Monday, December 27, 2004
Tuesday, December 28
The other day I said
Since my return from Cabo, I've learned that Gold production is declining. Production is estimated to fall from around 2500 tons to 2000 tons over the next ten years. The reason for this was a lack of Exploration during the 1997 - 2002 period. During this period Exploration budgets had been cut by 67% simply due to the fact that Exploration programs weren't profitable with a Gold price below $350 / ounce. No Exploration means no new Gold deposits ! Like so many products that become short in supply, it takes 4 to 10 years to correct the imbalance. Think not only gold mines, but paper mills and refineries.I knew the 50,000 tons was a large number, but I just learned that in all of mining history 145,000 tons of gold have been mined and 15% of that has been lost, leaving 123,000 tons. Imagine our trading partners are exchanging our paper for over 51,000 tons of gold a year or over 40% of all the gold still in existence in the whole world!
Last month the trade deficit for just the month was $58 Billion. That is almost $2 Billion per day! If a tonne of gold costs $14 Million, our daily deficit is equal to 143 tonnes per day or 4290 tonnes a month, 51,480 tonnes a year! Why would anyone accept our paper for over 50,000 tons of gold that is in short supply?
Muy Incredible! This will not end well.