Attendance is free for purchasers of the book Art of Wealth – FORTUNA. You will be notified of the webinar date by email.
Fill out the information below to register for the Gold and Silver webinar
Tears of the sun. The lust of kings. The love of the demigods. There has been no other metal in history that has been so adored and universally desired in all corners of the world. It didn’t happen by any force, it happened naturally. Love for gold and its artistic use burned in the hearts of Indians, Asians, Europeans and Africans. After the discovery of Australia, the love for gold also flared up on the continent down there.
From Africa comes the story of the richest man of all time. Mansa Musa is unknown to most people today. But as the ruler of Mali in the 14th century, he owned vast amounts of gold and gold mines. His gold fortune would be worth over $400 billion today. The key to understanding wealth in gold is not its current value in dollars, but how much that gold weighed. No one before or since has amassed such a fortune. Musa thought that gold was worth a lot because he had it himself and could buy whatever he wanted with it. He obviously did not understand what is the basis for the value of gold. That it is very rare. And as long as he alone has most of the gold and uses it piece by piece, its value remains. Because Musa did not understand this, he soon caused a disaster and as a result, almost no one heard of him for several centuries. But based on what he managed to do, or Musa just in case bribed the historians to sweep this difficult episode under the rug.
In 1324, Mansa Musa embarked on a pilgrimage across the Sahara to Egypt and through it to the Arabian Peninsula from Mali with a gigantic caravan, also loaded with huge amounts of gold, to visit Mecca and Medina. It is customary on pilgrimages to show charity, so he distributed so much gold to the poor in Cairo, Mecca and Medina that it caused his purchasing power to decline.
The basis for value is rarity. Gold is worth so much because it is very rare. And now Mansa Musa marches into the city, throwing sacks and sacks of golden grain from his chariots. At first glance, it was a blessing, but it ended in ten years of agony, economic crisis and hunger.
Due to the quantity of gold that suddenly appeared on a small piece of the world, gold was no longer rare. By now almost everyone had some. And the value of gold fell quickly and drastically. Prices skyrocketed, and first those who did not receive gold starved. And then the rest.
Even older is the story of gold from ancient Sumeria, one of the first civilizations in the world. From thousands of clay tiles as old as 6.000 years, translated by Zachary Sitchin, we learn an interesting story that we don’t know if it was true or if the best-selling science fiction novel of all time. On the tiles it was written, that the planet Earth was visited half a million years ago by a high technologically advanced inhabitants of the planet AN.UNAK.KI (50 of them came from the sky) and it states that they came from the planet Nibiru (Planet of the Crossing). The track of this planet is said to intersect with the tracks of the planets of our solar system.
And what brought space travelers exactly to our blue planet? Thirst for water?
No, the visitors were driven by the desire for gold. In other words, a deadly need for gold.
The Sumerians say that AN.UNAK.KI needed gold in order to sprinkle gold dust in the atmosphere of their planet in order to strengthen their protective mantle. They obviously destroyed the environment of their home planet by acting irresponsibly (sounds familiar?).
The Sumerians wrote many more things about AN.UNAK.KI and carved them into various clay tiles. But for our book, it is an important fact that visitors from another planet started digging for gold in Africa, in the area of today’s Zimbabwe. And soon AN.UNAK.KI encountered an insurmountable fact: there is so little gold on the entire planet that all the gold that has ever been mined in the world could be put into 3 Olympic swimming pools.
How the story of AN.UNAK.KI’s efforts to save their home planet ended, the clay tablets do not tell (or that ones did not survive the millennia). But since the rise of the first civilization in the world, gold has been the eternal desire of rulers (and with them, of course, all people).
Gold has many wonderful physical properties, it is easy to form and is ideal for making beautiful ornaments. It never tarnishes, not even seawater corrodes it, even most acids are powerless against gold. Gold is so to speak eternal and eternally beautiful. Above all, gold is extremely rare.
Gold is the easiest of all metals to forge. It can be stretched into a wire one atom thick, which can then be stretched significantly further before it breaks. Such types of nanowires are deformed through the formation, reorientation and migration of dislocations and crystal twins, without any noticeable increase in hardness. One gram of gold can be rolled into a 1 m2 sheet. Gold leaves can be thinned so long that they become semi-transparent. Transmitted light appears greenish-blue because gold strongly reflects yellow and red light. Such semi-transparent sheets also strongly reflect infrared light, which makes them useful as thermal protection in the visors of heat-resistant suits and space suits. Gold is a good conductor of heat and electricity.
