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Subject:  Gold and silver Date:  7/2/2013  11:16 PM
Author:  hheiserman Number:  1809 of 1817

Every weekend I put 50-60 economic and market data points into a spreadsheet that I have kept for many years. My goal is to identify the best arguments for deflation, inflation, and hyperinflation. If I know which 'flation is around the corner, then I can prepare...I hope.

Anyway, I also follow the precious metals. With the recent decline in gold and silver prices I thought I'd share my estimates for percentage gains from current prices, based on various scenarios. The comments below are copied from a Seeking Alpha post here:

If you want me to explain any of these admittedly cryptic descriptions, holler.



The theoretical percentage upside for gold and silver are both compelling, as my estimates below suggest.

But if forced to pick just one precious metal, I'll take silver. Silver is consumed, whereas gold is hoarded. In 2005, global per-capita above-ground gold bullion was 0.8 ounces, -17% vs. 1940 levels of 1.0 ounce for ever man, woman, and child.

Silver, though, was 0.2 ounces in 2005, -96% vs. 1940 levels of 4.4 ounces.

Estimate #1: Dow-Gold @ target 501%
Estimate #2: U.S. currency collateralized by U.S. gold 270%
Estimate #3: Federal Reserve liabilities collateralized by U.S. gold 938%
Estimate #4a: U.S. Monetary Base ($M) @ 40% U.S. gold backing (1914 Federal Reserve Act): 294%
Estimate #4b: U.S. Monetary Base @ 100% U.S. gold backing: 885%
Estimate #5: Debt due foreigners collateralized by U.S. gold: 1489%
Estimate #6: U.S. national debt collateralized by U.S. gold 5113%
Estimate #7: Global public debt collateralized by world central bank gold 3132%
Estimate #8: MZM collateralized by U.S. gold 3556%
Scenario #9: M2 collateralized by U.S. gold: 3188%
Estimate #10: M3 collateralized by U.S. gold 4862%
Average 2203%

Estimate #1a: Gold-Silver: 294%
Estimate #1b: Dow-Gold & Gold-Silver: 4949%
Estimate #2: Dow-Silver: 4944%
Estimate #3a: M3 Funds Flow: 717%
Estimate #3b: M3 funds flow & 50% of average annual mine supply (363M oz.): 2149%
Estimate #4: Funds Flow: Gold to Silver: 215%
Estimate #5: Funds Flow: (Global Stocks + Bonds) to Silver: 6831%
Estimate #6: Silver @ Gold Stock + Bond Value: 16957%
Average 4632%
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