Putting A Trillion Dollars Of Platinum In Perspective

Submitted by Tyler Durden on 01/04/2013 15:12 -0400

So you want a trillion dollar platinum coin? Ok: here are some facts:

Platinum has traditionally been the most valuable precious metal for one simple reason: it is rare.
It is so rare, that all the platinum ever mined could fit into a 25 cubic foot box.
The weight of that box comes out to just over 16 tons: this is how much platinum has been mined since the start of time.
A coin valued at $1 trillion and made out of platinum would, at today's price of $1557/ounce, weigh in at 642.3 million ounces.
642.3 million ounces is also roughly 18 thousand tons, or about 1100 times more than all the platinum mined.

In other words, putting a coin that is worth $1 trillion in perspective to all the platinum ever mined, would look something like this:

Now, putting the sheer legal idiocy of the proposal aside, and CNBC's John Carney has written a good article about why it is indeed, legal idiocy, the simple reality is that for this retarded idea to work, there has to be some justifiability, or even remote credibility of the "legal tender" backing the value. Sadly as the chart above shows, there can't possibly be such justifiability.

Or can there?

Remember, as we said, the chart above is indicative of reality at today's prices. So if the Treasury plans on literally coming up with ridiculous laws, what is there to prevent it from merely coining a one ounce, or half an ounce, or one gram Platinum coin and assigning it the value of $1 trillion.

Sure it can. There is a problem with that, however: it is called currency devaluation and is also what FDR did with executive order 6102 when he confiscated America's gold - he basically devalued the US Dollar by well over half overnight (which, for all those curious, is the endgame in the current depression also, but we'll cross that bridge when we get to it).

In other words, when one strips away with all the rhetoric, all the advocates of this insidiously stupid idea which gets a new life every time there is a debt ceiling crisis, are doing, is arguing for a massive devaluation of the dollar: because for the trillion dollar coin idea to be even remotely plausible, the price of Platinum, and by implication the entire precious metals complex, would have to go up by a factor of some 1,100.

It also means the value of the paper US currency would have to go down by 1,100.

Which, by the way, is precisely what all those who wish for the Fed to continue funding America's unprecedented spending binge, which can never be satisfied by taxes alone, are hoping for.

And of course, they will eventually get it.

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Fri, 01/04/2013 - 15:28 | 3123264 NotApplicable

It's platinum, DUH!

Fri, 01/04/2013 - 18:21 | 3124035 tradewithdave

Paper money does not accrue seigniorage. Coins are not Federal Reserve notes. That's the fundamental basis for this idea. I realize it's a joke, but accrual accounting is no joke when it is GAAP.

www.tradewithdave.com

Fri, 01/04/2013 - 15:18 | 3123201 Dr. Richard Head

$1.7 mill an ounce? Nice!!!!!! Looks like I'm going shopping for some Congressmen after this passes.

Fri, 01/04/2013 - 18:39 | 3124067 laboratorymike

Until you discover that you now need $1 mil to shop for groceries.

As an aside, I am trying to imagine right now, what it would be like if Chinese officials demand to be paid for their treasuries, and we mail them a 1 ounce coin.

Fri, 01/04/2013 - 15:18 | 3123205 MiguelitoRaton

You seem caught up in melt value vs. face value. What is the intrinsic value of a $100 bill and how is that different from a $1 bill? Sure such an act would increase money supply and thereby decrease the value of our currency, but it has nothing to do with the melt value.

Fri, 01/04/2013 - 15:20 | 3123217 MiguelitoRaton

BTW, I do NOT support this action, but just think that the seigniorage issue has been settled already with fiat.

Fri, 01/04/2013 - 15:25 | 3123249 Dr. Engali

How do you figure? If I go to the bank in 2000 and give them an ounce of gold and they give me fiat, it's going to cost me a lot more fiat to buy that ounce of gold back today.

Fri, 01/04/2013 - 15:29 | 3123276 MiguelitoRaton

I believe a bank would give you the face value of that Eagle ($50) while a "we buy gold" might give you $.90 on the dollar.