By 2019, man had mined 205.238 tons of gold from the earth. This corresponds to a cube with sides of 21,7 meters. About 50% of the new gold goes to jewelry, 40% to investments and 10% to industry. Gold’s high ductility and malleability, resistance to corrosion and most other chemical reactions, and electrical conductivity have led to additional use in corrosion-resistant electrical connectors in all types of computer devices (its main industrial use). Gold is also used in the protection against infrared rays, the production of colored glass, the production of gold leaf and in dentistry. Some gold salts are still used in medicine as anti-inflammatory drugs. As of 2017, the world’s largest gold producer is China, with 440 tons annually.
All gold ever mined in the world in history amounts to 205.000 tons. We assume that absolutely nothing was lost, although it is estimated that about five percent of the gold, despite careful storage and partly due to use in industry, was still lost. Source: Wikipedia
205.000 tons sounds like a lot. But gold has an exceptional density, it is a very heavy element. Therefore, let’s imagine the amount of gold in the form of a cube. All 205.000 tons of gold that have ever been mined can be packed into a single cube with an edge of 21,7 meters.
That’s it. One cube with an edge of 21,7 meters for all 7 billion 800 million people living now and billions of people to come after us.
Something very rare and highly desirable commands a high price. But according to this interpretation and according to the facts, gold is still significantly too cheap. I will explain why this is so and how the price of gold is actually manipulated bellow.
The total amount of gold ever mined is therefore estimated at 205,000 tons. Part of this gold is kept by central banks because gold represents the basis of their value, all the rest is paper money, which loses value year after year due to inflation.
Officially available data offer a picture of the 10 largest gold reserves according to the central banks of individual countries
There are 7 European countries with Russia on the list of top 10 gold reserves. Only 3 central banks (China, India and Japan) come from Asia. But where is the rest of the world?
What can this foretell for future demand for gold from central banks (and residents) from Asia and other parts of the world?
China or India alone have several times the population of the entire United States or Germany combined. China and India have traditionally valued gold very highly and have been increasing the amount of gold they buy for gold reserves year after year.
However, compared to Germany or even the USA, thousands of tons separate them in terms of gold per capita. This alone means that the demand for gold will only continue to grow.
After about 8.000 years of mining gold, certainly the most sought-after element in the earth’s crust, the supply of gold that can still be mined with known reserves and current technology is nearing its end. In any case, experts’ assessments speak of a near future in which the relative end of global gold mining will be realized. According to forecasts, this scenario will already happen between the years 2030 and 2050. At that time, you and the readers of this book will be closer, just before or already at the time of retirement. And at that time, we will mostly need an asset whose value will not decrease and will be liquid, which means that you can sell it at any time. If the extraction of gold through mining will then end or at least drastically decrease and become more expensive, this will definitely raise the price of gold upwards.
A similar prediction applies to silver. Both precious metals have been mined for thousands of years, and sooner or later every deposit is depleted.
According to forecasts, gold will already run out in around 2030. Silver will run out about 5 years after that. In any case, very soon!
Therefore, it will no longer be possible to extract gold from nature in such a way, volume and cost. There will come a day when the headlines will be filled with titles: The gold has run out. The gold is gone.
But when it comes to the luster of gold, numbers can dazzle us, and I have in mind, above all, the official statistics on the gold reserves of central banks. We should be mainly interested in the stocks of the central bank of the USA or the FED. The United States is said to store 8.134 tons of gold in the most protected fortress in the world, Fort Knox, as well as at West Point and the Denver Mint.
Such a mass of gold was reached, among other things, by USA handing it over for protection, this also applied for example in, France or Germany.
But how do we know that Fort Knox’s vaults (and those of other central banks) really hold exactly as many tons of gold as official records indicate? Central banks offer a simple answer: you have to trust us because we are central banks.
No central bank allows inspection by independent auditors.
But many experts seriously doubt that the central banks still have as much gold reserves as shown on paper. Based on several years of events, they believe that the central banks, led by the FED and the International Monetary Fund, decided to lower the price of gold as much as possible in order to convince citizens that the system of paper money is better than gold. Therefore, physical gold, which should be in the vaults of central banks as a national treasure, began to be lent to commercial banks.
At first the system worked fairly well. The summary, according to Jürgen Müller’s description, goes like this. Central banks lent physical gold to central banks at very low annual interest rates of 1-2%.
