Health Care in the US
(again shows gold headed past $25,000/oz)
Silver Stock Report
by Jason Hommel, July 26th, 2009
Many of my readers are investors, and investors are usually older, and thus, tend to spend more money than average on Health Care. But the average is so high as to be startling.
A quick wikipedia check shows that Americans spend $2 trillion per year on health care. In a national economy of about $14 trillion, that's 1 dollar in 7 spent on health care.
I always like to compare such large numbers to the size of the silver and gold markets.
World silver mine production is 600 million oz. of silver per year. But investors only buy 100 million oz., and the rest is consumed by industry (and jewelry and photography, both of which are simply different industries).
So, investors put 100 million oz. x $13/oz., or $1.3 billion into the silver market each year. Compared to health care? $2 trillion is $2000 billion.
$2000 billion / $1.3 billion = 1538.
Thus, Americans spend $1538 dollars on Health Care for every $1 they spend on silver.
But nobody spends $1 on silver, the realistic minimum would be at least one ounce, which is $13.
So, stated another way, Americans spend $13 x 1538, or $20,000 on Health Care for every 1 oz. of silver that they buy.
But again, most silver investors don't buy 1 oz., they typically buy 100 oz. So, again, stated another way, Americans spend $2,000,000 on health care for every "average" 100 oz. silver purchase of $1400!
Let's compare to gold.
The world gold mines produce $80 billion of gold. $2000 billion / $80 billion = 25. Americans are 25 times more likely to spend money on Health Care than on gold.
Well, not really, that was American Health, vs. World gold. Americans buy about 5% of the world gold market, and are about 25% of the world economy. So, Americans are about 25 x 20, or 500 times more likely to spend money on Health Care than on gold.
Financial Health is much less of a concern than Physical Health, for most Americans who have the money to spend.
Perhaps I could have made far more money, and gotten far more readers, writing a Health newsletter than a Financial Newsletter?
Clearly, gold and silver markets are not at a top. In fact, rather than gold being a small portion of health care, it should be the other way around! Only a small portion of world gold production should be spent on health care, with the rest being spent on "everything else"!
Or, stated another way, gold prices would have to rise 25 times, just to allow world gold production to equal the amount that Americans spend on Health Care.
Or, stated another way, if Americans had to use "real money" to buy everything that they want, gold prices would have to rise at a minimum of 25 times, but probably several times higher than that.
So when gold bugs say that gold will soar well past $25,000/oz., that's an understatement, and anyone who gives a lower number, really has a weird basis for their claim, or it's beyond my comprehension. Perhaps lower numbers are only a short term prediction.
Needless to say, as a free market advocate, I'm radically opposed to nationalized Health Care.
Lost in the debate is the fact that we all suffer from the same disease; it's called death, and we were all infected at conception, due to inherited sin from Adam and Eve.
The only solution is Jesus, who died in our place, for our sins, so that we might have eternal life if we have faith confess our belief in the resurrection.
But until the return of Jesus, Human Death is an incurable condition, and it is inevitable, we can only postpone it. And often, spending an inordinate amount of money doing so can be compared to vanity, false worship, wastefulness, or selfishness. Why so? Because the amount of money that you can spend trying to prevent the inevitable can stretch towards infinity.
The "practice" of Health Care can be defined as trying to prevent death, which is the inevitable. We are not cars that can always be restored! We are people, and we die.
It cannot be a "human right" to be provided with infinite amounts of other people's money to try to prevent the inevitable!
On the other hand, it certainly is a human right to be able to spend your own money on whatever you wish, such as preventing or postponing your own death, at whatever the cost, no matter how wasteful, because it's your money, and your decision!
If government health care is going to be designed to save money overall, then it must naturally grant human rights where they don't exist, and trample on human rights where they do, and restrict access to doctors who can help to delay the inevitable, which is death.
Thus, nationalized health care, to save money, can only restrict access to health care, not increase it, and will cause more death.
Health insurance is a vastly different issue than health care.
