Gold And Debt: The 1929 Great Depression vs The Next Great Collapse

SRSrocco's picture

SRSrocco

By the SRSrocco Report,

The situation Americans face in the future will be nothing like anything they have experienced in the past.  While we have seen old footage and heard stories about the Great Depression (starting in 1929), we have no idea how bad things really were during the 1930's.

At that time, approximately 25% of the American population were farmers.  Thus, when things really got bad, folks in the cities could move out and stay with their families or relatives on the country farm.  This is not an option for most Americans today as only 2% of the population are farmers and ranchers (source).

After WWII, Americans left the farms in large numbers for the allure of the great life in the cities and suburbs.  For decades, living in the city or suburb offered Americans a much easier way of life as the United States had plenty of cheap energy and resources to tap into.

Matter-a-fact, after the 1930's Great Depression, U.S. oil production continued to increase for nearly 40 years:

U.S. Oil Production

Even though U.S. oil production declined some years (1930-1970), overall growth steadily increased in a linear fashion.  However, the recent surge in U.S. oil production (2007-2015), mainly due to the ramp up of expensive shale oil, moved up exponentially and will likely decline in the same fashion.  This will have a profoundly negative impact on the U.S. economy and financial system.

Furthermore, the U.S. was able to pull itself out of the Great Depression due to the fact that it was just starting to tap into its huge reserves of cheap, high EROI (Energy Returned On Investment) oil supplies.

For example, the massive Lakeview Gusher in California (1910) had an estimated EROI of 35,000/1 (source):

Lakeview Gushger

Basically, for one barrel of energy equivalent consumed to drill the Lakeview Gusher, it provided 35,000 barrels of oil.  Today, Shale Oil comes in at whopping 5/1 EROI and Oil Sands in Canada is about 4-5/1 EROI.

The EROI of U.S. Oil & Gas in 1930 was 100/1.  This includes exploration and production.  According to white paper, A New Long Term Assessment Of Energy Returned On Investment (EROI) For U.S. Oil & Gas Discovery and Production, the U.S. oil industry in 1919 was finding 1,200 barrels of oil for each barrel of oil equivalent energy it consumed in exploration.  Today it has fallen to less than 5/1.

As the U.S. oil and gas EROI declined, especially after 1970, the United States continued to thrive due to the Petro Dollar system and the ability to import high EROI from the Middle East and other oil exporting nations.  Unfortunately, this is not a situation that will continue for much longer as the massive debt in the system is unsustainable.

Comparing U.S. Debt 1929 vs Today

It's quite interesting to see how much of a change has occurred since the Great Depression.  While things were very bad for Americans in the 1930's, the amount of U.S. public debt per person was very low versus today:

U.S. Debt 1929 vs Today

According to several sources, the U.S. population was 122 million in 1929 while total public debt was $16.9 billion.  Thus, the average debt per American in 1929 was $139.  Compare that to a population of 320 million and $19.4 trillion in debt at an average $60,625 per American today.

NOTE:  A few readers suggested that I adjust for inflation in this example.  So, if we take $139 in 1929 and adjusted for inflation today, it would be worth $3,288.  So, the net difference would be nearly 20 times higher.

What is interesting about total U.S. debt is that after each World War, the total level of debt declined for several years.  For example, after the end of World War I, total U.S. debt fell from $27.4 billion in 1919 to $16.1 billion in 1930 (source).  This was also true after World War II when total U.S. debt fell from a high of $269 billion in 1946 to a low of $252.7 billion in 1949.  Over the next several, as total U.S. debt continued to increase, there were a few years that experienced declines (1951, 1956 & 1957).

However, after 1957, there wasn't a single year that total U.S. debt declined.... it continued to increase for 58 consecutive years:

FRED U.S. Debt

I believe the reason total U.S. debt was able to decline after each World War and during a few years in the 1950's, was due to the relatively high EROI of U.S. oil and gas.  Moreover, as cheap domestic U.S. oil production peaked in 1970, oil imports had to increase to supply the ever-growing sprawl of the AMERICAN LEECH & SPEND SUBURBAN ECONOMY.

