refuting myths about gold

  1. dub
    29,537 Posts.
    lightbulb Created with Sketch. 155
    Warning - this is a very long article

    ----- Original Message -----
    From: dub
    To: dub
    Sent: Sunday, October 27, 2002 4:18 PM
    Subject: !!VERY!! long - brilliant - gold myths debunked - LOOOOng!

    Refuting Myths about Gold

    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 on.
    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

    Please tell me about any suggested changes, so I can update and improve the list. Email ideas to [email protected]

    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 accumulate wealth.

    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 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 whatsoever.

    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 the dollar:

    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:
    Source of gold at the U.S. Mint:

    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 2002.

    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 $4.30/oz.

    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 times.

    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 million.

    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 all do.

    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 mine-supply.

    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 electronics.

    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 2001.

    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 success.

    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 systems.

    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 each other:

    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 gold.

    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 early:

    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 too late.

    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 clearly.

    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 down?

    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 For the full, uncut version, visit

    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 [email protected]

    For a list of many reasons why I believe now is a good time to buy gold and silver, see my page at htttp://

    Jason Hommel

    October 28, 2002