Refuting Myths about Gold
by Jason Hommel, October 28, 2002
Now refuting (47) false ideas about gold and
precious metals that prevent people from investing in them. I
have attempted to refute these false ideas to convince people to change
their minds and behavior, so that they can protect their wealth by
owning gold. False ideas about gold have been systematically put
forth, as propaganda in America, through the schools &
universities, newspapers & TV for generations. These false
ideas are deeply rooted in the minds of many people, having become a
part of popular world-view of American culture, which is why I call
them myths. Only a few people see through the myths to recognize
self-evident truths easily. Others need more help, which is the
purpose of this list. Most people will only begin to wake up to
reality when they see the price of gold move far higher than they
thought possible, and they start struggling to understand what is going
I have been working on this list off and on since
the spring of 1999, but never published until now, October 2002.
Anyone is welcome to copy, change, or distribute
this list (especially gold dealers and gold newsletter writers).
Please include this introduction to credit http://silverstockreport.com/
Please tell me about any suggested changes, so I can
update and improve the list. Email ideas to
1. I can't afford the risk of investing in gold:
Wrong. The real risk is in not having any
gold. If you do not own gold, you have put 100% of your portfolio
at risk to go to zero. Every investment is a risk. The
value of cash can go to zero with runaway inflation. The value of
stocks can go to zero after bankruptcy. The value of land can go
nearly to zero in a depression when there are no buyers, and you have
no ability to pay an assessed property tax, and the government puts the
property up for auction to pay the tax.
Today, in the fall of 2002, the United States is
experiencing large trade deficits, which is putting very strong
pressure on the dollar to devalue about 30%, or more. So there is
a huge risk for holding cash or bonds. The flat out truth is that
gold and silver are the very safest investments you can own.
2. U.S. Treasury Bonds are the safest investments in the world, my broker told me so:
Wrong. Your broker does not work for you;
brokers work for investment banks. The banks are partners with
the government, and the government has bonds to sell. Bonds have
a risk that gold does not have. Bonds can drastically swing down
to zero value in two different ways, either due to inflation or
default. Gold represents "payment in full," cannot default, will
never be inflated away, and will always be worth something substantial.
The U.S. has actually defaulted on its monetary
obligations numerous times in history. In the revolutionary war,
money to pay the soldiers was printed up that became worthless.
In the civil war, greenbacks were printed up that became
worthless. Then, the fed defaulted on the dollar in 1933 and
later in 1971.
And even if U.S. Treasury Bonds are paid off by
printing more paper money, who is to say that the paper dollar of the
future will have any value at all?
U.S. Treasury Bonds are a con game that has two
purposes. First, bonds enslave the government to the ones who
issue the debt, because the borrower is the servant to the
lender. Second, by offering bonds to the public, bond purchases
help to siphon money away from people in the economy who would
otherwise have no other option but to either save their money, or to
invest directly into the economy which would allow them to prosper and
3. I'll buy options or futures contracts on gold when the time is right, not gold itself:
Don't be deceived. Options and futures
contracts are not the same as gold, and are no substitute. They
are contracts that will be defaulted on when gold makes the big move
up. Futures contracts in platinum already defaulted in the year
2000 when there was a platinum shortage. Read my last two essays
for the reason why the default will happen: "Impending Gold Futures
Default" at http://www.gold-eagle.com/editorials_02/hommel052902.html
and "Controlling Gold with Paper" at
4. Why do I need gold if the dollar is still backed by gold?
The dollar is not backed by gold. Dollars
could no longer be redeemed for gold within the U.S. in 1933. The
overseas dollar defaulted on the promise to be redeemed in gold in
1971. Since then, there is absolutely NO gold backing the dollar
5. Ever since the U.S. won WWII, the dollar is
supported by our military might, and oil, so we don't need gold to back
Is that why war with Iraq is on the horizon now in
fall 2002? In point of fact, there is a huge supply and demand
deficit in gold. But the most important point of all is that the
U.S. can't make war on everyone in the world who buys gold or refuses
to hold paper dollars.