At the peak, the U.S. imported a staggering 14.1 million barrels a day of oil in 2005 (net imports).  This accounted for nearly three-quarters of total U.S. oil consumption.  Again, the Petro-Dollar system allowed the United States to exchange U.S. Treasuries (paper IOU's) for oil.

As U.S. oil consumption declined after the 2008 Investment Banking and Housing collapse on top of increasing domestic shale oil production, net imports fell to a low of 4.1 million barrels a day in May 2015.  However, according to the EIA - U.S. Energy Information Agency's recent update (Aug 24th), net oil imports jumped to 6.6 million barrels a day (source).

So, now that U.S. oil production has declined 12% from its peak last year, imports are again on the rise.  Unfortunately, many oil exporters in the future will likely not take U.S. Treasuries or Dollars for oil.  This will cause serious trouble for Americans as U.S. oil production continues to collapse over the next 5-10 years.

While U.S. debt has exploded, so has the value of gold.

Homestake Mining 1929 vs Barrick Gold Today

If we compare the two largest mining companies in the U.S., we can see what a difference has taken place since 1929.  I was able to obtain several older annual reports from Homestake Mining, which was the largest gold producer in the country during 1929.

Here is a rare copy of Homestake Mining's 1929 Annual Report:

Homestake Mining Annual Report 1929

According to the USGS 1929 Gold & Silver Annual Report, Homestake Mining produced 312,328 oz of gold in 1929.  As we can see on the top of the annual report, Homestake Mining processed 1,437,935 tons of ore which resulted an average yield of 0.22 ounces per ton (oz/t).

Now, if we compare that to Barrick that produced 6.1 million oz of gold in 2015 while processing a staggering 139 million tons of ore, their average yield was a pathetic 0.04 oz/t:

Homestake vs Barrick Oz per Ton

When Homestake Mining was producing gold in 1929, it was extracting nearly enough gold per ton to make an 1/4 oz Gold Eagle (0.27 oz) versus Barrick in 2015 that wouldn't have enough metal to make half of an 1/10 Gold Eagle (0.11 oz) (source).

Furthermore, Homestake Mining paid its shareholders a staggering $1.7 million in dividends on total revenues of $6.5 million that year.  Thus, Homestake Mining's dividends were 26% of total revenue in 1929 and each investor received a stunning $7 per share.

Now, let's look how this compares to Barrick.  Barrick paid a total of $160 million in dividends in 2015 on total revenues of $9 billion.  Which means, Barrick's dividends were less than 2% of total revenues while investors received a paltry 14 cents for each share.

What a difference, eh?  By the way, Homestake Mining only had a little more than 251,000 outstanding shares versus Barrick's 1,165 million.... LOL.  So, if an individual had 100 shares of Homestake Mining in 1929, they would have received $700 versus Barrick's investors receiving $14.  The math is certainly not good for modern gold mining investors.

If we compare the cost to mine gold at Homestake Mining 1929 vs. Barrick Gold Q2 2016, there is a significant difference.  According to my adjusted income approach in calculating an estimated break-even for gold mining for each:

Homestake Mining 1929: = $17.33 oz (based on $20.63 spot in 1929)

Barrick Gold Q2 2016: = $1,152 oz (based on $1,259 spot in Q2 2016)

Even though Homestake Mining's 1929 margin of a 16% profit was only twice as high as Barricks Q2 2016 margin of 8%, we can clearly see the real winners were the Homestake Mining shareholders who made 50 times more money in dividends than Barrick's shareholders.

NOTE:  The margins were simply calculated by taking the cost of production by the spot price in both examples.

As we can see, producing gold for its shareholders was a much better deal for Homestake Mining investors than for Barricks.  Furthermore, a Dollar could buy a lot more gold in 1929 than it can today.

