Sunday, August 10, 2008
The Potential Real Demand for Gold and Silver
These numbers below are the real fundamentals of the silver and gold markets. Silver and gold are money.
In physics, there is kinetic energy, and there is potential energy. Kinetic energy is movement. Potential energy is not moving, but is potential movement. Likewise, the annual supply and demand of the gold market is like the kinetic energy--measuring the current movement of gold. But it is probably more important to focus on the potential energy of the gold market, which is the measure of all the paper money and wealth that will one day be sold to buy gold and silver.
The potential demand for real money, is the total of paper money, or other wealth, that exists that could, one day, show up as demand for real money: gold and silver.
With that introduction, I present to you some ongoing research I do that I call, "The Money Chart". Study it well. The sources for most of the figures are linked, so you can validate this research. When I first published a few of these figures in December 2003, they were quoted by Richard Russell, one of the most well respected financial advisors in the world.
1,000,000,000,000: 1 Trillion dollars
1,000,000,000: 1 Billion dollars
1,000,000: 1 Million dollars
$400,000,000,000,000: Estimated total derivative exposure of all banks in the entire world. (20 x U.S. GDP) (up to $400 Trillion?)
$118,000,000,000,000: World Global Capital Markets (Stocks, Bonds, &?) Feb 2005 McKinsey Global Inst.
$75,000,000,000,000: U.S. Govt. unfunded liabilities; social security, etc.
$49,000,000,000,000: World bond market, Fall 2004 PWL Capital Inc.
$46,000,000,000,000: Total World Paper Money supply 2004; from M2 & GDP of EU, USA, Japan, & China (see SSR #56)
$45,153,000,000,000: U.S. Household wealth, as of first quarter, 2004. (Includes Real Estate, and investments)
$37,000,000,000,000: Total global equity market capitalization June 2001 UN.ORG
$21,700,000,000,000: Total global market capitalization of NYSE stocks, Dec '05 http://nyse.com
$21,000,000,000,000: U.S. bond market, Sept, '03: IAPF treas.gov
$12,605,000,000,000: U.S. GDP, 2005 (3Q) http://www.bea.doc.gov/bea/dn/home/gdp.htm
$10,261,000,000,000: M3 (money in U.S. banks) Jan '06 http://tinyurl.com/vra0
$8,249,000,000,000: US debt, 2-23-2006 http://www.publicdebt.treas.gov/opd/opdpenny.htm
$4,000,000,000,000: Total global market capitalization of Tokyo stocks, Dec '05 http://nyse.com
$3,600,000,000,000: Total global market capitalization of Nasdaq stocks, Dec '05 http://nyse.com
$3,000,000,000,000: Total global market capitalization of London stocks, Dec '05 http://nyse.com
$2,622,000,000,000: Total gold mined in all of history, 150,000 T (4.6 bil oz.) @ $570/oz. http://tinyurl.com/vrcc
$2,500,000,000,000: Total global market capitalization of Euronext stocks, Dec '05 http://nyse.com
$2,400,000,000,000: U.S. annual budget 2005
$1,200,000,000,000: Total global market capitalization of Deutsche Boerse stocks, Dec '05 http://nyse.com
$754,000,000,000: Total U.S. paper currency & coin in circulation, March 2005 http://www.fms.treas.gov/bulletin/index.html
$753,000,000,000: Annual U.S. current account deficit (trade deficit) for 2005, (annualized from 1 Q 2005).
$596,000,000,000: U.S. debt increase (true deficit) (Fiscal year '03-'04). http://www.publicdebt.treas.gov/opd/opdpenny.htm
$400,000,000,000: Total silver mined in all of history: 40 billion oz. @ $10/oz. http://snipurl.com/93j1
$376,000,000,000: Market Cap of Exxon Mobil (biggest U.S. Corp.) (8-05) http://finance.yahoo.com/q?s=XOM
$286,000,000,000: Debt of General Motors (biggest U.S. car company) Jan 2006
$149,000,000,000: US gold, 261 mil oz., @ $570/oz. http://tinyurl.com/vsr9
$110,000,000,000: all the world's gold stocks/equities (Sept. 25, 2005, Denver Gold Conference)
$75,000,000,000: Money flowed into Equity funds in the first quarter, 2004
$26,000,000,000: Market Cap of Newmont July '05 (biggest gold company in the world)
$8,226,000,000: all the world's "primary" silver stocks (80 of them on this list, as of June 25, 2004) --my own data.
$7,000,000,000: annual flow of money "lost" in Las Vegas while gambling.
$4,000,000,000: Total annual ATM penalty fees http://redtape.msnbc.com/2005/10/now_even_atm_de.html $13/year per household
$3,500,000,000: 350 mil oz. of "identifiable" silver bullion left in the entire world, according to GFMS @ $10/oz.
$1,300,000,000: 130 million oz. of silver needed by the Barclays Silver ETF: feared to cause a silver shortage by the SUA.
$720,000,000: 72 mil oz. of "registered" NYMEX silver bullion (1-05-05) @ $10/oz. http://www.nymex.com/sil_fut_wareho.aspx
$266,000,000: 40 million oz. of silver purchased for investment, in 2004 at $6.66/oz.
$75,000,000: Limit 7.5 mil oz. of silver @ $10/oz. (limit of 1500 contracts per trader) at NYMEX
$15,000,000: Limit 1.5 mil oz. of silver @ $10/oz. (potential 1 month delivery limit) at NYMEX
$7,500,000: Limit .75 mil oz. of silver @ $10/oz. (over 150 contracts and you must reveal who you are) at NYMEX
$100,000: Limit of FDIC insurance per bank account.
$5,000: Limit of average cash withdrawl from small town banks, without ordering cash in advance.
$300: Limit of average ATM daily withdrawl
$10: Approximate amount of silver available per person in the U.S. at $10/oz., given 300 million oz., if that is available.
Therefore, when you hear that billions and billions of dollars are going to be invested in gold and silver stocks, just know that's an understatement.
I believe in 1980, the total market cap of all gold stocks was $1 trillion, and the total market cap of all NYSE stocks was $1 trillion.
Today, the figures are about $110 billion for gold stocks, and $21 trillion for NYSE stocks.
It's going to be a great decade for gold, and especially silver investors.