I don't have health insurance. Neither does my wife and our four boys. Neither does my older brother, nor does my father in law. Furthermore, I don't provide health insurance for any of my employees. Instead, I simply pay them higher wages, and they can decide for themselves how to spend it.
We don't believe in insurance. Any insurance. I'd rather trust the Lord in Heaven, even if he may have plans to smite me with an incurable disease, rather than trust the solvency, reliability, and honesty of an insurance company. Most people have far more faith than me, since they would rather trust such companies, but I think such faith is misplaced.
My father sold insurance. They were not even very reliable to pay for advertising after it was sent out, let alone the claims! Insurance companies make all the money. They know the risks, they are the ones with the information to know they are getting the best side of the trade. Banks and insurance companies are the ones who own all the big buildings, so you know they are the ones raking in the money, not the people who own the policies.
Instead of wasting money by giving it to large companies, we try to be pro active about keeping in good health.
I suppose I could write about that, but that would be the topic for another newsletter.
I realized after the President's address, that our nation's monetary system, and tax system, have helped to create the inefficiencies in our modern health care system. Wages are taxed. Benefits are not. This is not a loophole, it's reality, because many forms of benefits cannot be properly valued. For example, if I provide a gym to my employees, they don't have to report a gym membership as wages. Similarly with insurance. If I give health insurance to my employees, that's not taxed. Thus, it is to the benefit of companies to provide benefits such as that to employees, since it prevents government theft of their productivity.
The problem is that when the employer chooses, it restricts market choice. And for one employer, it is impossible to choose what is best for each employee, but only what is best for the employer.
Insurance also increases costs for everyone in multiple ways. First, there is a reduced sense of personal responsibility for one's heath if one has a sense of "coverage". Second, by introducing a third party to make the payment, it opens up possibility of fraud on all sides. Hospitals can defraud insurance companies, who can defraud covered people, who can defraud insurance companies.
Third, neither doctors nor consumers are cost conscious of treatment options. Well, actually, that's not entirely true, since perverse incentives exist. Doctors are given monetary incentives to prescribe the highest cost treatment options when there is third party insurance. Thus, a quadruple bypass operation might be more likely to be prescribed than herbs or amino acids that might be more effective, such as cayenne pepper or grapefruit to dissolve the fatty deposits and chelating amino acids such as lysine, or minerals such as magnesium, to help dissolve the calcium deposits. And clearly, there will never be a University sponsored or Medical establishment recommended double blind study to prove the difference or best combination of nutritional remedies that cannot be patented.
And conversely, HMO's have incentives to provide the least costly treatment option, except they must "go with traditional medicine", such as the quadruple bypass, or be accused of cutting corners. And both options are entirely without regard to what is best for the patient.
And if there are that many problems with a third party, such as insurance companies getting in the way, imagine how many more problems there will be if government gets involved!
Oh, and finally, no matter what topic I discuss to highlight the importance of real silver, people accuse me of all sorts of "deviousness" and "selfishness" to market "the silver scam", and inevitably, at least one person will rudely demand to be removed from the list as I have insulted their sense of fairness, or I hit a hot button with them.
Excuse me, how can silver be a scam? With the silver investment market being only a $1.3 billion market, and with a standard mark-up of about 2.5% for the dealers, the potential profits for the entire silver bullion investment industry are only $1.3 billion x 2.5% = $32 million for the entire industry.
Oh yes, what scammers those silver peddlers are, hoping to suck the economy dry with their paltry $32 million total annual profits to be shared among all of them combined. That's less than the annual salary of many sports stars. I tell you, the accusers have no sense of size, no basis for comparison, no sense of right and wrong. Those who are so easily offended will surely get what they deserve, which is nothing, as silver continues in this inevitable and unstoppable bull market.
Let's look at a way to visualize inflation.
It's amazing that people can't see the theft, and even that so many
will argue in favor of deflation, meaning that "the dollar
is getting stronger" when that has never taken place over the long run in
the last 95 years.