U.S. Gold Certificates 1929 vs Federal Reserve Notes Today

Prior to President Roosevelt confiscating gold in 1933, the U.S. Treasury issued Gold Certificates.  Thus, any American could go into a bank prior to that period and turn in their paper Gold Certificate and demand actual gold.  Today, if you tried to do that at any bank, they would bring everyone out from the back and laugh at you.

Below are two $20 bills.  The top is a $20 Gold Certificate and the bottom is a $20 Federal Reserve Note:

$20 Gold Certificate

$20 Federal Reserve Note

The $20 Gold Certificate was printed in 1929, and the $20 Federal Reserve Note was printed 80 years later in 2009.  Both are bills, but one was backed by real gold and the other is now backed by $19.4 trillion in U.S. Public Debt.  That is why it's called a "Note."

We must remember, a "Note" is an obligation.  When you take out a home mortgage or car loan, it can be also called a "Note."  So, all those Federal Reserve Notes we keep in our wallet or purse are debts or obligations we owe, rather than an asset such as a Gold Certificate that represents physical gold.

Here is another Gold Certificate printed in 1928:

$1,000 Gold Certificate

This $1,000 Gold Certificate was rare and even rarer today.  Of the 84,000 printed that year, there are only 200 available today to collectors (source).  The value of this $1,000 bill today ranges from $4,000 to over $20,000 depending on the condition.  So, not only did this $1,000 Gold Certificate represent a lot of value in gold at the time, it's worth 4 to 20 times more today.

If an American took that $1,000 bill and went to the bank to demand gold bullion in 1929, he or she would receive (50) $20 gold coins.  The amount of gold in a typical $20 St. Gaudens gold coin was 0.967 oz. (source).  So, even though the spot price of gold in 1929 was $20.63, when we multiply it by 0.967, we end up with almost $20.

Regardless, that $1,000 Gold Certificate in 1929 would enable the holder to a nice bag full of 50 gold coins.  The average cost of a new car in 1929 was $643 and a new median home price was $7,246.  Today, $643 would only pay half of the taxes on a $25,000 car.  Furthermore, $7,246 would be less than a third of one percent of a down payment for the typical $250,000 house today.

Lastly, $1,000 today in (10) $100 bills won't even buy you one ounce of gold.  All you could get today for $1,000 is 3/4 oz gold compared to 50 oz in 1929.

What a change in 85 years... eh?

Americans are in real trouble and I don't continue to say that just to be pessimistic or negative.  U.S. oil production is about to collapse while total U.S. public debt of $19.4 trillion turns out to be a staggering $60,625 for each American.  There is no way this debt will ever be repaid.

Some investors and analysts believe there should be a "Debt Jubilee" or a wiping out of debt so we can start fresh.  I would like to remind these "Einsteins" that wiping out debt also wipes out the supposed assets on the other side.  When assets implode, so will the capital available to the market for future economic activity.

Anyhow, U.S. debt will implode due to the collapse of U.S. domestic oil production on top of falling oil imports in the future.  This will create an event in history that will make the population understand the value of GOLD & SILVER once again.

While Americans have been suffering 45 years of Gold & Silver Monetary Amnesia, PRECIOUS METALS RELIGION will finally wake up the living dead.  However, when this occurs, I would imagine most Americans will be caught by surprise as many will be wondering why their Banks are closed for an extended "Holiday" and their brokers are no longer taking their calls.

While I have tried to wake up family and friends about whats coming, I hate to say...

GOD HATH A SENSE OF HUMOR.....

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

Check back for new articles and updates at the SRSrocco Report.

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Radical Marijuana's picture

I thought that was an excellent article

that understated things less than usual.

