$5,000 Silver? The Mathematics of a Potential Price Surge
By Bill Holter
Global Research
April 17, 2015
A catchy title this “$5,000 Silver?” don’t you think? Am I crazy? Is this even possible? In who’s lifetime? Ours or our great, great grandchildren long after we are dead and buried? The best way to look at this I believe is to briefly look at silver’s big brother gold and then postulate whether it’s possible or not.
To begin, let’s look at what happened in 1980 and why gold traded up to $875 in the first place. As Jim Sinclair has said many times, gold “moved in a manner to cover the value of foreign held debt of the U.S.”. He has also said “$50,000 gold is possible and it may turn out that this figure is far too low”. Before you laugh and start firing spitballs at me or Mr. Sinclair, I remind you of his call of “gold at $1,650 per ounce by Jan. 2011″. He said this when gold was $350 per ounce or so and the year was around 2004 if memory serves me correctly. He was called a nutjob and far worse …he was correct in retrospect and off in his timing by about eight months …SEVEN YEARS AHEAD OF TIME!
To refresh your memory, let’s do some basic mathematics. The U.S. purportedly has 262 million ounces of gold. (As a side note, if you understand how much gold China has imported just over the last six years and compare that to global production, then you understand the U.S. has in all likelihood “dishoarded” much of this gold). We can compare this 262 million ounces to our national debt rounded off at $18 trillion. Doing the math, if we had to back our debt with the gold we supposedly have, the number currently comes up to $68,700 per ounce!
Before you call me nuts, I have one question for you. Were foreigners to decide that “dollars” for any (many!) reason was no longer acceptable, what would we “pay” with? Remember, since the dollar is the reserve currency, the U.S. holds almost NOTHING in foreign reserves. Why should we have to hold foreign reserves, we issue THE reserve currency?! And yes, I understand the debt is “contracted” in dollars so all we have to do is print more to make the payment. All I am saying is this, if the U.S. was forced somehow to actually settle the debt …in gold, our gold would need to be valued at $68,700 per ounce “now”. I say “now” because our debt burden will only grow larger, our gold holdings (IF they truly still exist) will not grow or “breed” making our stash larger with new little goldlings. My point is this, $68,700 is a credible number only assuming we do have the gold we claim to have.
The Rest…HERE
