As the world turns and we gear up for a pain that will be felt through out the world (for those that do not heed the warning it will be worse) because of human nature we want to wait till the right time to invest let alone make sure we have enough funds to invest in something the strangest thing which is the factor of being human is we want to wait till just before the increase in price to buy because we do not want to lose value lose money and lose our personal dignity.
Because of this human delay however we loose sight of the facts and where we are eventually going to end up and then I and others will be called the great fortune tellers with the crystal ball as I have no crystal ball and if I did I definitely would be no prophet
The glory goes way above me and to our maker I just can't help the fact I am interested in this stuff It is extremely exciting we all have to process information and academically speaking they take all the fun out of it in school ( sit there while I explain history and repeat what I say) we are in the time where learning has to be practical and easily applied that's the only way I know to learn and use what I hve learned and teach others to do the same although we are different we have similar learning patterns it is the ability to access those patterns and the ability to accept different patterns of learning
Hence the best way to apply what you know is to teach others yet I learn from reading listening and video I try to make that available for those that visit here you however will have to find a local mine in your back yard to really seek how they did things in history because when you are present at that mine think back in time how many people really set foot where you stand on the real dirt and grime blood sweat and tears of tough work mining truly is stored energy (stored human energy)
world population video:http://www.youtube.com/watch?v=4BbkQiQyaYc
by these simple charts you can see why 10x10 in todays standards equals 10000 times more people than before and that is the factor for all markets
Read how mike Maloney puts it into perspective below
Many analysts in the precious metals community claim that gold is the ultimate wealth insurance because it maintains its purchasing power throughout the centuries. There is an old myth they propagate that in ancient Rome an ounce of gold could clothe a man from head to toe with a toga, sandals, and a belt, and that today a man can still clothe himself in a suit, shoes, and a belt for the price of an ounce of gold. They claim that this has always been the case. Nothing could be further from the truth. Before the Federal Reserve was created in 1913 you could buy a man’s suit, shoes, and belt for an ounce of gold, and gold’s price was $20.67 per ounce, but due to inflation, by the end of the roaring `20s you couldn’t. At the beginning of the great depression gold was still $20.67, but because of deflation you could once again buy the outfit. Then in 1934, as the dollar was devalued, gold’s price rose to $35 and you could now buy an exquisite outfit, but by 1970, with gold still at $35 per ounce, it would only buy the shoes, but just ten years later, when it hit $850, it would buy a topnotch suit, very fine shoes, and a great belt. Then by the year 2001, when gold bottomed at $252, it could only buy a shoddy suit, cheap shoes, and a crummy belt.
Yes gold is always worth something, but it has always varied in a range of purchasing power. This myth that gold maintains the same purchasing power throughout the centuries is based on the true fact that we mine gold at about the same rate as the growth of the population so there is relatively the same amount of gold per person on the planet today as there was in ancient Rome. So let’s dissect the myth of the Roman suit and see why gold’s purchasing power has varied, and what it could be in the future.
The gains in efficiencies made since ancient Rome are mind boggling. To make a toga required either cotton to be hand planted, hand tended, hand picked and hand separated from the seed, or it required sheepherders to tend small flocks of sheep and then shear them by hand. Then the cotton or wool had to be hand washed, hand combed, and hand spun into thread, but the spinning wheel was yet to be invented, so a spindle and distaff (basically two sticks) were used instead. This was a very laborious process so it could take someone weeks to make enough thread for a toga. Then the thread was hand dyed with hand made colors that had been hand mined or harvested. Then it had to be hand woven on a two person vertical loom (again, slow and laborious.) Then the cloth was cut to a pattern and hand stitched into a toga. The shoes and belt were equally labor intensive.
Today, with factory farming, cheap fuel, modern irrigation, and pesticides it’s possible to tend thousands of acres planted at densities never before imagined. Giant combines drive through the field plowing the dirt and sowing the seeds in one pass. At harvest time specialized combines pick the cotton and other machined separate the seed. With factory ranching efficiency is the same story with thousands of sheep being tended and shorn in production line fashion. Then trucks deliver the cotton or wool to where it’s washed, combed, and spun into miles of thread in minutes, then dyed with cheap mass production dyes and woven into miles of cloth by machines... again in minutes. Then the cloth is stacked many layers thick and a computer guided shear cuts out dozens of each of the parts of the suit in a single pass. The parts go to an assembly plant where workers, who specialize in making the left sleeve, or right leg and such, do so at amazing speed. Workers that can turn out dozens of suits per day do the final assembly, also at a blazing rate. Then it’s shipped to a store where you can pick from dozens, or even hundreds of styles, colors, and sizes. It’s a similar story at the shoe factory that spits out a pair of shoes every few seconds, and the belts that come off the production line by the thousands.
