Gold News

Never Enough Gold

The era of Peak Gold has arrived, along with inflation, which is truly momentous...

AMBROSE EVANS-Pritchard of The Daily Telegraph reports how the US Academy of Sciences calculates that "some 26% of all the copper and 19% of all the zinc that ever existed in the earth's crust has already been lost to mankind, mostly wasted in milling or smelting or buried in landfills."

   Gregory Wilkins, of Barrick Gold, says that much the same thing is happening to gold, too. "Global mine supply is going to decrease at a much faster rate than people generally believe," he says. "Many of the new mines that people are anticipating will never come into production."

   Kevin McArthur, chief executive of Goldcorp, is quoted as agreeing. "Global gold output was on a relentless slide," apparently. Which makes Buying Gold look like a smart idea yet again today.

   In short, "The era of 'peak gold' has arrived", which is truly momentous, because it means that the "easy to get at" gold has been gotten to, and the rest of the gold left in the earth is harder to get to, and thus the rate at which gold is being discovered has collapsed when compared with the old days.

   Which is just like the collapse in new discoveries of oil, which is where you get the phrase "peak oil" – and they both have crucially to do with how a rising demand growth curve and a falling of supply growth intersect at that place called Lonely Street.

   Oops! Sorry! That's Elvis Presley...

   I mean, falling supply and rising demand intersect at that precise point that is scientifically referred to as "Expensive like you wouldn't freaking believe!" (To see it in action, just take a glimpse at Gold Prices lately.)

   And since everything from fuel to fertilizers to plastics to medicines to everything you can name under the sun is made from oil – other than gold, of course, beautiful gold – then you are going to see inflation in prices like you will not freaking believe, which means that each unit of your currency will buy less like you will not freaking believe, which means that people are going to be hungry and broke and miserable and rioting like you will not freaking believe.

   Here is where I reveal why I am so insanely bullish on the future of gold, and how I am actually salivating at the prospect of having so much money that I can spend my time gallivanting about in a carefree manner...playing golf, and hiring lawyers to – as my old high school said in its school song – "fight until we have victory, and all our enemies have gone away."

   I always thought that was kind of a stupid creed, since our enemies could be massing just over that hill in preparation to attack us, and our best course of action is to immediately track them down and kill them all in a frenzied orgy of blood, and then dance like ghouls on their dismembered bodies, swaying to the hypnotic sounds of captivating rhythms on the bass line. But they called me mad!

   Mad? Hahahaha! I'll show them madness!

   But this is not about stupid sanity hearings or about psychiatrists recoiling in horror at what I "see" in their stupid ink blots...nor how traitorous neighbors and family members are lying their heads off in their testimony. No, this is about why I am so bullish on Buying Gold.

   It's easy, as Mr.Evans-Pritchard reports that cost-price inflation is hitting gold mining companies, too. "Costs are rising at $60 an ounce annually," he says. "They will average $460 by next year. From tires to diesel fuel and the geologists' salaries, mine inflation is running at 15%."

   Inflation of 15 percent? Yow! At that rate, dividing 15% into 72 – as per the "Rule of 72" – this means that gold-mining costs will double in about five years! That means that it will cost $920 an ounce to mine gold in five years, which means that gold is selling right now for $140 below the cost of mining gold in five years!

   And while supply may be falling, Junior Mogambo Ranger (JMR) Ed S. sent me a posting from the Gold Anti Trust Action Committee that Reuters reported that "Global gold demand in the third quarter rose 19% year-on-year to 947.2 tonnes on the back of robust inflows into bullion investment funds and improved jewelry consumption, industry-sponsored World Gold Council (WGC) said on Thursday."

   Even more significant, Milling-Stanley said, "The increase in investment demand has replaced jewelry buying as the major source of growth for the third quarter."

   It was then that I wished I knew of a time in my whole freaking life when some woman had ever said to me, "Don't buy me any more jewelry! Buy Gold Bullion as an Investment, instead!"

   And failing to think of one such absurd event, I laughed. And laughed again.

   The details, in case you are interested, are that all the women in the world always wanted more jewelry, and that their wishes were answered. Put another way, "Total gold supply for the third quarter was 1,045 tonnes, up 16% year-on-year due to significantly increased official-sector sales," as the WGC reports.

   And in a related news item, the St. Louis Post-Dispatch reported that some outfit called Missouri Coin "sold seven times as much gold and silver as it did a few months earlier."

   Wow! A 700% increase?!

   And this is seemingly borne out by Junior Mogambo Ranger (JMR) Chad K., who writes, "I went to purchase some silver today. There is now a 4-8 week waiting period and prices cannot be locked in."

   She says that "I am glad I started listening to you weirdo gold bugs a few years ago and purchased when the dealers actually had some."

   Me, too, Chad! Me, too! [Ed.note: Tired of waiting? To Buy Gold instantly, with no delay and no credit risk whatsoever, visit BullionVault now...]

   If it weren't for gold, we would be in a mess with no place to go for safety. If it weren't for silver, we wouldn't have such a startling upside potential.

   And if it weren't for corrupt people in and out of government who have created this mess, neither one of these assets would make us as filthy stinking rich as they are going to make us, as the ultimate value of fiat currency is always literally zero, meaning that when all the money is gone, the skimpy five billion ounces of gold extant in the world will be, theoretically, ALL the money.

   The people who have some of it will have their share of everything! Wheee!

The angriest guy in economics, the Mogambo Guru is Richard Daughty, general partner and COO for Smith Consultant Group, serving the financial and medical communities. The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it – has been quoted frequently in Barron's, The Daily Reckoning and other fine publications.

See the full archive of Mogambo Guru articles.


Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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