Gold 75% Underowned In 20 Years, Or Exter's Pyramid For Gen X/Y

Tyler Durden's picture

Paul Kedrosky has posted an informative chart from JPM's Michael Cembalest indicating that ownership of gold in dilutable terms (aka dollars), as a portion of global financial assets has declined from17% in 1982 to just 4% in 2009. And even thought the price of gold has double in the time period, as has the amount of investible gold, the massive expansion in all other dollar-denominated assets has drowned out the true worth of gold. Were gold to have kept a constant proportion-to-financial asset ratio over the years, the price of gold would have to be well over $5,000/ounce.

Of course, the chart above pales in comparison with the true Exter pyramid, which incorporates all those wonderful JPM/Goldman inventions known as derivatives, amounting to $1.8 quadrillion, which certainly did not exist in 1982. If one were to factor the above table  to include this Exter securitized credit money as well, then the true constant worth of gold would be well north of $10,000.

h/t Adam

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
MacHoolahan's picture

That's probably enough about gold now - these last few days. Yawn....



ZeroPower's picture

There is never enough. You should know that by now. And remember, if GLD goes lower, its a VICTORY FOR THE BULLS.

IQ 145's picture

 Why is it a victory for the bulls if GLD trades lower ? I am unable to understand this.

UncleFester's picture

That's because your IQ is 145.

DoChenRollingBearing's picture

IQ 145, he is actually, delicately, trying to tell you that physical gold will go up, GLD probably not so much if the rumors are true (and seem to be, that GLD and their custodians and sub-custodians DO NOT have the physical they claim to).

Uncle Fester was, of course, my favorite character in The Addams Family.

drwells's picture

Money put into GLD is supposedly used to short physical. Sort of like a Ponzi scheme that will blow up really, really badly.

Baron Robber's picture

you were supposed to just give him clues, then he'd figure it out with his 145 IQ

ZeroPower's picture

Because all the gold bugs can keep buying and averaging down from the 12xx high which they bought into.

traderjoe's picture

I see more liquidation through the next great flush of hedge funds shopping any liquid asset to meet liquidation requests and margin calls - don't know low price. And next a slow then parabolic move to acquire hard assets as the toilet paper currencies get used for...toilet paper. 

UncleFester's picture

I just tried a Franklin, too rough.  Am saving for the winter to be used as kindling.

Rebel's picture

I can remember the day that Nixon took us off the gold standard. I was a kid, but can remember how irate my dad got. He was so sure of the eminent collapse of the financial system that he stocked up on toilet paper. He bought pallet loads of it. Enough, he calculated to last the rest of his life. He had grown up in the great depression, and did not want to ever go back to corn shucks. The day he brought his TP score home, happened to be the day my mom had all the ladies over for bridge party. Well, my dad starts unloading the truck and tracking through the bridge party bringing the TP in. Ladies all laughed at him, and he told them they would not be laughing when they had to wipe their be-hinds with corn husks. The collapse he was anticipating did not happen. I went on and had a normal life, although I always remembered the lessons my dad taught . . . never borrow money, never waste anything, always buy hard assets, never trust the bank or a banker, never trust someone selling financial advice, work hard, choose a career that you make or do something people need. Funny thing as I read zero hedge . . . it is just like sitting around my dinner table in the 60's and 70's. In the end, I don't think my dad was wrong, I think he just underestimated the amount of time the ponzi scheme could continue. Again, I led a normal life despite the rather unique (for the time) perspective my dad had, but I do think that we are approaching the point that the ponzi scheme collapses.

lawrence1's picture

Ditto, great story! And you always had enough toilet paper.

lettuce's picture

cheers on the little story, smokey!

Shameful's picture

Your dad is my hero!

My dad taught me about scams and hustles (small time pool player when I was little), mainly how to avoid them, but even he got taken in by the great ponzi (401k).  One of the great life lessons a father can share with his son, if it sounds to good to be true, it is.  We have all been amazed by the skill in which the ponzi has been kept in the air, so have to give them that. Looking at history I would have thought it would have crashed pre Volker to, at least now we know we are to far down the tracks for them to pull a Volker.

Rebel's picture

My dad passed away last month, peacefully, with his family at his side, and full of years. He did not live to see the collapse he had anticipated, but he did live to see gold at $1200, and the banking crisis pretty much confirmed his thesis in 1971 was right. 

Edmon Plume's picture

Sorry for your loss.  Wish I had a dad like that!  That was a very funny story!

SuperDollaR's picture

But a Jackson could be used as an ass-on too!

GoinFawr's picture

Yah SuperDollaR, bring back 'specie' and I'd be all over the USD.


Rebel, nice perspective.



Troy Ounce's picture

You know, my dad was also furious and predicted a crash. Same story minus the toilet paper.

Augustus's picture

How do you use your corn shucks now?

Rebel's picture

Mrs. Rebel makes tamales from corn shucks, as they were intended to be used.

Edmon Plume's picture

I think you're missing an opportunity here - cooking them makes them a lot softer.  Hence, they might make a heavenly TP.  Let me know how that works out.

aerojet's picture

It could  be a bs internet story, but it read well, at least.  The problem with thinking that you will be around for some major historical event is that major historical events occur so rarely.

WaterWings's picture


I guess trolls define history differently than the sincere.

Treeplanter's picture

My dad showed me a silver certificate and a federal reserve note and said one was money and one was not, back when Kennedy was squabbling with the Fed.

fearsomepirate's picture

The lesson is that when you prepare for a crash by stocking up on guns, food, and toilet paper, when the crash doesn't come...hey, you've still got guns, food, and toilet paper.  It's win-win!

Quinvarius's picture

Except gold was at a record high when the DOW hit 6500.  So don't hold your breath on gold suddenly behaving like something other than sound money.

UncleFester's picture

Never underestimate the power of junk.  My 401K is up to 1,263,865 orange crayons.  CPI in orange crayons doesn't look too bad!  Can't buy a gallon of gasoline or a steak for less than 500 of them, but plastic purple hippos made in China can be had for only ten!

koaj's picture

i just spit water all over my laptop


thank you. i needed that laugh

RedwoodTree's picture

U sure tha was just H2O?

I am not Chumba Bumba Numba Rotumba or anyone else

Idiot Savant's picture

Fucking hilarious!!


We need more comedians amongst all this doom and gloom.

Bendromeda Strain's picture

try the veal - and don't forget to tip your waitress...

MayIMommaDogFace2theBananaPatch's picture

plastic purple hippos made in China

Those hippos don't last for shit...Word!

SWRichmond's picture

And next a slow then parabolic move to acquire hard assets as the toilet paper currencies get used for...toilet paper.

Oh, no you don't!


drwells's picture

Yes, I'm hoping for another 2008 selloff as good assets are sold to prop up bad ones. The 14-day RSI has been a pretty reliable indicator of places to buy on the way up. Daily is heading toward oversold but weekly still has plenty of room to go down.

Cheeky Bastard's picture

Blythe Masters. Thank you. 


Cheeky Bastard's picture

Thank God someone gets this joke. 

FYI; I believe an ex-Merrill Lynch-er junked me.

lsbumblebee's picture

I get it now after I googled it. I thought you just lit up a cigar or something.

lsbumblebee's picture

...Dutch head hurts....

MayIMommaDogFace2theBananaPatch's picture

my head hurts....

Take your finger out of your eye...Just sayin'.