Overshoot in a nutshell happens because some people are abstractly able to appreciate the mathematics of exponential functions, but pretty well nobody can emotionally respond to the eventual consequences. Certainly, the established systems which are based upon public governments enforcing frauds by private banks, that make "money" out of nothing as debts to "pay" for strip-mining the natural resources of the planet as fast as possible, are based upon the vast majority of people having been conditioned to not understand, but rather, want to misunderstand.

http://www.youtube.com/watch?v=TFyTSiCXWEE

Peak mining & implications for natural resource management - Simon Michaux

The underlying problem of various manifestations of diminishing returns applies all across the board, and those problems multiply to compound each other, so that the synchronicities of exponential growths overshooting are yet another sort of derivative of still more exponential growth having even more non-linear consequences ... Those become even more difficult to abstractly understand in mathematical ways, and much more difficult to respond to at any gut level! Intellectually, it is like attempting a creative synthesis that multiplies the insights of Al Bartlett times Bill Catton.

In my view, the article above was still relatively typical in the ways that more than 90% of was good analysis, but then collapsed back to pretending the precious metals could be some sort of "solution." While I am sympathetic to those who like to continue to pretend that they can somehow become better prepared, I no longer believe that is practically possible.

My opinion is that money is measurement backed by murder.

Inserting precious metals into that ONLY results in that becoming

money is the measurement of precious metals backed by murder.

Within the lifetime of those still alive today, the previous systems of paper money frauds, backed by gunpowder weapons, have become globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs. Within that context, most of those who are attempting to become better prepared for the most probable finite futures of sociopolitical systems based on enforcing frauds, becoming exponentially more fraudulent, continue to tend to rely upon old-fashioned ideas, which were developed when there were ONLY paper money frauds, backed by gunpowder weapons.

What really EXISTS are globalized electronic frauds, backed by the threat of force of atomic weapons. Therefore, once again, while one can attempt to abstractly understand that, through using mathematics, the vast majority of human beings can NOT come remotely close to any appropriate gut feeling for those emerging REALITIES.

Maestro Maestro's picture

 

 

Smoke and write LESS.

 

 

Radical Marijuana's picture

Maestro, I may recommend that you too should enjoy life LESS.

Vlad the Inhaler's picture

Today is much different than the Great Depression because governments are absolutely shameless in what they will do to keep this propped up.  They'll buy up the entire market if they have to.  Of course eventually they must pay up but don't underestimate how far they can kick the can.

Radical Marijuana's picture

The central bankers are attempting to kick the can UP HILL,

while that slope is getting exponentially steeper, and higher!


Not even Sisyphus on steroids could continue to still do that...

Bemused Observer's picture

"I would like to remind these "Einsteins" that wiping out debt also wipes out the supposed assets on the other side. When assets implode, so will the capital available to the market for future economic activity."

And I'd like to remind THIS 'Einstein' that those assets, which he correctly described as "supposed", have been incorrectly valued, thus the capital they unleash is not real, not based on actual valuations. And yes, all that "capital" needs to be wiped out. Will that hurt? Of course it will. This is why you shouldn't fuck around with these things in the first place.

But the pain you've all been desperately trying to avoid IS coming, one way or another. So quit your whining about lost assets that were never there in the first place, and start getting REAL.

SRSrocco's picture

Bemused Observer,

Yes, I realize that the "supposed assets", are seriously inflated.  However, the collapse of both debts and supposed assets will destroy capital as well.

This translates to lower oil production, and growth.  Which means collapse happens quickly.

Steve

radbug's picture

Given the Australian experience in 1931, it's remarkable how inventive pathologists can be in mis-describing death by malnutrition.

CHoward's picture

Yeah...but we have really really smart people running the government and shit today so everything will be awesome.

ToSoft4Truth's picture

At a certain point it may be best to bail, fleeing north. 

Maestro Maestro's picture

 

 

You know, this can't be fixed.

 

Everybody's corrupt.

 

What does gold mean to a pig or a dog?

 

Truth is reality, i.e., what exists as opposed to what does not.

 

Americans (and we're all Americans now) pretend that the medium is the message.

 

What does that tell you?