6. The only reason gold might go up in value is a potential war in the Middle East.
Wrong. Gold must go up for a long list of
fundamental, long term, systemic reasons related to supply and demand
factors. The media falsely claims that war, or short term
political tensions, are the only reason gold "might" go up because most
political worries are temporary. For the most part, political
worries or rumors of war are distractions from the real risks, which
are pervasive, systemic, and long-term.
7. The U.S. government still has gold; and that still backs the dollar at least somewhat, right?
Wrong, and this brings us to the fundamentals.
If the 7700-tonne (248 Mil. oz.) U.S. gold reserve still exists (and
some seriously doubt that it does), it would only provide an ounce of
gold for about every $33,000 dollars that exist as M3, the most
comprehensive measure of dollars available.
Source of M3: http://www.federalreserve.gov/releases/h6/Current/
Source of gold at the U.S. Mint: http://www.fms.treas.gov/gold/index.html
This is not opinion here. Look up the numbers
and do the math. (8.3 Trillion dollars in M3 / 248 million oz. =
$33,467/oz.) If you really think that U.S. gold reserve is
backing the dollar, then you must value gold at over $33,000 per ounce
as a necessary logical consequence of what the numbers actually
are. Stated another way, if gold is valued at $334/oz., only 1%
of U.S. dollars (as M3) are backed by gold, and that's IF the U.S. gold
reserve actually exists.
Now the concept of "gold at $30,000/oz." doesn't
mean that an ounce of gold will have the purchasing power that $30,000
does in the year 2002. It will probably be much less. One
"myth" is that we tend to think of the dollar having a relatively
stable value. By the time gold hits $30,000/oz., the value of the
dollar will be much lower.
And I am also not saying that an ounce of gold in
the future will have the same purchasing power it does today. Not
all of the price change will be due to dollar devaluation. Gold
will probably be much more valuable than it is today, and that is
extremely difficult to quantify, and it certainly cannot be quantified
in dollars which are not a stable unit to measure anything.
Further, I am not predicting gold will be
$30,000/oz., and then stabilize at that price. By the time
fraudulent dollar excesses are blown off between now and the time gold
hits $30,000/oz, in all probability there will be further increases in
the number of dollars printed, and/or added to the electronic banking
system. For example, it will take some time for gold to move from
$300/oz. to $30,000/oz. If M3 increases by a factor of 10 in that
time, then the real target price becomes $300,000/oz.
But not all the U.S. gold is for sale. That
hypothetical gold amount of U.S. Treasury gold above is simply used to
point out the problem, and calculate that theoretical target
price. Since that gold is not for sale, or if that gold does not
exist at all, then the dollar will drop in value to a point where the
dollar gold price is much higher than $30,000/oz. gold.
Additionally, if the vast majority of dollar holders
decide, due to a sudden burst of rational thought, to abandon holding
the dollar in favor of holding gold, the dollar price may well exceed a
million dollars per ounce. And again, this doesn't mean an ounce
of gold will have anything close to the value of a million dollars in
As an example of the difficulty in determining
changing values, a silver quarter was once a day's wage. Suppose
that in the future, a silver quarter will be worth a day's wage again,
or over $80 (a day's wage) in 2002 money. But then again, due to
mechanization and increased productivity, perhaps a day's wage in the
future will not be one silver quarter, but perhaps 4-5 silver
quarters. In that event, an ounce of silver in the future may
well be worth about $80/oz., as measured in 2002 dollars, up from
8. Now that Gold and Silver are no longer
backing the dollar, the metals are just like any other commodity, and
are therefore no longer money:
That's absolutely false. Precious metals are
unlike any other commodity. They are extremely scarce, are not
destroyed by dividing into smaller units, can be melted together again,
and don't rust away or spoil.
Most other commodities have less than one-year
supply above ground, and are consumed or spoil in less than a year, and
are unfit to use as money. Grain is an exception, as it can be
stored for up to 20 years, and grain was also used as money in historic
Gold has 50 times as much above ground supply (130,000 tonnes) than is mined each year (2500 tonnes).
GOLD IS MONEY, and remains as money throughout the
world, used by banks, central banks, governments, and people.
If gold truly were just like any other commodity,
then those people who create the economic propaganda would be just as
pleased that "consumers are spending" whether they were buying gold or
cars. Obviously, gold is very different.
