let's do it
market vibes
February 16…)
“I often paint fakes.” Pablo Picasso
Z Hedge started a lively discourse over the weekend with an X post suggesting, “It would be great if Elon Musk could take a look inside Fort Knox just to make sure [the gold] is there. The last time it was audited was 1974.”
To which Elon replied, “Surely it is reviewed every year.”
To which I replied. “Actually the last time was 1953.”
To which Rand Paul replied (to Elon, not me):
Then… I querried Grok: Using your best estimate of all extant gold in 1953 and the golbal population in 1953 (whatever that was) calculate the per capita quantity of gold in 1953 compared to the same metrics today... for instance the mid point of 6.9 billion troy ounces divided by 8 billion population.".
This what I got (and I think it is credible):
1953: ~1.15 troy ounces per person.
2024: ~0.85 troy ounces per person.
This is a useful macro expression of supply and demand. By this measure, the supply is indisputably lower today than the last time gold was formally audited by the Treasury.
How did we get the gold in Fort Knox?
From 1940 to 1945 every gallon of gasoline, bushsel of grain or support for the British fight with Hitler was paid for either in gold transferred to the United States C.O.D. or bonded with IOUs backed by gold. Post war reconstruction was paid in gold. Repararations were paid in gold. In brief, by 1953 whatever allied or Nazi gold could be found during or after the war found its way to America.
By 1953 The US treasury held for its account, one billion ounces of gold. However, much of the same gold flowed to back Europe in trade via the gold pool as the US debased the dollar into the 1950s and 1960s. By 1971 when Nixon shut the gold window only 250 million ounces +/- ounces remained.
Demand in 1953 was an entirely different matter.
Bear in mind US gold ownwership was illegal in 1953, 64% of the U.S. population lived in urban areas 36% of the U.S. population lived in rural areas, with 15% on farms and 21% in rural nonfarm areas. As many as 15-20% of citizens in rural America still had no running water or electricity in their homes. Gold was non existant to the American public. They happily traded their right to own it for prosperity twenty years earlier in 1933. The global population was 2.68 billion people.
Let’s take a look at demand today.
The global population is estimated at 8.25 billion people. Seventy-one % of the global population uses a mobile phone, translating to around 5.78 billion unique mobile phone users.
The cell phone is a university without walls. In order to operate one the minimum requirement is reasonable literacy and arithmetic skills for which billions of young and old in every corner of the planet have a reasonable awareness of trade, credit and money… including the daily price of gold, especially in places where there are no sophisticated financial products availble for investment and savings. I would estimate that current demographic equal to or greater than the total population of the world in 1953.
As for auditing the US stock of gold reputedly the the largest official single holding on earth, you can find these posts here: @Alyosha745 but I will re-post them below as as well.
As for contemporary supply?
True… the enterprise of mining gold has continued apace at the rate of 80 to 100 mm toz per year since 1953. Even so, there are fewer ounces per capita to go around. So, let’s see if an audit will happen at all, when it will happen, what it will require to do an audit credibly, how long it will take, and whether or not an audit really matters to the value of an ounce today, tomorrow or ever. Here we go…
