Tuesday, August 21, 2012

If I Ruled the World

Do you remember playing those games as a kid where you pretended to rule the world?

Even the TV cartoons on each day had a  despot or two wanting to own and rule everything and everybody. It's even a theme for older generations in movies like James Bond.

But if you were to own the world, what would you have? Well, the value of all assets in the world has been calculated to be around $US 150 trillion. That is $150,000,000,000,000. Quite a handsome sum really. Of this, $60 trillion is in cash, $40 trillion is in bonds, and $40 trillion is in stocks and, wait for it, $2 trillion is in gold. This is about 1% of all assets.

OK, so there are two ways to look at this small allocation in gold. One, that no one wants it and it is a useless relic. Held only for traditional purposes (to repeat Ben Bernanke's famous phrase). Or, the system still hasn't cottoned on to the fact that gold is coiling for a large breakout, especially if the Reserve Bankers continue their money printing ways.  Or maybe fund managers are playing chicken and trying to squeeze out the last bit of return they can get out of fiat money, and it's derivatives, before they call it quits and flood into the safety of gold.

The other way to look at this is that if large institutions were to move into gold, the supply would not be there to meet the demand. There isn't enough of it around at current supply. This would cause huge pressure on the price.

Of course, then there is silver. Silver usually follows gold in the trends, only it does so in a more volatile way. But silver would probably give you more bang for your buck in these circumstances.

Interesting days ahead indeed for the Masters of the Universe and their assets.


Gold in New Zealand dollars: $2004.95 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $36.63 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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