9. Gold inflates just like paper currency:
No, it does not. The supply of gold worldwide
increases by about 2% per year, about the same rate as the increase in
world population, so that the amount of gold available per person
remains at a constant of about 7/10ths of an ounce.
So, while the supply of gold has increased by a
factor of 2 in 30 years, the supply of dollars in U.S. banks (M3) has
gone up about 30 to 100 times! They say that the dollar inflation
rate is low at about 3%, but those are government statistics that don't
include the cost of housing, fuel, and food; in other words,
lies. A more accurate inflation rate for dollars created might be
obtained by looking at M3 increases. From 1980 until 2000, this
grew at 6.7% annually.
And actually, the supply of Silver (available for
sale at the COMEX) has decreased dramatically. I don't have a
source or URL for figures, but here's what I have in my notes:
In 1990, total world silver was an est. 1,340 million oz.
In 1995, total world silver was an est. 850 million oz.
In 1996, total world silver was an est. 700 million oz.
In 1998-99, total world silver was an est. 400
million oz., and people were predicting that in five years, there would
be no more silver. I've been watching silver since 1998, and I've
watched COMEX inventories fall from 400 million oz. down to a low of 70
10. Gold does not do anything; it just sits there:
Wrong. In contrast to all other paper
investments or paper contracts, Gold can never lose all of its
value. That's quite an amazing accomplishment, and a very unique
and valuable property. In contrast, every paper currency ever
created in the history of the world has always gone to its intrinsic
value, which is zero. Gold keeps men honest, and prevents the
theft of your wealth through inflation. In fact, gold cannot even
be taxed away, (like land), because governments have no way of
detecting whether or not you actually own any gold. Those are
three amazing qualities of gold, that when considered all together,
make something wonderful; gold's value can't go to zero, & it can't
be inflated away or taxed away.
11. Gold does not pay an interest rate:
Wrong. From 1971 until 1980, gold increased
from $35/oz. to $850/oz. That was an increase of about 24 times,
2400%, or an annual increase of 34%. Even a bond paying 34% would
not be as good, because a bond paying that high of a rate would most
likely default, and remember, gold can not default. The best
investor in the world, Warren Buffet, has only been able to increase
his portfolio at an annual increase of about 20% over the years.
Gold, as an investment, for a certain time period, has vastly
outperformed the best money managers in the world, and gold will do so
again for everyone who owns it now.
12. The world can never go back to gold and silver:
Wrong. For over 6000 years, gold and silver
have been money. They continue to be money today (metals are
loaned out at an interest rate, and are still used and held by banks
and nations and wise investors), and will be the most popular money on
earth again, (if it isn't right now).
Under a gold standard, society prospers and human
productivity increases, which causes the gold you own to be able to buy
more and more over time. Under a gold standard, entrepreneurs are
better able to plan for the future, and invest wisely, and thus, create
a better life for everyone.
13. The banks are selling gold:
Yes and no. Officially, they have sold a mere
10% of their reserves in the last 10 years, from about 34,000 to 30,000
tonnes. And many banks have bought gold. Besides, annual
supply is 2500 tonnes, and demand is 4000 tonnes. There is not an
oversupply, but an under supply of gold in the world.
Actually, the banks are selling gold, but they are
doing it secretively, through loaning it out, but still claiming it as
a holding and asset on their books. The best estimates are that
about half or less of the approximately 30,000 tonnes of central bank
"official" gold remain in their vaults.
And why are they selling gold secretively? The
people who create and control the dollar (Alan Greenspan and the
Federal Reserve) must attempt to force the price of gold and silver
down to keep the dollar strong. If people see gold and silver
going up, they will be more likely to spend dollars for gold. And
if people flee the dollar, and buy gold and silver, the con game of
paper money comes to an end. But their con game will end, as they
But the real point is that central bank sales or
loans are not, and can never be, an infinite supply; but rather, a
limited supply. When that supply stops, as it must and eventually
will, (and there's no way to tell exactly when this will happen) it
will create a huge and immediate "supply & demand" system shock and
imbalance. That shock will cause prices to skyrocket much faster
than when the price of gold went from $35/oz to $850/oz when the United
States finally stopped selling gold (redeeming gold for dollars &
went off the gold standard) in 1971.
