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Putting It In Perspective: In 2013 The Fed Will Conjure Enough Paper Money To Buy 11% Of All Existing Gold

Posted By yihan On December 20, 2012 @ 2:20 pm In Money Watch | Comments Disabled

Zero Hedge [1]
December 20, 2012

When people throw around “trillions” (and in the case of Yen-denominated Japanese debt and/or total outstanding gross derivatives, quadrillions) with the facility that mere billions was being dispensed with as recently as 5 years ago, it is easy to lose sight of the big picture.

So what is the big picture? Well, recall the following quote from Warren Buffet’s letter to investors [2]:

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion….You can fondle the cube, but it will not respond.”

Gold is now 7% lower, and even when netting incremental mining production in the interim since this letter was written, one can roughly say that the total value of all gold in the world is ~$9 trillion. In other words, in 2013 the Fed, alone, excluding all the other central banks, which as we pointed out earlier is vary naive, will conjure out of thin air enough 1s and 0s, equivalent to $1 trillion, or enough money to buy 11% of all the gold in existence in the world. Add all the other central banks, all of which are now engaged in “unlimited easing”, and this number will likely rise to about 20% of total.

In 3 years of unlimited easing, which at this pace looks quite possible, after all all Chairmen have made it clear there will be no end to the global paper printing until 2015, enough electronic money will have been created to buy more than half of all god in existence.

In 5 years? All of it.

Putting It In Perspective: In 2013 The Fed Will Conjure Enough Paper Money To Buy 11% Of All Existing Gold Cube%20of%20Gold 1 0 [3]

So, once again, which is the scarcer commodity?

 


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URLs in this post:

[1] Zero Hedge: http://www.zerohedge.com/news/2012-12-20/putting-it-perspective-2013-fed-will-conjure-enough-paper-money-buy-11-all-existing-

[2] letter to investors: http://www.berkshirehathaway.com/letters/2011ltr.pdf

[3] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/12/Cube%20of%20Gold_1.jpg

[4] Putting It In Perspective: In 2013 The Fed Will Conjure Enough Paper Money To Buy 11% Of All Existing Gold: http://www.prisonplanet.com/putting-it-in-perspective-in-2013-the-fed-will-conjure-enough-paper-money-to-buy-11-of-all-existing-gold-2.html

[5] Record High Demand For Physical Gold Threatens To Break The Back Of The Paper Gold Market: http://www.prisonplanet.com/record-high-demand-for-physical-gold-threatens-to-break-the-back-of-the-paper-gold-market.html

[6] More money, less Gold to push gold price to $2000: http://www.prisonplanet.com/more-money-less-gold-to-push-gold-price-to-2000.html

[7] The “Bond King”: Buy Gold, Not Bonds: http://www.prisonplanet.com/the-%e2%80%9cbond-king%e2%80%9d-buy-gold-not-bonds.html

[8] Putting America’s Tax Hike In Perspective: http://www.prisonplanet.com/putting-americas-tax-hike-in-perspective.html

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