 

Not even nothing.

oncemore's picture

I want to comment, that $60625 cleared off inflation , are $4383 in the 1929 parity. Inflation calculator shows something like 13.83 if compared 1929 to 2016.

$4383/$139=31

in the year 2016 we have 31x higher debt per citizen.

Sudden Debt's picture

The math in this article is so fucked up... it's bad.

The national debt was only 4 times smaller then it was today if you would apply the math right and it's still a shitload of debt.

But it's not about the current debt, it's about the obligations. Those where standing near zero in the 20's and now... it's like 7 times the GDP of the world.

And that's why you should own gold and silver.

It's not the size of the current debt witch is very high, it's the size of the debt that it will be in the comming 2 decades.

So if your younger then 40 years old and you would EVER like to retire, buying gold and silver now is that retirement fund you'll need.

Buy it, store it and forget about it for 20 years.

 

jfmoris's picture

   What if the (D)irtbags do an FDR on private gold ownership.

Bemused Observer's picture

I'm sure they've thought about it. But the logistics would be daunting. Very, very daunting. And would likely not yield nearly as much as some might hope.

So, would they take the risk? In my opinion, no. I see them allowing a price rise, to lure holders out to sell, and grabbing it that way. Get it at a lower price, right before it starts running.

It's just so much easier, and cheaper, to just 'print' up some extra fiat and get those holders to hand it over willingly. Especially if you already know that gold is on the brink of a run-up, and your fiat is on it's deathbed.

I've always wondered about those Cash for Gold places that seem to spring up overnight when gold starts going up. Who actually owns/operates them?

SRSrocco's picture

Sudden Debt,

I would imagine the math could be adjusted in many ways.  However, your notion that the debt will continue to increase for 20 more years fails to address the exponential trajectory.

There is no way the debt will increase for 20 more years.  It blows up way before then.  If you understood exponential equations and graphs, you would realize the U.S. debt increase is not sustainable for two more decades.

steve

SixIsNinE's picture

i agree with you - however, we're talking about .Goob & statistics - how has the .goob kept the debt below $20 trillion for the last 4 years?   by making it up.   we're still @ $19.4 trillion, according to the stats, which is about where it was 4 years ago, right?

SRSrocco's picture

SixisNine,

The debt was  $14.8 trillion five years ago. It's up nearly $5 trillion in 5 years.  That's up 32% in five years. It's doubled in less than 10 years.  Which means it would easily reach $40 trillion by 2026.  The interest on the debt would be silly.

U,S, debt can't grow 20 more years.  And, this doesn't even take into consideration that U.S. oil production will likely be down 75-80% by 2025.

We are in serious trouble.

Steve 

Doom Porn Star's picture

Federal medical care spending has been compounding at approximately 9% ( a little higher actually ) over the last two years since the ACA was implemented.   These two programs alone are responsible for more than 1/3 of ALL Federal spending.

At growth rates similar to the last two years Medicare and Medicaid costs will be responsible for more than 50% of ALL Federal spending by the end of fiscal year 2020 -only 4 years away..

FURTHER: at growth rates similar to the last two years Medicare and Medicaid costs will be responsible for more than 75% of ALL Federal spending by the end of fiscal year 2024 -only eight years away..

We will never get there...

 

https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts0616.pdf

 

...Oh, please do also note the sections carefully:

Pg. 9 concerning Federal Student Loans.

Pg. 10 Medicaid and Medicare outlays

Pg. 11 & 12 FHA

Pg. 14 Troubled Asset Relief Program aka TARP

( YOU tell ME if these are ongoing payments to OR from TARP )

Pg. 15 Interest on Treasury Debt Securities

Pg. 19 Unemployment Trust Fund

 

'EXTRA CREDIT' for finding where US Government issuance of IMF Special Drawing Rights to FED cartel banks is concerned.  

NO. NOT purchases of SDRs by the FED banking cartel.  

... ISSUANCE TO The FED Banks..

Tinky's picture

Interesting. Parse the SDR issue out a bit, would you?