14. The Federal Reserve, the United States
government, and the powerful banks are all lined up to keep gold low,
and they are too powerful to fight by investing in actual gold myself.
Wrong. The default on the dollar in 1971
proved the vulnerability and fallacy of the attempt of the bankers to
keep the price of gold fixed low. It proved the fallacy of
thinking one can use the printing press to create wealth. Nobody
can fight market forces forever, and market forces are the strongest
economic force and reality.
I believe the powers that are systematically
suppressing gold know exactly what they are doing. They are using
public companies to do the dirty work of short selling gold and taking
on the gold derivative contract obligations. This!way, when the
bullion banks such as J.P. Morgan and Goldman Sachs fail, the primary
ones hurt will be the owners of those stocks. In other words, the
ones hurt will be the little guy who thought he could own "a piece of
the house" in the rigged game played with dollars.
You are not alone if you buy gold. You would
ally yourself with the stronger and larger side of the market that is
buying the 4000 tonnes per year, as opposed to the 2500-tonne annual
15. We can determine when central bank sales
will end. If there is a 1000 tonne supply/demand deficit, and the
central banks of the world have 15,000 tonnes left, then gold will not
rise for the next 15 years.
No, it's not that simple. First, the
supply/demand deficit is not a static number; it is rapidly rising,
which will cut the time substantially.
Second, not all the banks will sell gold until they
have nothing left. Back in 1971, the U.S. stopped selling when a
third of the reserve still remained, so that will also shorten the time.
Third, many of the central banks of the world have
no interest in helping the U.S. dollar stay alive for a few more
months, when it is certain to crash. They will want to hold onto
gold, or accumulate more gold, to keep their own currencies strong, or
to have a reserve in case of currency collapse.
Fourth, and most important, there is a tremendous
supply of paper wealth that could pour into the gold market and absorb
all supply at any moment. The 15,000 tonnes of gold still held by
the central banks, at $330/oz., is valued at a mere $160 Billion.
The world, in a panic, could buy that much gold at that price in a
single hour. In fact, there are many investment funds that
control far more than $160 Billion in capital. Thus, a single
investment fund that realized the truths presented in this article
could make a snap decision that would bring the investment opportunity
of a lifetime to a swift end.
16. There is not enough gold in the world to use as money:
Wrong. Twice as much refined gold exists in the world today as there was 30 years ago.
There is "not enough gold" only for those people who
have none. If that describes you, you should buy gold immediately!
If you are a liberal socialist, or communist,
remember to avoid buying "more than your fair share," which is 7/10ths
of an ounce, or seven tenth-ounce gold coins. At $320/oz., that's
$224 worth. (130,000 tonnes, or 4.18 Billion ounces of gold in
the world, divided by 6 Billion people, is .69 oz. each.)
Of course, that price reflects today's low
valuations. If gold were to be valued the same as dollars (100
times more), then there would be $22,400 worth of gold (the same
7/10ths of an ounce) available per person on earth.
17. There is too much gold in the world today to use as money:
Wrong. With $8 Trillion dollars in M3 in the
U.S., and $1 Trillion worth of Gold in the world (valued at today's
prices), there is certainly much less "gold value" in the entire world
than there are dollars in the U.S. Gold will jump up in price
quite nicely for those who hold it.
18. The supply of gold is not flexible enough to use as money:
Wrong. There is always enough of gold to use
it as money. When there is little gold, the gold has more value,
which, in turn, causes a mining boom, which brings out more gold.
When there is a lot of gold, it has less value, and mining slows
down. Gold is inherently both flexible enough, and stable enough,
to use as the perfect money.
19. Nobody accepts gold and silver:
Wrong. As recently as 1964, 90% silver coins
were in use in the United States, and for over a hundred years previous
to that. The U.S. Constitution says gold and silver are the only
forms of lawful money. Worldwide, gold and silver are probably
more widely traded and recognized than the U.S. paper dollar.
20. Gold is a bad investment because you can't spend it, I mean, the supermarket will not take it:
That's bad reasoning. You can't spend a bond,
or a share of stock, or the title to a piece of land at the supermarket
either, but those are all accepted as investments. In fact, if
you negotiate directly with any store manager or owner, you'd have a
greater chance of getting them to accept precious metals as payment
than any other investment vehicle. Gold is the most liquid
investment available; it is the very definition of "liquidity".
