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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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From: loantech	1/11/2006 1:02:22 AM
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Who Knows: The current value of all the gold in the world approximates $2.5 trillion. US gold which is supposed to approximate 261 million ounces is worth roughly $135 billion. We say "supposed to" because the gold hasn't been audited for a very long time and with all the gold leasing that has gone on over the past 20 years it is very unlikely that everyone is still holding the gold they claim. Comparing this with the US only M3 money supply - $10 trillion and the world bond market - $35 trillion, and gold would have to appreciate over 18 times or $9306 per ounce. Using only these two components should provide a very conservative estimate of what we could expect. However, let's take into account that a lot of debt would just disappear due to cascading defaults and discount that number by 80% and we get $1861 per ounce. Jason Hommel of goldismoney.com uses the M3 figure of $10 trillion and divides it by the 261 million ounces and comes up with $38,314 per ounce which I believe will ultimately be closer than my two conservative targets. Another important consideration is the terrible fundamentals and deficits affecting the US dollar which would most likely shift the results back up in favor of a higher US dollar price of gold. While it is clearly a moving target it is a pretty good risk to reward bet that the additional investment demand for gold and silver just as supply is falling off will provide a strong upward catalyst over the next few years. As the heat is turned up on the US paper shuffling economy and the temperature approaches Fahrenheit 451 you will be glad to have your wealth in gold rather than paper which can be expected to kindle into nothingness. 321gold.com

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