Gold: The End and The Beginning
Here is the latest post by Gary Christenson. We all know the debt in the US continues to rise but Gary has some interesting charts to show how gold is undervalued.
Click here to visit Gary`s site for some other articles.
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Gold prices peaked in January 1996 and then fell for 3.5 years into a multi-decade low. It was the age of stocks, debt, leverage, and good times; nobody needed or wanted gold.
Since the gold price peak in 2011 the Federal Reserve has “generously” supplied the world with trillions of dollars of newly created digital and paper debt, all backed by nothing but faith and credit. Bonds have rallied and the S&P is higher by 50% or so. The Japanese Central Bank has similarly produced trillions of yen, bought stocks and bonds, and extended their recession several more years.
Yes, the past four years have been a repeat of the age of stocks, debt, and leverage, but only the financial and political elite experienced good times. Debt is massively higher and gold is still bumping around a bottom.
- Gold dropped from about $405 in January 1996 to $253 in July 1999: 38% in 42 months.
- Gold dropped from about $1900 in August 2011 to $1070 in July 2015: 44% in 47 months. The drop is similar to the 1996-1999 collapse.
The US national debt has steadily increased. Examine the following two graphs regarding gold and the national debt.
WHAT THESE GRAPHS SHOW:
- Gold prices increase with national debt, with notable exceptions such as 2001 and 2015 – circled in green. Those exceptional prices did/will correct higher to match the upward trend in national debt.
- Gold prices in 2015 are clearly low compared to long term national debt, as they were in 2001. Expect gold prices to rise substantially to compensate for the past four years of declining prices.
- The ratio of gold to population adjusted national debt for the past 20 years shows that gold prices rise along with both population and the inexorably increasing national debt. Currently the ratio is at the low end of its multi-decade range. Gold prices will rise more rapidly than population and the national debt for several, probably many, years.
Examine the 25 year log scale graph of gold and note points 1 – 4 on the graph.
CONCLUSIONS:
- The sun will rise tomorrow and national debt will continue its exponential increase.
- Gold prices will rise and fall but inevitably follow the increase in money supply and debt. The next big move will be upward to match the exploding national debt.
- The ratio of gold to national debt is currently low, based on decades of history. Expect the ratio to increase in the next several years. Since we absolutely know that national debt will increase, gold prices have considerable upside, even without hyperinflation or a currency collapse.
Gold prices could (I doubt it) fall further in the short term, since High Frequency Trading dominates trading action, and central banks need to hide the fact that their policies and currencies are failing, which usually means they suppress gold prices. Gold was formerly the “canary in the coal mine” indicating the failure of monetary and fiscal policies. But active suppression of gold prices has replaced the “canary” with a plastic look-alike that disguises the warning signal which tells us that something is very wrong with our monetary policies.
However, it is only a matter of time, whether it is days or months, before the consequences of massive debt and uncontrolled “printing” of unbacked debt based fiat currencies sink more of the world into “Venezuela conditions.”
Paper currencies, central banks and delusional paper promises will fail. We need something better. Gold and silver come to mind…
Gary Christenson
The Deviant Investor
Hope at least one of you got in to FMG. Told you a deal was coming. This is a terrific deal.
Bob M. time to do a write up on FMG.
Thanks Peter,
al
Peter R:
I was buying shares in this 8 years ago for $.25. Those shares are now worth $.04 after 8 years of little action except for management collecting salaries for doing nothing. Are you certain you want to want me to write this up?
FMG could be a poster child for projects that eat investor money and accomplish nothing at all. This is not a good story, it’s a bad story.
Bob, I suggest you review the history again. You couldn’t be more wrong. No salaries paid for years and even when there were salaries they were minimal. FMG wasn’t even listed until 2010/11. Don’t even think it ever existed as a private company 8 years ago. I suggest you review you history. Every junior has been completing next to nothing the last few years to stay alive and minimize dilution. Your statements apply to everyone including GCU. You must be having a bad day. If you don’t see they potential in FMG you are crazy.
Peter:
Sorry about the eight year comment. I was wrong, it wasn’t eight years.
It was 8.5 years ago that I bought shares.
Please don’t tell me that, “Every junior has been completing next to nothing…” Including GCU.
I wrote about GCU in December when they had a stock price of $.10. They went to $.33 in April giving everyone who listened to me the chance to make a 230% profit and then returned to $.10 giving everyone who listened to me yet another chance to profit as they just accepted an offer that will be worth in excess of $.33.
A lot of companies have come and gone in the last 8.5 years. I’m not at all impressed with FMG and what is at best a non-binding agreement. Maybe someday FMG will do something.
Thanks Robert.
Bob, How much did you invest?
Those are the charts the gold shorters and haters can not respond to without looking more silly.
Goldcorp now has a 10% position in TMM with the sale of infrastructure for Ana Paula.
Am I reading Garys chart wrong or is it showing gold should be at $1600.?
turn it upside down bb its $910.00,,,lol
where is that chart?