21. I can't use gold as money because the commission fees to get in and out are too high.
Not really. Occasionally, you will find a gold
dealer who is willing to sell gold bullion at the spot price or 1% over
the spot price. Large coin dealers are in serious competition
with each other and often cut commissions on gold to the bone.
A large warehouse store like Costco/PriceClub, or
Wal-Mart, could easily sell bullion to the public at a 1% commission,
and then, in turn, "buy back" the gold at the exact same price they
sold it as long as people were to use the gold to buy their other
merchandise. In that case, there would be no transaction fee at
all, just like real money. Most credit cards charge transaction
fees (to the merchant) from 3% or more, which are higher transaction
costs than gold.
22. But gold and silver have gone down in
price from 1980 to 2001. Therefore, gold is a bad investment:
Yes, perhaps, gold would have been a bad investment
if you bought in 1980 and held on until 2001. (I say "perhaps,"
because if you bought in 1980 and are still holding, you have not yet
lost anything, but are still owning the same ounces you bought.
And further, you still stand to gain a tremendous amount by the time
gold hits $5000/oz. or over $30,000/oz., like it eventually must as the
currency continues to depreciate to zero.)
But I'm not advocating that people buy gold in 1980,
I'm saying, buy now. The best time to buy is when prices are
cheap, like today in 2002.
The last time gold was this cheap, relatively
speaking and adjusted for inflation, it was illegal to own it (before
1974). In 1971, gold started the upward climb from $35 an ounce
to $850 an ounce over ten years from 1970 to 1980.
And, back then, silver went up more than gold did,
just like it will today, because the supply and demand fundamentals for
sliver are better. There's simply less of it around, and huge
industrial demand for things like photography, batteries, and
In fact, even if you are a trend follower (and not a
value investor) now is the time to invest in gold, because for a year
now, gold has been in a bull market, coming off of lows of $255 in mid
23. But Gold went down in price for 21 years. Why should I buy an asset that performs so badly?
Even the stock market has had periods of 10-20 years
of poor performance. Past performance is no guarantee of future
Things move in cycles. Gold almost doubled in
price in the 30's going from $20 to $35 by presidential decree.
Gold stocks performed wonderfully back then. Gold increased by a
factor of 24 times in the decade of the 70's. If the next default
on gold contracts is worse than the last two because of the greater
value of the fraudulent paper created, then precious metals should go
up by more than fifty times, or even by a factor of 100! That's
$33,000/oz. for gold.
24. Won't they make it illegal to own gold?
Probably not. The bulk of money today is held
in IRA's, mutual funds, 401k's, Social Security funds, bonds, and
retirement accounts. Unlike in the depression of the 30's, the
banks today have already stolen most of the gold out of the hands of
the people. To steal wealth today, they'll go after mortgages by
repossessing houses or businesses, and/or the pension funds and bond
holders will be wiped out, not holders of coins. Besides, what
can they do, outlaw cameras, electronics, batteries, and jewelry, which
all use precious metals?
Even in the very unlikely possibility that they
outlaw coins themselves, you will always be able to sell silver
directly to those industries that desperately need it. Or you
might make a nice trade. Perhaps you will be able to trade a few
silver dimes (which you can buy for about a dollar each today) for top
of the line computer in a few years?
In fact, after a total economic collapse of the
debt-based paper currency, the government will likely encourage gold
use and ownership to get the economy going again.
25. Gold is unpatriotic. If I buy it, I help to collapse the banking system:
Gold is very patriotic, and buying gold might
collapse the banking system. But the banking system is inherently
unstable and will collapse eventually no matter what you do. But
you have the choice to protect yourself and your wealth now by buying
precious metals. If you invest in gold, you keep your wealth in
your own nation where you live; and that's always patriotic.
The USA was founded on using gold as money, under a
gold standard. The USA grew from nothing to become the mighty
superpower of the world. The wealth of gold actually prevents the
collapse of a nation, and that means it's very patriotic to own gold.
The hidden assumption in this objection is that the
collapse of the banking system would be bad, but actually, it would be
wonderful. Without the debt burden, and without the ability of
the government to levy massive taxes, the economy would flourish, as it
did in the early days of the united States.