Fri, 01/04/2013 - 15:30 | 3123278 MiguelitoRaton

Let's print a $5T coin and send it to China for their bonds, then let them try to cash it ;-)

Fri, 01/04/2013 - 15:32 | 3123292 Dr. Engali

Well I don't deal with a bank of course but the point is fiat doesn't maintain it's buying power so I don't get how you are figuring that the seignorage question is settled with fiat.

Fri, 01/04/2013 - 15:38 | 3123322 MiguelitoRaton

Dr. E, whether it maintains value is irrelevant. The simple point is that seigniorage enables the government to put any value on the coin. What happens to its value and the value of the paper currency in the system is not their concern.

Fri, 01/04/2013 - 15:41 | 3123345 Dr. Engali

I got you. I was thinking along the lines of buying power, not the cost of printing..or minting. Thnx.

Fri, 01/04/2013 - 15:32 | 3123290 NotApplicable

Gold coins don't circulate. This example is no different than a dime which is really only worth two cents.

Honestly, all Tyler's chart shows is the size of the future devaluation possible before it too is under valued (like the nickel). In other words, a central bankster's wet dream.

Fri, 01/04/2013 - 15:38 | 3123328 MiguelitoRaton

Gresham's Law: Good money drives out bad.

Fri, 01/04/2013 - 16:47 | 3123680 unununium

You got that backwards or are using a new form of sarcasm I am not familiar with.

Fri, 01/04/2013 - 18:24 | 3124043 tradewithdave

In a near zero friction environment (say using Square on you Iphone at Starbucks) Gresham's law reverses. Just sayin'...

Fri, 01/04/2013 - 15:47 | 3123385 Jonas Parker

That's funny! I have a bunch of gold French 20 franc Napoleons that have definitely been in circulation. Maybe you ment to say "gold coins no longer circulate".

Fri, 01/04/2013 - 15:20 | 3123213 Vincent Vega

Is that 642.3 million ounces troy or avoirdupois? /sarc

Fri, 01/04/2013 - 15:35 | 3123310 tickhound

Who cares? It's $16 Tril as soon as it's secured in a Fort Knox-like environment with the transparency of being buried at sea at 2 am with no witnesses.

Fri, 01/04/2013 - 15:37 | 3123317 XitSam

You load sixteen tons, what do you get?

Another day older and deeper in debt.

Fri, 01/04/2013 - 15:49 | 3123387 tickhound

We're all cynical but the fact the idea has any traction suggests fiat has lost, and will continue to lose, credibility... despite all the force.

Fri, 01/04/2013 - 15:54 | 3123424 NotApplicable

Meanwhile, Timmah gets the Nobel Memorial Prize for Economics.

Fri, 01/04/2013 - 15:20 | 3123216 Freddie

Maybe we can get the muslim a set of titanium golf clubs.

Fri, 01/04/2013 - 16:08 | 3123505 DoChenRollingBearing

Likely he already has them.

Hey, you didn't pay for that! Oh, wait...

Fri, 01/04/2013 - 15:23 | 3123237 cougar_w

Okay that kinda missed the point.

None of this has anything to do with the actual value of anything made of anything else for any purpose except as a means to keep the Titanic afloat for another millisecond because every millisecond is worth about $1M in market trades enriching the top 1%.

Pretending it means anything else is just playing into their hands.

Fri, 01/04/2013 - 15:35 | 3123308 NotApplicable

Actually, I think this article makes the very point you've laid out, in the form of Reductio ad Absurdum.

Fri, 01/04/2013 - 15:42 | 3123358 cougar_w

Then maybe it's before noon on Friday and I haven't had nearly enough coffee yet, but it's too soon to have started with the LSD and shrooms, and until one or the other hits nothing I hear or read is making one bit of sense so far.

Fri, 01/04/2013 - 15:55 | 3123435 NotApplicable

Might I recommend Everclear? Does wonders on those rusty synapses.

Fri, 01/04/2013 - 16:25 | 3123592 DoChenRollingBearing

Dilute the Everclear a little with absinthe...