Sudden Debt's picture

And yet it will, and for that you need to look to European monetary history.

There's plenty of examples over here where we had 90% devaluations in our currencies in just 1 year.

You can find those examples in the numis silver and gold coins. A 20 franc gold coin become a 250 gold coin overnight, a 5 frank silvercoin become a 50 frank coin overnight. They still had the same weight, only the carvings changed.

That's a destruction of all savings.

And whatever everybody will say. It was the best thing ever to happen to our economy.

It was a reset. It destroyed the old money and powers and everybody had a shot to start over.

Hard? O hell yeah!

It was the same as after WOII which was also a reset.

And like in a forest, a forest fire also resets everything so the little once get a shot to become great.

So whatever will happen, it's part of an ancient economic circle that will just repeat and has happened hundreds of times already.

And we do need a reset. ASAP. And sure a lot of people will suffer. The lazy and stupid kind. But if you have a brain, an idea and the skills, that will be your moment.

FEDbuster's picture

It would only take a tube of Krugman trillion dollar platinum coins to pay it off, once we go full Zimbabwe.

saldulilem's picture

lol @ barrel of energy

gregga777's picture

Haven't the inbred hereditary subnormal IQ elite morons at Goldman Sachs' Feral Reserve System done a fabulous job at maintaining price stability? Isn't that why they they go to those super prestigious Ivy League schools? /sarc

tarabel's picture

 

 

Precious Metals Religion?????

Never in my life have I heard a legitimate argument against the ownership of gold or silver.

Until just now.

Y'all have a nice ride on that Long Black Train.

DC Beastie Boy's picture

Gold has been the best performing hard asset the past 100 years which is an indisputable fact.  (Real estate excluded because of taxes, broker fees, etc)

brushhog's picture

I've owned 4 houses in my lifetime, and when I go back to when each one was purchased, what each one sold for, and then deduct the property taxes over the term of ownership and maintenance costs, gold ( purchased at the same time and held through the same period ) would have netted me more every time. I've run through the numbers for houses bought and sold by friends and family and the gold has out performed every single time...often by a long way.

Fed-up with being Sick and Tired's picture

I have done the very same thing: my last house "netted" us a big check but then I went back and calculated the taxes, insurance, upkeep and interest paid, and we netted only $20K. That was for 15 years of "ownership." That was our last piece of RE in our lives. We rent now and live full time in an RV (another whole picture of depreciation)...there is NO WAY OUT Completely, by the way.

RadioFlyer's picture

Depreciate the RV with some side business.

Vendetta's picture

so set the value of gold at $50k an ounce and back the money... what's the problem?

NoBillsOfCredit's picture

You should give some indication you are being sarcastic. Some people may think you are serious.

lakecity55's picture

Oooh! Ahhh! It would feel really good! I'd have a Central Bank!

LC55 Central Bank
In God We Trust
All Others Bring Gold

Doom Porn Star's picture

Bank Of Hard Currency

Bank Of Hard Knox

RafterManFMJ's picture

Your post made me feel funny in my secret zone.

RadioFlyer's picture
RadioFlyer (not verified) RafterManFMJ Sep 4, 2016 8:38 PM

Tingle in the GLD-Spot?

BurningFuld's picture

If we compare the two largest mining companies in the U.S.

Problem number two: Barrick is a Canadian Company.

lakecity55's picture

Ummm, I likes Canadian Gold.

free's picture

Yeah, anyone remember Bre-X?

Taught me a lesson about Canadian gold companies - paid some big tuition on that one.

Fuckers.

More_sellers_than_buyers's picture

My avatar is the Bre-X Headquarters

Latitude25's picture

You mean fake Canadian gold maples?  On my last visit to my LCS I tested some with bulliontest and they failed.

https://www.youtube.com/watch?v=5pZnqp3bl3A

OK go ahead and down vote me but if you own any I challenge you to test them.  I'd be happy to be proven wrong.