The commercial banks immediately sold the gold they obtained on the market (and the gold therefore moved into people’s safes and turned into rings, earrings and necklaces). The money they received was used for loans to gold mines at a slightly higher interest rate of 3-4%. The banks therefore earned something from the difference between the interest rates. The gold miners, happy with the large loans at low interest rates, also began to mine gold in areas where gold was more difficult and therefore more expensive to extract. The idea was that the mines would pay the commercial banks in gold, which would then return it to the central bank.
Anyone who learns nothing from history, must experience it again. Central bankers have forgotten the story of Mansa Musa and the increased supply of gold (or that’s exactly what they were planning to do).
Since a larger amount of gold appeared on the market, which should have been in the cellars of central banks as the basis of the value of the national currency, the price of gold on the market naturally began to fall.
So the spiral started…
Since gold was now worth less on the market, the gold held by central banks was worth less. This reduced the value of gold loans to commercial banks and the value of interest.
Mines, which due to cheap money, started mining even in layers where there was less gold and it was more difficult, i.e. more expensive to obtain, faced a problem that they could not solve: the cost of producing gold increased, the price of gold fell, while loans and interest remained as they were before the fall in the price of gold. In order to repay the value of the credit, they now had to accumulate significantly more gold, which was less valuable, and the production costs increased! As a result, the lifetime of the mines was shortened, and due to the lower value of gold, investments in the search for new deposits were no longer worthwhile.
The mines thus found themselves in trouble when it was necessary to supply gold to commercial banks. Instead of how to return the gold they lent to the central banks, they were concerned with how to increase short-term earnings by a few percent. The commercial banks of liquidity, which they obtained by buying gold from central banks and selling it on the market, no longer invested in loans to gold mines, but bought government bonds, which yielded a percentage or two higher interest.
Bill Murphy, chairman of the American Gold Anti-Trust Action Committee, estimated in 2005 that central banks lent around 20.000 tons of gold to the market to keep the price of gold from rising. However, it is not clear whether, due to the described problems, the commercial banks returned this mass of gold to them (in whole or in part). This number must therefore be deducted from the central banks’ official reserves. Central banks do not allow independent audits of gold stocks. For example The last time the USA allowed an audit of its gold reserves was way back in 1955. So only ten years after the end of World War II and then never again.
A special example is the gold reserves of Germany. In addition to the events described above, the special feature of the German case is that it keeps only 2% of its 3.364 tons of gold in Germany. But where is the remaining 98% of German gold? Experts agree that most of it is actually in the US, in the basement of the New York Federal Reserve Bank, and that Germany will never physically see it. What kind of balance is it that you have only 2% of the entire stock in your possession, and 98% in another country, at the other end of the world. And it is clear for this country that it is lending gold from its reserves to the market in large quantities, from where it no longer returns. Not only did the US refuse Germany’s request to return the gold. The US did not even allow Germany to audit its own gold in FED warehouses.
Reading this story, do you think the meticulous Germans would have found that a lot of gold was missing?
The last to recover their gold reserves from the US were the old-school French. In 1965, Charles De Gaulle demanded that the US hands over its gold reserves to France. He did not choose words and means. The US resisted, but finally, in 1971, a French warship entered New York harbor with one mission: to take home French gold.
Let’s remember that this battleship sailed past the famous Statue of Liberty, which France gave to the newly founded United States, and that it was France that helped the United States defeat Great Britain with huge financial support. Even this gigantic cost brought the people of France over the edge and in the end they themselves carried out the revolution and shortened King Louis XIV by his head.
So the Americans saw that the French were serious and, given their extensive experience with guillotines, preferred to hand over the gold to them. But, this successful venture in 1971 was the last time countries holding gold in the United States were able to obtain or audit gold from the United States.
A flash for thought: if central banks like the FED say that gold is a relic of an old age, that now is the age of new, paper money and that it is the future – then why are they clinging to gold so much? It is obvious that they are playing a double game.
It is therefore difficult to determine what the actual gold reserves of central banks are. We only have two options. To completely trust the central bankers and tell yourself that everything will be fine. Or, on the basis of this information, determine that the time when gold will begin to be scarce has come even faster.
Despite the efforts of central banks to lower the price of gold and make the precious metals sector as unattractive as possible, the price of gold continues to rise. In the last 15 years, it has achieved an average of 8% return in price growth. And you pay no income tax on that return!
Gold and silver do not bring any return, interest, dividends. Lying in safes only creates costs. This is the opinion that the central banks want to instill in you.
Why do central banks want to lower the price of gold and silver?
