Friday, March 4, 2011

What should unmanipulated Gold and Silver be valued at?

Adrian Douglas, a Director of the Gold Anti-Trust Action Committee (GATA) and editor of the Market Force Analysis Letter offers the following opinion on the true market value of Gold.

  • Look... the manipulation can, obviously, not continue. There has never been the manipulation of a market that has continued forever as they all come to a sticky end. And this is the opportunity for investors, the price of gold and silver have been depressed way below their true market values. And obviously when they find their true market values, then the investor is going to make huge gains. The reason why silver has been supressed is because gold has been supressed. And gold has been supressed because it makes the dollar look more valuable than it is and allows the US government to live beyond it's means.

    The true price of gold can be estimated by looking at the Fed's balance sheet. They have a line item that essentially has all the Treasury's claimed gold of 261.5 million oz's which the footnote states is the collateral against which all Federal Reserve notes are issued. They have issued approximately 15 Trillion dollars and the collateral is 261.5 million ozs of gold. That gives you a gold price of $57,000/oz. If you have an asset against which the note is issued, that defines that note.

Douglas contends the true market value of Gold is $57,000/oz.

Unmanipulated Silver will return to it's historical ratio of 16:1/10:1 to Gold. Therefore unmanipulated Silver's true market value should be $3,550 - $5,700 per ounce.

In this context, Silver at $130/oz is a no-brainer. And with price jumps like today, $130/oz will come much faster than most people expect.



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