SRSrocco's picture

BurningFuld,

While Barrick is headquartered in Canada,  it runs the number one producing gold mines in the United States.  Even if we substituted American based Newmont Mining, the second largest gold mines in the United States, the results would be similar.

 

Steve

GRDguy's picture

What folks don't get is that both of those firms (and others) are controlled by the banksters.  They absorbed many individual successful mines to maintain that control.  That's why there's no serious investigations into fraud and manipulation. Gold is money and THEY know it.

Hubbs's picture

I was going to ask you on your blog site-either you or Mike Maloney as your work would be complementary in this calculation/presentation:

Is there a chart which shows the projected recoverable future gold reserves, (taking into account possibly two curves as representative of a range of recoverable gold based on factors such as known reserves, accessibility, cost of mining, EORI etc.,) and add this to the baseline of  the total known gold already mined/refined, and stored by sovereigns, investors, retailers, insurance compoanys banks etc....

 

and against this plot the current anticipated rate of world fiat money creation? Because of many different fiat currencies, could these currencies  be convereted into one unit of currency, preferably the dollar, based on today' relative values?

 

I know this is a tall order, and requires heaping inference upon inference, but it would give a good overview of not just the current theoretical price of gold , some say $5,000 others up to $10, 000 an ounce etc. but how quickly is this relationship changing  ie., how quickly is the creation of new world wide fiat out stripping the current availability of gold and the future anticipated availabiltiy based on future mining and refining to back it up?

 

Is there a role for silver to act as a secondary backing for gold, or is there so little silver available due to it's industrial consumption that it is no factor?

 

 

SRSrocco's picture

Hubbs,

You ask a very interesting question.  However, I believe future gold production will be a small fraction of remaining resources or even proven reserves.

Why?  Because, I believe global oil production will experience a Seneca Cliff like decline.  Thus, gold production will fall faster than the future forecasts.

New analysis that I just completed shows that it takes Barrick & Newmont 32 gallons of liquid fuel to produce one ounce of gold.  Now compare this to Pan American Silver primary silver mines consuming 0.2 gallons of liquid fuel to produce one ounce of silver.

Which means... it takes 150+ times more liquid fuel to produce gold than silver.

Lastly,  I believe the value of gold and silver will rise considerably compared to most paper assets and real estate.  This will be due to the rapidly falling EROI- Energy Returned On Investment and declining oil production. 

Steve

KansasCrude's picture

Hey Steve if the investment is just more paper non backed confetti also know as FIAT.  What difference does it make.  Or perhaps did you mean EROEI  Energy Returned On ENERGY Invested.   The accounting profession does not like the EROY as I here some now calling it.   Why confuse the crowd?

SRSrocco's picture

Kansas Crude,

While the correct abbreviation is EROEI, most of the scientists who publish white papers on the subject use EROI.  Don't mean to confuse, but the EROI is the standard abbreviation used by the top minds studying Energy Returned On Investment. 

Steve

GreatUncle's picture

A few readers suggested that I adjust for inflation in this example.  So, if we take $139 in 1929 and adjusted for inflation today, it would be worth $3,288.  So, the net difference would be nearly 20 times higher.

*************************************************************************************************

The US has never told the truth on the money creation program as the global reserve currency. You got found out once and had to come off the gold standard but you didn't stop. You carried on with even greater fraudulent money creation not restricted by the required gold to back it up anymore.

2008 though you got caught out again, you needed to create far more money than the concealed process in the banking system could genenrate because the real economy was no longer big enough to create the amount you needed. All done to combat the masked technology deflation and support sovereign debt, keeps the economy in a form that is good for them.

Games up, you are now forced to create so much that it is now revealed and debt is going to end up like in Japan.

The old economy dies that way money no worth, power = 0, so no longer able to be as it was and at that point ...

Clinton and WW3 starts to try and hide it.

Figure that is what's coming down the road, destroy everything to preserve themselves and an economy that is good for them.