times the amount of gold claimed. This would mean there is a nice round
number of $1 trillion worth of gold sitting in the vaults. Would this
amount “matter”? Would really and truly having “$1 trillion” mean or
change anything?
Think about where we have come from and what has been done over the last 6
years to keep life as we know it going. The Fed has increased their
balance sheet by well over $3 trillion while the Treasury has borrowed some
$8 trillion more. You might also remember the Fed “secretly lent out”
some $16 trillion all over the world and mainly to foreign
entities. This was discovered in 2011 I believe, it was a shocker
at the time but “oh well”, it means nothing now. My point being, in
just the last 6 years, the Fed and Treasury have printed and borrowed over
$10 trillion, so no, $1 trillion in the vault is no big deal.
But wait, “this is gold and not dollars” you say? Well yes, it is
gold and we do know it can be pegged in price. If it is pegged too low,
demand will outstrip supply and if too high then supply will come in to the
bidders. Yes, there is a huge difference between sitting on $1 trillion
worth of dollar bills and $1 trillion worth of gold, we can touch on this
shortly but first let’s do a little more math. We have had several
individual years where our fiscal deficit was over $1 trillion, so our 25,000
tons of gold would have already evaporated many times over. Let’s
make another assumption that the rocket scientists in
Washington D.C. decide to pull a “Roosevelt moment” and mark up the price of
gold (since they have so much).
Let’s assume it is decided to mark gold up to $10,000 per ounce, what
would this do? The flat out answer is “very little and certainly not
enough”. Even if we truly did have three times the amount of gold we
claim to have AND marked up the price nine or ten fold to $10,000, we
still only cover the lunacy of the last six years! If we look at the
big picture of Treasury debt and the Fed’s balance sheet combined, we are
only halfway there. Looking at the entire picture which
includes all debt and future obligations, the number is a
staggering $200 trillion. This humongous stash of 25,000 tons of gold,
priced at $10,000 per ounce is only equal to 5% of total current and
future obligations!
Do you see what we just did here? This was a backdoor way of
displaying how ridiculously cheap gold is currently compared to all of the
debt that’s been underwritten. Yes I know, there will be those who say
“Holter, you are an idiot. It doesn’t matter what the price of gold is
because it’s not money anymore”. Really? (not the idiot part, the
“money part”). Gold IS money. Yes, our government says
it is not and does not want you to believe it is money …does
that change the fact? Let me point something out to you, China
believes gold is money, many other nations believe gold is money, can the
U.S. “legislate” to foreigners? Foreigners are already “voting” their
beliefs and pocketbooks by purchasing all the gold the world produces and
quite a bit more.
To wrap this part up, let me just say that no, pigs do not fly unless they
are in an airplane and no, the U.S. does not have more gold than we claim to
have. Common sense tells you the gold supply and demand deficit
has had to have been supplied from somewhere. This “somewhere” is
obviously where the gold had been stored. ONLY the West, led
by the U.S. had massive hoards of gold large enough to supply 1,000′s of tons
of annual supply deficits. ONLY the West, led by the U.S. has had a
motive to supply these deficits to support the value of the dollar and to
depress the price of gold. Yet, all we hear from the U.S. when the
topic of either the Fed or our depositories being audited are three
things, either crickets, an audit is too expensive or “trust us”. As
for the “too expensive” part, I think we can equate this to last year’s 5
tons of German gold… they didn’t get more because of transportation
logistics. How funny!
As promised for several months, below is Kathy’s latest finished portrait,
“Commanding Presence”. Forgive me if I sound like a cheerleader, I am
her biggest fan! For those who have not followed my work and don’t
know, Kathy now has a whopping two years of experience. She had never
ever painted anything before and was basically self taught until last April
when she began lessons once a week from a master portraitist. This
portrait of her son Jason is her 5th portrait ever. Kathy plans to
enter this in several national as well as international competitions.
I have never before seen in any occupation a learning and improvement
curve similar to what she has done. She’s gone from zero to crazy
good in only two years! Hopefully this particular portrait will
win recognition in one these contests because of the “story” behind it.
She will be competing with lifetime and internationally known artists. Any
type of win amongst this type of international competition will be unheard of
from someone of her experience.
Her website www.KathrynHolter.com is now up and
still under construction, she can be contacted via the website should you
desire a portrait done.
I hope you enjoy this portrait, I will enjoy her next one… for my
birthday we did a photo shoot with my amigo Principe’ and got a fabulous shot
I’d like to call “Hi Ho Silver!”. “Nothing doing” she said, it
will be called “Rarin’ To Go!” because she hears the words silver and gold
too often living with me!
Please click on the image and I urge you to expand it as much as possible
because the detail is AMAZING!
Commanding Presence