A Worthless $900,000? – The Value of a Gold Bar

If you had to choose, what would you rather: A free King size Hershey’s chocolate bar or a silver 10 ounce bar?

It’s your call.

It’s not something we’re asking, but an experiment Mark Dice ran on the streets a few years back. He walked around asking random strangers which one they wanted, and they got whatever they chose.

Surprisingly — at least to me — everyone in the clip chose the chilled chocolate bar over the silver 10 ounce bar.

One person surveyed even commented:

I don’t have any way to do anything with the silver.

Mark Dice: ‘So do you prefer the Hershey’s bar?

To which she answered: ‘Yeah but is it real? It doesn’t seem real.

The chocolate bar, that is.

You can see the clip right here. The whole point is, many people out there today don’t see silver or gold as holding any value.

They showed this same video at the Gold and Alternative Investment Conference (GAIC) this week in Sydney.

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Honestly, it’s been fantastic. I’ve spent my time listening and speaking to gold industry authorities, mining companies and crypto experts. Our own Shae Russell, editor of Daily Reckoning Australia is one of the keynote speakers.

And, GAIC is one of the few places you can hold about $900,000 of gold in your hands. Here is a photo of it:

GAIC - 26-10-19

Source: Selva Freigedo

[Click to open in a new window]

Yep, the gold bar above is roughly the value of a home.

Anyway, let me tell you, the mood here is great, a very different vibe than the GAIC I attended a couple of years ago in Melbourne.

Back then, cryptos were all the rage and gold was very much a forgotten investment.

Yet the truth now is that gold is starting to spark more interest. Gold prices have been rising, particularly when measured in Australian dollars.

GAIC is one popular conference, but perhaps not as popular as it should be.

Meaning that there are still plenty of people that think gold has no value, much like the entertaining Mark Dice video I mentioned above.

The other interesting point I want to make about the conference is that many of the main speakers had a similar stark warning.

There are risks and dangers building in the system…and this could be good for gold.

It’s something we’ve written about here in The Rum Rebellion often.

We are living in interesting times, there is a lot of debt around and central bank experimenting.

There is also a lot of turmoil and upheaval around the world. We’ve heard about plenty of protests happening this week everywhere. Chile…Hong Kong…Quito…

Why is everyone so angry?

We are in one of the longest bull markets ever, we have low unemployment and home prices around the world have been increasing.

Yet people are still pessimistic. Why?

Well, at the same time salaries have stayed put and while we have seen a lot of ‘growth’ in recent years, it has been mostly funded by debt. It’s not real growth.

My point is that when things turn negative, people start flocking into gold. Gold has been a wealth protector for thousands of years and is still is, even if we have somewhat forgotten it.

Central banks are taking us further into negative interest rates in an effort to extend this cycle. The normalisation is now over.

Lower and negative interest rates are bad for pensioners, for people heading into retirement and for savers. But it’s good for gold.

And the case for holding gold gets better at negative interest rates, since having cash in a bank account doesn’t pay you any interest.

How long can central banks extend the boom for? How long will it go? And, what’s the price for it?

These are truly unconventional times.

With more turmoil, negative rates and our money very much removed from the real economy, the case for gold is starting to stack up.

Rum Rebellion editor Greg Canavan has identified another reason that could push gold higher. You can read all about it here.

Best,

Selva Freigedo Signature

Selva Freigedo,
Editor, The Rum Rebellion

PS: Watch the full video interview with The Rum Rebellion’s Greg Canavan and Jim Rickards, US economist and gold expert. Click here to watch.


Selva Freigedo is a research analyst for The Rum Rebellion. Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table. Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default. Selva has also lived in Brazil, Spain and the USA. Back in 2000 she was living in the US as the dot com bubble popped… And in 2008 she was in Spain as the property market exploded and then collapsed… She has seen first-hand what happens when bubbles burst. Selva joined Port Phillip Publishing’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.


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