The end result is that the “time value” of the Roman outfit most likely measures in months of human labor, whereas the modern suit contains only a few hours of human time. This is true of all the other stuff in society as well. When it comes to the time value contained in stuff… everything today is on sale for a tiny, minuscule fraction of what it once cost. And as proof to support my thesis I offer this… Today a good percentage of the world’s population has maybe a hundred times more stuff than 99% had 2,000 years ago. Think about it. You are surrounded with furniture, cell phones, computers, TVs, refrigerators, grocery stores, cars, planes, hotels, restaurants, a great bed to sleep in at night, and just about anything else that you want. By contrast 2,000 years ago most people, with the exception of the ruling class, lived a subsistence living barely able to afford the things they needed to survive. In many cases a great bed or pair of shoes were extravagances they would not experience in their lifetimes.
So if this is true… and it is… then why is gold’s purchasing power so low? If there’s so much more stuff per person, but the same amount of gold per person… shouldn’t an ounce of gold buy many, many, many times more stuff than it does today? Absolutely, emphatically, YES… it should.
Then why doesn’t it?
Because of the other big factor in busting this myth...
In ancient Rome, if you wanted to save some of your wealth for the future there was only one asset available for you to save your purchasing power in… real money… the gold and silver coins that made up their money supply. Today if you want to save some of your wealth for the future you do so with financial assets such as stocks and/or bonds, and maybe a tiny portion of currency in a checking account. These highly liquid assets actually compete with gold and silver as a place to store your wealth. They all dilute each other’s purchasing power.
So that’s the answer… competing fiat currencies and other financial assets. In ancient Rome there was only one place to store your wealth… today there are thousands. The gains in purchasing power that gold should have made due to man becoming so much more efficient at making stuff, have been almost exactly offset by alternative liquid financial assets in which to store that wealth.
Highly liquid world financial assets (which exclude all real estate, any business not listed on an exchange, and derivatives) total about $230 trillion. Total world currency, including bank deposits, stands at about $50 trillion. So that’s a grand total of $280 trillion of liquid assets. That’s $40,000 worth of wealth per person on the planet stored as transient digits in computers.
Today, investment grade gold (coins and bars) held by the public totals about 1.1 billion ounces and there are about 7.1 billion people on the planet. That’s 0.15 ounces of gold per person. At today’s prices it’s about $200 worth of gold per person. If you include official reserves, such as central bank gold, you get about $400, and if you include all above ground gold, including things like jewelry and religious artifacts… in other words, all the gold ever mined in history, you get about $800 worth of gold per person. That’s it… That’s all.
With technology, machinery, and super cheap energy we’ve become a thousand times more efficient at producing stuff, and at the same time we’ve created a thousand more ways to store our wealth. If it weren’t for all those competing currencies and alternative financial assets gold would buy many, many times more stuff. But even with all this competition, because of the gains in efficiency, an ounce of gold should buy 10 men’s suits today. And if fiat currencies were to fail (like they always have) then it should buy a hundred or a thousand.
So what happens to those alternate financial assets in the inevitable market crash that lies out there in the future? Those trusted financial assets suddenly become, hocus-pocus, voodoo, financial assets and their value evaporates, just like those AAA rated Mortgage Backed Securities did in the crash of 2008. What happens to fiat currencies in the coming currency crisis? All those currencies become hot potatoes that nobody wants, causing hard assets, like gold and silver, to be bid up to the moon. Either way, gold will buy a whole lot more stuff someday in the near future.
So you have $40,000 worth of wealth per person stored in alternative liquid assets compared to just $200 per person stored in investment grade gold. That’s a 200-1 ratio. That means that in a crisis if just 10% of the wealth invested in those alternative assets were to come chasing gold, its price could rise 20-fold.
The moral of the story is… If you want to buy 20 suits, shoes, and belts a few years from now… buy an ounce of gold today.
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