The Case for Re-Monetizing Gold at $20,000/ounce

THE CASE FOR THE REMONETIZATION OF GOLD The governments of the world will never be able to repay the debt they have accumulated. The only solution is to pay off their debt with gold -- after revaluing gold higher relatve to the currency their debt is denominated in. TOO MUCH DEBT USD RESERVES DECLINING By 2014, if global taxes were raised to 100% and all of it were used to pay off sovereign debt, it still wouldn't be enough. How will the debt be paid? US dollar reserves are declining... Government debt of G20 countries as % of GDP Foreign Exchange Reserves in % U.S. Dollars *** 114 106 98 Advanced countries 83 78 78 Reserves in %U.S. Dollars Developing countries GOLD RESERVES ARE RISING 38 38 39 40 .as central banks are accumulating gole 35 Central Bank Buying Gold (tons) 700 2006 2007 2008 2009 2010* 2014* 525 crease over 2010 Source: IMF 350 *Forecast 175 Full year 2010 First half 2011 Full year 2011 Q1 2012 Annualised Q2 2012 Annualised AT WHAT PRICE CAN GOLD PAY OFF EXTERNAL SOVEREIGN DEBT? Amount of foreign held US Treasury debt: $5.557 trillion (and counting). Size of US gold reserve held by the Federal Reserve: 287 million oz. $5.557 trillion/287 million = $19,362/oz (.0.U (0.U 287 million oz @ 1,650/0z 0.47355 trillion 287 million @ 19.362/0z 5.557 trillion 5.557 trillion 5.557 trillion THIS PROCESS IS ALREADY UNDER WAY ECB Gold Holdings: Value and Volume 400 440 350 Value of gold holdings in billions of euros (LHS) 300 The ECB has begun valuing the gold on its balance sheet based on -Volume of gold holdings in millions of troy ounce (RHS) 410 250 MERK 200 380 150 100 350 its market value 50 320 Dec-99 Dec-01 Dec-06 Dec-11 Source: Merk Investments, European Central Bank © 2012 Merk Investments, LLC INTERNATIONAL POLITICS IS THE WILD CARD What will be the terms of a new international monetary agreement? How much debt will be cancelled? INFORMEDTRADES.COM Our mission is to help traders learn. SOURCES http://www.economist.com/node/15108456 http://blog.milesfranklin.com/central-banks-accumulating-gold http://www.goldmadesimplenews.com http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt http://www.gold.org/government_affairs/gold_reserves/ http://www.merkfunds.com Dec-00 Dec-02 Dec-03 DOKER Dec-04 Dec-05 Dec-07 Dec-08 Dec-09 Dec-10 JOKER