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Don't Show This To Warren Buffett (Gold vs. The Financial System)
Submitted by Simon Black via Sovereign Man blog,
Warren Buffett once famously chided that all the gold in the world would form a cube of 67 feet (20 meters) on each side.
In doing so, he was attempting to argue that there was no point in owning gold since all the gold in the world would be an unproductive, useless hunk of metal.
What’s ironic (and completely lost on the venerable Mr. Buffett) is that you could make the same argument about the paper-based financial system.
It’s estimated that the derivatives market now exceeds $1 QUADRILLION (15 zeros) in notional value. If you were to somehow accumulate and stack up $1 quadrillion, the pile would be thousands of feet high and hundreds of yards long… much bigger than the cube of gold.
It’s a similar story with government debt, which exceeds $56 trillion worldwide.
My friends at Silver Bullion (a state-of-the-art precious metals depository here in Singapore) recently put together a great infographic which visualizes all of this—over $1 quadrillion in the paper financial system stacked against the known supply of gold and silver in the world.
click image for massiuve legible version
Now, it may be a cute thought experiment to blast gold as a useless hunk of metal. But the reality is that gold will never require a taxpayer-funded bailout. It won’t crash the financial system. And it won’t enslave future generations to higher taxes and inflation.
On the balance, at least as a means of preserving assets over the long-run, ‘useless’ certainly beats ‘destructive’.
(Actually gold can be put to productive use and generate a rate of return—it’s just that such platforms are extremely rare. I’ll share some exciting developments on this front with you soon.)
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Can't click the image
Yes, clicking has the same effect as supporting the GOP one's whole life, as I have.
Clicking the image would be a barbaric act, to open one's eyes and thoughts to such anachronisms of the Golden past...
gold will never require a taxpayer-funded bailout. It won’t crash the financial system. And it won’t enslave future generations to higher taxes and inflation.
Which is a great list of the reasons why we are not allowed to use it as money.
I do agree that the Government should be compelled to require the seller of any good or service to list that price in gold as well as dollars and payable as such in either form.
"True pricing" as it were.
It simply makes no sense for the Pontiac Superdome to be sold for 300,000 dollars and still be worthless.
failpic.
You mean this one?
http://www.sovereignman.com/wp-content/uploads/2015/02/LiquidityPyramid.pdf
Links are hard. Bitching is easier.
Gruber was right.
Apparently actual fucking images are hard (somehow) vs PDFs. Fuck that.
Shut up Warren. Pay your back taxes and give your secretary a raise.
She doesn't deserve more for pdfing 1pg info graphics.
Buffetts handle here is AssholeOfOmaha not PoB
People like buffet criticize gold because it could all fit in a 20x20 meter cube, and simon shows this chart about what 1 quadrillion dollars looks like, but I think it's even more telling that technically you could fit 1 quadrillion dollars onto a single bill and eliminate that pile. The intrinsic value of all fiat currency is nothing. It costs no more to make a 1 trillion dollar bill than it does a 1 dollar bill, just ask Zimbabwe. Pieces of paper with numbers on them only buy thing until people lose their trust in currency since those in control will just make moar pieces of paper with numbers written on them.
Or you could, given enough time and printing resources, fill the entire universe with fiat.
It's rather poetic that in this thought experiment, blackholes are analogous to govt - productive assets in, never back out.
was an idea i had for a sci fi story. aliens that police the universe, looking for races, that only consume, and shoving them into black holes. kind of poetic justice as humans get stuffed in one.
Good point.
Alternatively ones and zeros are cheap...I could fit the entire world's "wealth" onto a small thumb drive.
Maybe Buffet would prefer that thumb drive instead?
Well said. Your example illustrates the point that fiat currency is based on 1) faith in its future convertility to another form and 2) as a fallback, its intrinsic value (lousy toilet paper)
arrowflinger, stickbow or compound? I like my longbow (reflex deflex so similar to recurve) but have a compound too for more accuracy at range. Also, Lars Anderson, wtf?
Compound, but quitting mechanical release and going back to fingers.
It made your butt bleed? All it did to me was nothing at all.
Click on Sovereign Man hyperlink, then Read Articles. It's the first entry. You can enlarge graphic from there.
I can click it.
try this:
http://www.sovereignman.com/trends/infographic-someone-please-show-this-to-warren-buffett-gold-vs-the-financial-system-16174/
$Trillions of Fiatso bucks are fewer electrons of storage than an 8 year-old lithium battery that won't take a charge has.
Exactly. Most of those derivative balances don’t even exist as paper. They’re just digital bits which could all be stored on a disk drive and zapped into oblivion with one “delete file” instruction.
Now there’s a happy thought.
A lifetime of work in bank savings........ZZZZZAPPPPPPPP!!!!!
It's coming and not a moment too soon, as people have forgotten what is real, what has value.
the reason that doesn't matter is 2fold:
1) everyone backs shit up
2) if it can be destroyed so easily, it can be recreated.