Fri, 01/04/2013 - 15:24 | 3123244 HomeBrewPrepper

Fucker won't fit in my pocket. And I can't get change at the store. But I'm richer then a Rothschild. Bullish

Fri, 01/04/2013 - 15:25 | 3123248 tooriskytoinvest

ARE WE REACHING THE TIPPING POINT? ALMOST ALL FOMC MEMBERS SAW POTENTIAL QE COSTS AS INCREASING. 1994-LIKE SURPRISING TIGHTENING IMMINENT?

http://investmentwatchblog.com/are-we-reaching-the-tipping-point-almost-...

Fri, 01/04/2013 - 15:39 | 3123331 walküre

the 1% tipping point will unleash the 99% tipping point

Fri, 01/04/2013 - 15:46 | 3123377 cougar_w

The 99% are easy to manage. The oligarchs can just launch another round of terrorist alerts, or send an envelope containing white powder to a Fed Reserve bank somewhere, or encourage the OWS people to come back and battle with police.

The 99% are easy to manage because they really do fear change. That won't change soon.

Fri, 01/04/2013 - 16:15 | 3123541 walküre

not in our lifetime .. we're 10 years after 9/11 and had 10 years to figure out how their shit works.

gig - up

Fri, 01/04/2013 - 15:27 | 3123254 Banksters

And to think, the federal reserve has printed/data entered about 3 times that amount, without getting a callous on their milky white hands.

Fri, 01/04/2013 - 15:28 | 3123263 HelluvaEngineer

They would have gotten away with it if it weren't for you meddling kids!

Fri, 01/04/2013 - 15:30 | 3123277 Schmuck Raker

And to think I almost swore off infographics for a New Year resolution.

(They were too depressing last year.)

Fri, 01/04/2013 - 15:30 | 3123282 eatthebanksters

My question is: will the bond vigilantes hold the system accountable? I don't think so! They will bury their heads in the sand knowing full well if they call out the farce they will create their own doom...no these guys are all in cahoots in a rigged game. The system won't crash, but the little people will be robbed through inflaton whaile their smiling president brags abot taxing the rich to help them. What a clusterfuck...the criminals are running the government.

Fri, 01/04/2013 - 15:38 | 3123326 NotApplicable

Since 1971... er...

make that 1932... er...

make that 1910... er...

...

_{Infinite regression, ftw!} _{(or should I say "loss")}

Fri, 01/04/2013 - 15:40 | 3123338 XitSam

Oh, it is a first class cluster. But I think each of the bond vigilantes thinks that when the time comes, he will be the first one out.

Fri, 01/04/2013 - 17:50 | 3123948 walküre

always remember .. there's no honor among thieves

they don't trust each other

Sat, 01/05/2013 - 00:53 | 3124682 MrButtoMcFarty

Let's say you are card carrying member of the banksterscum elite....

Which would you prefer?

A tortuously long slow bleed as everything is done to prevent the game from stopping (ie rates increasing)....driving those 99% to REALLY hate you and leave the USA (your golden goose) in a trail of tears and goldengoose shit....possibly bringing the entire PLAN to a screeching halt.

Or...

A sudden debt crisis....manufactured at your pleasure of course....where the rates spike and tear the fucking heads off all those fucking peasants....allowing you to commence the final stages of wealth transfer from working class to GOD'S CHOSEN ONES.

Fri, 01/04/2013 - 15:40 | 3123286 Cdad

The stupidity and desperation of the Overlord class...becomes more breathtaking every singe day.

So...sell gold and silver for a sixth consecutive week...with clowns such as these in charge? Please advise...

Sat, 01/05/2013 - 00:55 | 3124685 MrButtoMcFarty

49/49 PMs/SP500

with the other 2% in high grade cannabis and liquor....

ZeroHedge with a Smile!

Fri, 01/04/2013 - 15:31 | 3123287 mudduck

Why not just decree that dirt is now money so we can all be rich and no one will ever have to work or want for any thing ever again. Oh, and make sickness illegal so we can all be healthy. And make it manditory that every one has to keep one eye closed and squint with the other when one looks at another person so that there are no more ugly people. And although my fecal matter smells like sugar cookies, I think the government should do something to make everyone elses crap smell better.

Fri, 01/04/2013 - 15:32 | 3123293 TrumpXVI