Zakaj je potrebno zniževati ceno zlata in srebra? Da v očeh ljudi ne bi bila videti kot vrednost, ki bi lahko ponovno postala osnova za denarni sistem krit s trdno vrednostjo. Če bi se to zgodilo, bi se elite morale odpovedati strojem za tiskanje denarja iz nič. Elitam namreč bolj ustreza, da iz nič ustvarjajo tisoče milijard papirnih, zdaj elektronskih in kmalu verjetno še valut v kripto obliki.
Obenem pa zasebne ustanove kot je FED za uslugo ustvarjanja denarja iz nič računajo še obresti. Z njimi služijo in obenem še kontrolirajo finančne tokove in rasti ali pa padce gospodarske aktivnosti (krize). Morebitne slabe posledice tako plačajo ljudje s svojimi prihranki in nižjim življenjskim standardom. Sistem kot obstaja sedaj vedno ustreza elitam na vrhu. V času gospodarske rasti jim gre odlično, saj so lastniki kapitala, proizvodnje in celo tiskanja denarja. Elitam pa gre odlično še bolje v krizah, saj lahko takrat natisnejo še več obresti in jih posodijo dalje v bančni sistem. Kasneje bodo za to glavnico dobili še plačilo v obliki obresti. In še nekaj gre na roko elitam: čas krize je za njih čas poceni nakupov. Ker imajo vedno denar lahko kupijo realno vrednost, podjetja, proizvodnjo, intelektualno lastnino po nizkih cenah.
With a monetary system that is backed by gold or silver, the elites are limited and can only spend as much money as is backed by gold or silver. Therefore, money maintains its value stably and requires that it not be spent endlessly in investments. This gives people a salary in a currency that actually has value and does not lose value. In this way, people can create a stable asset by saving, which ensures that they will survive future crises, unforeseen events and have enough money even during retirement.
Capital, on the other hand, must invest money wisely, which brings sustainable profits. So everything returns to some kind of normality, it comes out of the crazy world, which demands higher profits because of more money, more interest, which requires more production for lower costs but causes the destruction of the environment, natural resources and, last but not least, the entire society, which ends up with a pile of worthless money and buy waste products and garbage.
Investments in mining stocks. Only shares of those trades that do not hedge trades. The 16 largest mining companies represent the HUI index. Since 2000, this index has grown several times higher than the index of companies with hedge trades, the XAU index.
Determining the price of gold:
In times of crisis, when the state relies on less and less valuable paper money and wants to steal the last assets from the citizens, the state even goes to such an extreme and underhanded measures as the confiscation of assets.
More recently, the country had the luxury of confiscating gold in the United States, the Soviet Union, and China.
While for communist countries you would still think that it is possible that they stole people’s gold as well, if they had already taken all their other property (and often even their lives), for most people such a fact is extremely unbelievable.
And indeed, even in the USA, the “land of the free”, known for its gold miners, in 1934 President Roosevelt enacted a law that made the government’s private ownership of gold a criminal act. The owners of the gold had to sell it to the government, and at a much lower price. Whoever did not do this and kept (part of) the gold risked a fine of 10.000 dollars at the time (today’s value would be around 210.000 dollars) and/or 10 years in prison!
Until 1974, i.e. for 40 years, it was illegal for people to own gold in the USA.
Thus, the state deprived people of the opportunity to protect themselves against the devaluation of money.
Only in 1998 did Russia start allowing its citizens to start buying and storing gold.
China, however, barely started changing laws in 2002 that severely punished people for owning only a few grams of gold.
Therefore, based on historical experience, gold is in danger of being seized by the state in times of crisis and confiscated from citizens. That is why it is extremely important that you buy and protect gold in such a way that the state will not be able to get to it, even if it wanted to.
Gold therefore maintains its purchasing power value through years, decades and centuries.
It is not taxed, profits from its sale are tax free.
It is liquid, you can sell it anytime and anywhere in the world.
Even small pieces have a high value. Two or three kilograms of gold in a bag is already a real asset.
Old wisdom saying: whoever did not have to sell his gold had a peaceful life.
Another old wisdom saying: whoever owns gold has a peaceful life.
How to properly buy gold, secure it and make the most out of gold ownership?
Register for the free Gold and Silver webinar.
All calculations and results in the techniques described in the book are examples and are not a guarantee of future results or for all users. Author Martin Korošec, official representatives of the publisher and the company are not financial advisors, stockbrokers or registered investment advisors. All types of investments or named companies or financial instruments are presented for educational purposes only and not for the purpose of recommending a purchase. Consult your chosen licensed advisor before investing.