An honest man's refusal to participate in a game of
fraud (and hold dollars) is not evil in any way. The honest man
(who refuses to play the game of fraud) is not the one who causes the
participants of the game to be defrauded.
The holders of dollars who will watch their wealth
evaporate away as the dollar is destroyed will get what they deserve.
26. Gold is used by terrorists:
Yes it is. And this is one of the ways the
media is attempting to demonize those who own and use gold. And
why do terrorists use gold? Think about it. They use it
because gold is private. It cannot be tracked. Physical
ownership of gold requires privacy. An example: A liberal
left-winger, no matter how strongly they might believe in gun control,
would NEVER put up a big sign on his front lawn saying "This is a gun
free zone," because it would be an open invitation to robbery.
Likewise, nobody advertises that they own gold, except the heroic gold
dealers and jewelry shops, which make use of several high security
measures like steel doors, alarms, vaults, and armed guards. The
ownership of wealth, gold, is supposed to be private. And those
who demand privacy are not terrorists. Those who would invade and
destroy privacy are the real terrorists and tyrants.
27. Gold ownership is advocated by right-wing rednecks, the "religious right," and gun-toting loons.
Yes, and what's wrong with that? These people
are united in their love of freedom. Gold represents and demands
freedom. Are you saying that slavery to a debt-based, high-tax
money system based on fraud offers a better way of life than freedom?
28. It does not make sense to dig up gold from
the ground, and bury it again deep in the ground in a vault:
Yes, it does. Gold is kept in the vault
because gold is valuable and rare, and thus, it needs to be protected
from theft. You wouldn't want your property to be stolen, would
you? Gold ownership also prevents theft from inflation, and from
banking collapses during depressions, which happen under paper money
29. I keep my money in the bank, where it's safe, and protected from theft.
Don't you know yet that the bankers are the biggest
thieves of all? In fact, gold coins are not even safe in a
safe-deposit box in a bank.
30. Gold represents greed as in "gold
lust". Paper money represents mankind's ability to get along with
Only in fantasy land. Paper money represents
greed, fraud, theft and deception. Gold is good. Paper
money came into use because it was a promise to pay in gold.
These promises were broken and dishonored because banks operated
fraudulently, in greed, in deception. Banks operate on a
fractional reserve lending system, and print up invalid paper promises
(dollars), thus stealing gold and wealth from people.
31. A Gold standard creates and causes poverty; gold is too restrictive for economic growth:
Gold creates prosperity. Gold is wealth.
Gold is the ultimate "private property", without which, there cannot be
prosperity, but only poverty. People without gold (and who have
paper or electronic money instead) think they are wealthy, but they are
not, they are actually very poor.
Paper money used in a debt-based money system
creates poverty, because when all new money is created through loans,
the people and businesses must go further and further into debt to
prevent a widespread depression and to continue economic growth.
In the land of debtors, the man who owns and owes nothing is the
wealthiest of all, because he is free. Debt creates poverty, not
32. Gold is a Barbarous Relic.
Relics are valuable, and gold is valuable.
Gold is barbarous and cruel only to those who think civilization should
consist of legalized and government-sanctioned theft. I believe
civilization should consist of justice and fairness.
33. I lost money in gold. I'm an old
timer, and I remember many of these kinds of arguments. I lived
through the 70's... I vowed that I'd never invest in gold again:
Well, that was a dumb vow. Of all people, the
older generation should know what I'm talking about, and should know
that now is the time to buy gold. Inevitably, most must lose
nearly everything that was invested in stocks and in the dollar, and
they will make the same, stupid vow, but this time, to never touch
stocks. Nobody has to make the same mistake twice.
Therefore, make the switch now, from stocks to gold, while stocks still
have value left.
34. Nobody else is investing in gold. I
only heard one guy on the radio, and now you. None of my friends
are in gold.
Then gold must be at absolute rock bottom prices if
it is so out of favor. That's a buying signal if you understand
the concept, "buy low, sell high."
Further, who says all your friends are really not in gold? Gold ownership demands privacy, remember?
