This piece from Mexican Billionaire Hugo Salinas Price follows on from the article of his we posted last week. He turns his thoughts to what the global “gold supply” is really made up of. How most of it is “in hiding” and he comments on what it will take to bring it out from hiding. As always from Mr Salinas Price, it is an insightful read…
By Hugo Salinas Price, Plata.com.mx
The supply of gold is largely misunderstood. According to MSM, gold supply is what is mined every year and brought to market – about 2,500 tonnes.
This is a big mistake. The supply of gold is calculated at about 170,000 tonnes, made up of virtually all the gold ever mined since mankind took notice of its existence as shiny yellow pebbles in sand “placers” in riverbeds. Every ounce –every gram – of this supply is owned by someone, either a person or an institution.
This brings up another point, which I have never seen mentioned: since every gram of gold in existence has an owner, then the effective world demand for gold is 170,000 tonnes, and increasing every year to take up all 1.5% additional production offered for sale. This is an undeniable fact, because when you own something, you are exercising a demand for it. When you no longer demand something, you either throw it away or sell it. A gold owner who no longer wants to own gold, for whatever reason, will instantly find a buyer because gold is the most marketable commodity that exists. No amount of additional gold can exceed demand and bring down the price, because every one of the present owners wants more gold, and the number of those who would like to be owners of gold is practically the whole human race!
170,000 tonnes of gold – the figure is an approximation, as no one really knows with any certainty how much gold there is in the world – have to be passed on from one generation to another by their owners, millions of human beings. Some gold is owned by institutions and of course can be retained for years by these entities, but the greater part of gold in existence is in the hands of individuals.
During the past one hundred years gold has been going into hiding. Humanity has fallen into an anti-human condition of servitude where humans do not receive the treatment that they deserve, from their rulers. Rulers there have always been, and despite the arguments of the anarchists – people who explain that we really don’t need rulers – we probably always will have rulers and the ruled.
It would be an inaccurate description of the condition of humanity in the 19th century, to say that it was lovely and splendid in every sense. But one thing we can state is that during that century the world saw more progress toward a life of increasing prosperity and ease, than in any other period of history. This was because governments around the world, generally speaking, knew that there were limits to their sphere of action and that people were human beings, and not cattle to be numbered and manipulated, ostensibly “for their own good”. You did not even require a passport, to travel around the world.
Wickedness there has always been, but in the 19th century we saw, again generally speaking, that around the world there was respect for what I would call the humane political economy. This involved respect for private property; respect for the Rule of Law; respect for inviolability of a man’s home. Everything that we think of as civilization is involved in the humane political economy, and that included respect for the institution of money as gold and silver.
In the period between the world wars, there was still a residue of respect for human beings. In those years the schooner “Yankee” sailed from Gloucester, Mass. on four world cruises, captained by Irving Johnson, accompanied with his wife, “Exy”. Young men and women had their fathers pay for their cruise around the world as crew on the “Yankee”. Ports around the world welcomed them with open arms, not an enemy in sight. Those were dream days! A close friend of mine, Harry Wright, had the privilege of enjoying one of those memorable circumnavigations.
What a great and dreadful change has come over humanity, and in what a short time it has taken place! Governments around the world have assumed a new and fearful aspect. Gold cannot be used as money. The Chinese government is actively urging the Chinese to acquire gold and silver for their savings, a sign of wisdom on the part of the Chinese government; however, gold is scorned and feared by most governments; some may even resort to prohibition and persecution at some point, later on. Gold is not allowed to perform its useful function for humanity, as the ideal means of exchange.
If humanity has thought fit to value gold and accumulate it from the dawn of history, our modern-day governments, especially Western governments, do appear incredibly ignorant and arrogant in their attempts to banish gold from the monetary and financial scene, and more than that, to attempt to erase gold from human memory. With a stock of 170,000 tonnes and growing, held mostly by millions of individuals, governments are not at all likely to succeed in this pathological attempt to deny human nature, any more than they would succeed in attempting to banish sex.
Humanity’s 170,000 tonne hoard of gold is constantly migrating from one owner to the next, as one generation is succeeded by another. A small part of this migration takes place through the Exchanges where gold is bought and sold, but most gold is transmitted from one owner to the next in a secretive manner.
On the Exchanges, the price of gold is manipulated and vastly understated by the nefarious interference of Western governments colluded with the bankers that deal in bullion. The collusion is indispensable in order to maintain the illusion that the vast amounts of Bonds sold by governments have any value. Every rise in the price of gold is a virtual discount on Bonds, corporate and governmental. The danger perceived by governments is that the increase in the price of gold may at some point direct all investors to gold rather than Bonds; a very real danger indeed, for the sellers of paper Bonds.
A small part of the supply of 170,000 tonnes comes on to the Exchanges by reason of those daily changes of ownership and from miners who have to sell their gold; it is this gold that is used to manipulate the price of the total supply.
The huge total supply is not participating in the market at all. The vast majority of owners refuse to part with their gold at the ridiculous prices assigned to the metal; forgetting this fact, MSM wrongly concludes that what the miners must sell every year is the “supply”.
However, it is not only a question of a higher price to bring the total supply – or at least a considerable part of it – to market. The deeper question is: if the owner is to part with his gold, what can he expect in return? Can he expect to recover his gold if he invests it? Certainly not! Then why part with it in the first place?
The world has come to a bankrupt, dead end in political economy. The ideas which have prevailed for the last hundred years, can find their origin in the idealistic thinking of Plato, who wrote the most atrocious, inhumane book on political economy back in the 4th century B.C.: “The Republic”. He was the original Leftist. Leftists since his time have learned nothing and continue to present themselves as “idealists”. By “idealists” they mean that they propose a world which would suit them, albeit it means plain slavery for their victims. They are the habitual “improvers”, who want to improve things – using other people’s money, of course.
I remember a conversation with a journalist who was a Leftist. I noticed he didn’t wear socks – I guess he thought wearing socks would brand him as “bourgeois”. I told him I thought the organization of an ant-heap was somewhat similar to his idea of a well-organized society. He answered me that “Yes, human beings should learn to behave like ants and bees”. I said, “But humans are not ants or bees”. He responded, “But that would be the best organization.” Plato would have loved him. Such are Leftists.
These people have captivated the world’s imagination, in spite of the dreadful results of their ideas in actual practice. The politicians and bankers are in their thrall, and humanity pays for it all in increasing woe.
Politicians and bankers are not thinkers. Politicians have one single aim in mind – reelection. Bankers for the most part (99.99%) are employees, most of whom do not think much, if at all.
Back in the early 70’s, when Mexico was in the throes of a bout of leftist interventionism, with a government soon to go bankrupt, I had a conversation with an American banker friend. After he had two martinis before lunch, I asked him: “Why does your bank continue to lend money to the Mexican government? Don’t you see what this government is doing?” He answered me with unforgettable words: “To make a buck, Hugo. To make a buck.”
The amount of paper Central Bank International Reserves, excluding gold, back in 1971 was $50 billion dollars. On the 18th of January, 2013, the amount totals $10.933 trillion dollars – an increase of over 201 times in 42 years. “To make a buck.”
The greater part of the world’s supply of gold – 170,000 tonnes – will remain in hiding until the world’s rulers decide to become humane.
Is there a chance that may happen? It could happen if some rulers heading nuclear powers were bright enough to cast off the truly silly and obstinate policies of the present majority, turn their attention to building a framework of political economy in accord with the requirements of human nature (which is precisely what the Founders of the USA put together) and give up on “improving” conditions by making them worse with paper money.
“Hope springs eternal in the human breast…”