Top of the thread Al.
JJ, I know it doesnt really matter to traders, but for share buyers it kinda does, gold may very well get to $900, maybe even hit $400, silver could hit $4.
If it stays at those levels any length of time debt with any company could very well kill them.
Anyone understanding how banks work has to ask themselves if thats not the idea
We are talking with Gary right now.
How about a chart with not just official U.S. debt but all the money the Fed has created and distributed amongst central banks that keeps their ponzi going…..
How about Shadow Stats CPI in Fed note terms from 1980 to present day vs. gold in 1980 vs. today….
What I find disingenuous are traders that knock gold on a regular basis to fill their jolly souls when the Fed has destroyed their currency and padded the wealth of the psychopaths that rule with said debasement and destruction.
The Federal Reserve is the problem and gold is the solution and that is no laughing matter for the citizens of the US and the world.
Just heard on bnn 20 of 25 analysts said Gold Corp was a buy.
So that means sell? Are those the same analysts who all said the Fed would hike?
I dont know the value of bnn analysts, I really dont watch it, just happened to see it today.
I just thought it was interesting.
I havnt looked at gold corp so I couldnt say if I would own it or not.
I actually have more companies I like than I have cash to buy them.
Might be the same for most “investors”.
First Mexican Forms JV to put Guadalupe Property into Production
Vancouver, British Columbia. First Mexican Gold Corp. (the `Company` or `FMG`) (TSX-V: FMG, Frankfurt: 21M) is pleased to announce that it has signed a non-binding letter agreement (the “Agreement”) with Link Natural Resources FZC (LNR), a private entity in the United Arab Emirates (Dubai), to enter into a 50/50 Joint-Venture (JV) with the intent of putting the Karen zone into production at the Company’s Guadalupe property in Sonora, Mexico. The agreement is subject to a 30 day exclusive due diligence period.
LNR has been granted the right, for a period of 30 days from signing, to complete due diligence, and, at LNR’s discretion, to finalize a definitive agreement with the Company (within 40 days) to acquire a 50% interest in First Mexican’s Guadalupe property which is located along a trend of long term producing mines in the Sierra Madre Occidental.
“We’re very pleased with this development and with a completed definitive agreement First Mexican shareholders will have exposure to a fully funded program at the Karen zone which also allows the Company to significantly expand its exploration program to other high potential targets at other prospective sites on the property.” remarked Jim Voisin, President & CEO.
As per the following terms LNR would acquire a 50% working interest in exchange for a scheduled investment within the first year totaling US $8.0 million in consideration for:
• Payment of non-refundable $100,000 (US funds) to secure exclusive stand still during due diligence period of 30 days, this is applicable to total investment;
• Providing the necessary funding to permit and advance the Karen zone deposit into commercial production targeting mineable Gold & Silver mineralization from surface (US $5.0 million);
• Further advancement of other high priority targets on the property will have a dedicated budget (US $1.0 million);
• An agreed cost recovery payment to First Mexican Gold Corp (US $2.0 million).
The partners will create a joint venture company (“Newco”) in order to complete the 50/50 JV, with First Mexican to remain and designated as operator.
LNR retains a 33 day option to purchase 2,000,000 common shares of FMG at a price of $0.05 per share (Cdn funds).
The terms of the definitive agreement will be subject to the approval of the TSX Venture Exchange.
Some Historical Data
Karen zone drill highlights to date (all near-surface intercepts, see news releases dated April 28, 2011, Feb. 27, 2012, and Oct. 15, 2012) and Diana zone drill highlights to date (all near-surface intervals, see news release on March 10, 2011) are as follows:
Drill Hole Length (m) Au (g/t) Ag (g/t) Cu (%) Ag Eq. g/t *
KAREN
HDH 09-01 5.8 3.67 753 934
HDH 09-02 15.2 2.58 47 198
HDH 09-03 39.2 6.06 669 .94 1094
RC hole #2 2.0 1.48 1330 1357
RC hole #3 18 6.52 61
HDH 11-04 15.2 1.57 336 .18
plus 22.35 .35 200 1.21
HDH 11-05 33.46 4.27 395 1.24 785
HDH 11-06 21.60 4.90 104 .73
HDH 11-27 9.70 6.22 1853 12.62 3288
HDH 11-28 1.50 .56 20.4 .20 73
HDH 11-29 12.20 1.86 70 .14 177
plus 51.85 .16 6.15 .52
HDH 11-30 24.40 .34 25.8 .42 87
including 1.50 4.44 380 1.64 792
HDH 12-32 7.65 3.64 217
HDH 12-33 10.9 2.70 152 .20 306
DIANA
HDH 11-09 15.70 .77 105 146
plus .70 2.58 12 .12
HDH 11-10 39.0 .40 135 153
HDH 11-11 49.50 .42 86 107
including 13.30 .75 195 231.