35. I'll wait until a few of my friends invest in gold first. Then I'll jump in:
That would be a huge mistake, and demonstrates a
complete ignorance of the implications of the facts presented so
far. Remember, there are 100 times more dollars out there than
the U.S. has gold to sell, and the U.S. gold is not for sale, assuming
it even exists.
Now, if 1% of the existing supply of dollars were to
buy gold, that would be $80 billion, about equal to the entire 7700
tonne U.S. gold hoard, and absolutely swamping the world annual gold
demand of 4000 tonnes per year. Eighty billion dollars is also
twice the market cap of all the world's gold companies, which is about
$40 billion or less. That much new demand would likely force the
gold price to go up by a factor of five to about $1500/oz., which more
than enough to cause a massive gold contract and banking default.
Likely following that, all gold trading would likely halt completely
until a new, much higher price is reached. Therefore, if you know
100 people, and they all immediately tell you exactly when they make
all their investment decisions, and you wait until 1 of those 100 are
investing in gold, it will be far too late!
36. I'm actually a broker. I DO know
what 100 investors are doing right now. I'll know when to get in
Probably not. I've found that most brokers are
very ignorant of even the basic facts about gold covered in this
article, and ignorant about gold investing in general. Actually,
perhaps less than one person in 2000-3000 is invested in gold and/or
gold mining stocks. If gold demand were to double from where it
is today, the gold contract default would certainly occur.
Therefore, waiting until demand rises to 1 in 1000 investors would be
37. If only 1 in 1000 bought gold, and caused a collapse, that does not sound very fair:
Every user and saver of paper money has chosen to be
deceived by paper money; by submitting to its use, and by trusting
banks that have proven they should not be trusted. They will get
what they deserve because they attempted to store up wealth in the form
of false weights and measures. Some people have worked very hard
to avoid being deceived, and are working very hard to help others see
38. Oh, I see that this article was written by
a lunatic who believes that gold will go up to $30,000/oz.; therefore,
I don't need to listen to what he has to say.
Wrong. I actually believe gold will eventually
trade for over infinity dollars per ounce, because the dollar will, and
must, eventually reach its intrinsic value, which is zero. Every
sane person must agree that eventually that will happen, the only
debatable issue is when, and whether within our lifetimes or not.
Those people who think it can't happen are actually betting that over
99.9% of the people in the United States remain deceived forever, and
that "the powers that be" continue to deceive the people of the world
to such an extent that people eventually use gold for pavement.
That's the insane view.
The real questions are, "What price will gold be a
year from now, two years, 5 years, 10 years, 20 years, and so
on." Or, "What price will gold be when the excesses of the dollar
are blown off, and the dollar comes back to a rational valuation where
each dollar in circulation is 100% backed by gold?" The second
question is much easier to answer, and that is irrefutably $33,000/oz.,
or higher, just by doing the basic math that any smart nine-year-old
could do on a calculator, dividing M3 by official U.S. gold.
Given that irrefutable fact, you can easily determine a risk/reward
calculation for yourself on whether or not it is reasonable to invest
in gold now. You should especially take into consideration that
the collapse could easily begin if 1 in 1000 investors wake up to the
cold hard facts of reality and invest before you do.
39. I'm not going to buy gold now, because
it's at a near-term high. I'm a technical trader, and I'll buy on
a dip. (Or, I'll buy when gold breaks through resistance level of
$340 and it will really zoom.)
Well, I don't read the stars, I don't read palms, I
don't read tea leaves, I don't read bones, and I don't read the charts,
not like the technical traders read them.
The gold chart says absolutely nothing about how
many extra dollars have been created since 1913, or since 1933, or
since 1970, or since 1980, and are now in people's hands waiting to buy
something of value. The gold chart says absolutely nothing of how
or when or at what price the dollar will stop falling. What lies
ahead is not on the gold chart in any way, shape, or form.
Today's moves between $330 and $255 are like the
moves between $43 and $35/oz back in 1971. In hindsight, those
were nickel-and-dime moves that are relatively unimportant. It
didn't matter what price you paid, just as long as you actually bought
some back in 1971, and held on until 1980. Not having any gold
the moment when gold trading locks up could be VERY costly. Gold
could literally stop trading at any time now until a much higher price
is reached. Gold could have "limit up" days for 30 days in a row
or more, during which time you could not buy gold or gold mining stocks
at any price. In conditions like today, and given what is coming,
it absolutely does not matter whether you pay $305 or $450 today, just
so long as you actually have real gold, in hand, now.