That said, I'm on my way home from my tech job with a kilo O's silver and an oz of gold in my bag that just got delivered today.
Moron supposedly drinks 5 cokes a day. Idjit.
Haven't you noticed how much richer he is than you? Or how old but healthy he is? Envy is a deadly disease. It rots the brain as you so wonderfully demonstrate.
Lady Liberty is only holding up the green and gold layers of Exeter's inverted pyramid. They are tangible. The rest is illusory, transitory, and subject to sudden disappearance in the event of an EMP event - accidental or intentional - on the storage devices.
Because no storage devices are stored in metal cages that might protect from an EMP.
Or that gold is somehow resistant from becoming radioactive...(big emp is usually from a nuke or the sun)
How big is the cube of fiat currency?
...Zimbabwe dollars, US Continentals, Confederate money, Reichsbank mark...
Cube dimensions need to be adjusted for purchasing power.
Bet PMs win.q
It's high time we turn those pyramids upside down. Maybe smash a few chess boards also.
Derivatives - "You didn't build that!"
You didnt build the equity you purchased on the public market either.
little different than derivatives. There is no collateral. ask GM
Useless? Can't eat gold so there. Yeah, well you can't build a cell phone, explore space or browse the internet without some of that useless stuff. And a burrito won't help you with that.
The Burrito fart has more BTU's than would be emitted by $10 trillion in electrons.
Good luck eating anything from 1836. My gold is still good from then.
You can't eat the paper based financial system.....
Why not just take that 67 foot cube and launch it all into deep space since it isn't worth anything? I guess the fun would really start after that.
But but but it would cost all the fiat to launch something that dense!
Warren Buffet is a barbaric relic.
http://www.sovereignman.com/wp-content/uploads/2015/02/LiquidityPyramid.pdf
Why do some people get so pissed off with me owning something as "useless" as gold?
If it's so useless, they shouldn't give a shit why I have some.
I don't give a mean rat's ass what they do with their money.
Or...does my gold threaten them?
If gold threatens them...then perhaps it is worth more than they admit
Excuse me...I need to phone my dealer.
Legit considered asking for my recent raise in bullion.
Depending on how the owner thinks PMs will go he could plan accordingly (eg expect to go down? Buy at spot. Expect to go up? Buy upfront in bulk.
Gold went up and down in a organized manner from 2005 until 2011. I traded certificates like a bandit...let it go up $60, sell...let it drop $40, buy. Bought and sold certificates at Scotia Bank...until the certificates started to arrive slower and slower. Sold everything at $1600 and started to buy actual in 2012. No more paper for me...everything was lost in an unfortunate boating accident.
If Buffett said gold was a great hedge, price would rise. He might be trashing and stacking, who knows.
Anyone who doesn't see the clear and present danger to fiat currency in this age of CB pumping is not paying attention.
Youre just jewing people by saying to click in the photo to make it bigger.
bitchett was into silver at $4 I think. I think he may have sold at $13 or so. Anyway, that bitch talks his book and, if he really doesn't understand why you own gold then fuck that dumbass.
A new way to hold gold.
http://www.peakprosperity.com/podcast/84359/new-way-hold-gold
Fiat money used to be worth more. In the 80's interest rates were 18% because there was demand. Now that rates are 0% it proves two points - fiat is a barbaric relic and Buffet is a shill for the fiat financial system he bet the farm on. By the time it's over Buffet will have to cut back to one cherry cola a day.
here is a higher resolution graph
http://www.silverdoctors.com/someone-please-show-this-to-warren-buffett-...
Hah. Warren, the fact that you can put all the world's gold into a relatively small cube is precisely why it is a great store of value.
Silver's cube is smaller. This is a great graphic.
Silver, bitchez!
I've yet to see a convincing study on how much fizzical ag is out there above ground. Wierd Bix says there are less silver ounces than gold ounces, other estimates say about 5 times more Ag (by extension, a cube of ~ 10 times the volume that of au) is the global stock. Either way, fizzical silver is greatly undervalued, so I agree. Silverfishez !
http://en.wikipedia.org/wiki/Silverfish
As the population, technology, infastructure and etc. grow, it is necessary to add to the money supply.
You can't do that with gold unless you
a.) print more paper backed by gold that doesn't exist
or
b.) strip mine the planet for resources wihch must be at a rate equal to or greater than the economic growth.
Then of course you have the Spanish problem where they found so much gold in the americas it completely debased the currency.
It's not about gold, it's about confidence in the currency.... in Roman times, Roman coins were forged, using similar roman stamps and MORE gold than the originals.... why would anyone do that ? Because it's about confidence in the currency. Even in a Casino, you have confidence in the chips and know the casino will pay out cash against them.
Incorrect.
Point "a)" is only valid if all the paper money (currency) printed is already equal to the value of all the gold backing it - AND that the value of gold is absolute.
But you're right about it being confidence in the currency. However, governments (politicians and central banks) have eroded that confidence by "printing" as much as they need to keep spending, thus reducing its value.