Waiting for the "perfect time" and/or "perfect
price" is foolishness. Any delay in buying gold from this point
on could be extremely costly.
40. I don't think Americans will be convinced to buy gold.
That's irrelevant. Americans don't have to be
convinced to buy in order for the gold price to go sky high. The
buying power of the rest of the world will do that, and is doing that
right now. In 1971, it was not the buying power of Americans that
caused the U.S. to abandon the gold standard, because Americans could
not redeem dollars for gold anyway! It was foreign nations who
were buying gold in greater and greater amounts that caused the price
of gold to explode, just like today.
41. Gold mining is big business. I can't support big business by buying gold:
Holding dollars helps the biggest businesses around,
the large banks. Buying gold does not support big business.
Mining today is mostly done by big businesses because the price of gold
is manipulated down so low. If gold were priced much higher,
there would be many successful small businesses. In a modern-day
gold rush there would be many individuals using metal detectors to find
gold. By buying gold, you help the most important small business
of all: yourself.
42. Gold mining is harmful to the environment:
As far back as the 1870's in California they
outlawed strip mining, where they used high-pressure water hoses to
strip away the earth. A by-product of mining is gravel, and we
need gravel for things like pavement, just like we need gold.
Mining within the United States is very highly regulated, and money
must be set aside for clean up. Even heap-leach mining is not
really bad for the environment. The expensive cyanide and
chemicals they use are nearly always all reclaimed. Newspapers
like to make a big fuss when they spill, partly because it's so
rare. But even if they do spill, the expensive chemicals used in
gold mining rapidly evaporate or revert to harmless substances.
43. Currency (paper money) is simply labor:
No it isn't. Currency (paper money) is created
out of thin air in today's banking system whenever a loan is made, and
is backed by nothing. Gold is brought out of the ground by the
hard work of blood, sweat and tears. GOLD is LABOR.
44. Doesn't a gold dealer just want to get rid
of his inventory and sell gold, because he knows the price is going
No, the gold dealers replace what they sell to you
by buying more from a larger dealer. They make money on the
volume, the commissions. They don't have a need to "turn
inventory" like a car dealer. Gold does not spoil, nor does it
take up too much space.
45. If a gold dealer isn't trying to get rid
of his inventory, then he wants me to buy gold to help the price go up
so that he'll be successful.
Probably. But more importantly, are you going
to let your envy of his success prevent you from being successful, too?
46. Aren't you just a gold dealer trying to sell me gold?
No. Who am I? I'm an investor in
precious metals and stocks of various gold & silver mining
companies (and I'm a bible prophecy teacher) who would benefit if the
gold price moves up. My goal is to help educate people to help
them to buy gold. I honestly believe the world would be a much
better place without debt-based paper money.
47. I hate gold.
That is certainly understandable. When so many
respectable sources of information in society such as newspapers,
universities, schools, your parents, your boss at work, and so on, all
teach so many myths about gold, it is exceedingly difficult to come to
a different conclusion on your own. Many people hate gold with an
irrational religious fervor, merely as the natural outcome of having
accepted, over time, so many lies about gold. Regardless of the
lies and how you may feel, the rest of the world will continue to mine
gold, use it, trade it, save it, and invest in it.
This is not the full version of the article.
The last four myths and refutations were cut because they are too
controversial, and contained arguments based on the Bible, which are
not appropriate for the forum at gold-eagle.com. For the full,
uncut version, visit http://silverstockreport.com/goldmyths.htm
I am not a licensed investment advisor. I am
not a broker. I hold positions in precious metals and mining
stocks, which are subject to change without notice. I am biased
against what I consider to be the fraud of fiat money, which are false
weights and measures, and an abomination. I am biased against the
fraudulent practice of creating money out of nothing. I am biased
against debt: particularly when money is lent at any interest rate
whatsoever, a practice called usury.
Reminder: If you think I'm wrong on any of
this, or to help me improve the list, please send your ideas to
For a list of many reasons why I believe now is a
good time to buy gold and silver, see my page at