Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

A Half-Century of Gold, War, and Costs

Commodities / Gold and Silver 2015 Nov 17, 2015 - 05:57 PM GMT

By: DeviantInvestor

Commodities

In round numbers, these wars (in today’s dollars) were tremendously expensive:

Vietnam War:  Estimated cost is $740 Billion

War on Drugs:  Estimated cost is $1,000 Billion

War on Terror, including Afghanistan and Iraq:  Estimated cost is $1,700 Billion and counting

War on Poverty:  Estimated cost is $22,000 Billion

Total estimated war costs – about $25 Trillion.  Really?  Value received?


The following are my opinions and they are certainly not shared by everyone, so read with that caveat in mind.

In a sensible world a government would declare war, ask citizens to accept higher taxes or use accumulated national savings to pay for the war.  In that sensible world, the war would produce a benefit to the country, hopefully in assets, but certainly in less tangible items such as protection of borders and internal security.

So how is the US government doing?

  • Vietnam War: Benefits to the United States were difficult to see.  The “Red Menace” story and the “Domino Theory” failed to satisfy most people.  The war was expensive in dollars and lives.  Many people fail to see any good reason for the war other than an excuse for military contractors and bankers to increase profits.
  • War on Drugs: Certainly the drug dealers and gangs liked it since it massively increased their profit margins and revenues.  Many people were imprisoned so the private prison corporations benefited.  Large banks profited from money laundering.  But illegal drugs are still prevalent and have not been eliminated.
  • War in Afghanistan has stretched into its second decade. Where are the benefits?  More opium and heroin are available on the street at less expensive prices but otherwise ….
  • Wars in Iraq: These did not work out well for the US.
  • War on Terror: The Homeland Security Agency was created and TSA grew more important.  Security has been increased, but at what cost?
  • War on Poverty: Much poverty still exists in the US, possibly more than before the war on poverty was initiated.  Government programs, number of government employees, and debt have expanded immensely.  Positive results are difficult to find.

Common elements from a half century of wars:

  • Massively increased official federal debt.
  • National Debt 1965:                           $317 Billion
  • National Debt 2015:                      $18,600 Billion
  • Expansion of government and the military.
  • Consumer prices have inflated
  • 1st Class postage 1965:                            5 cents
  • 1st Class postage 2015:                         49 cents
  • Loaf of bread 1965:                                $0.21
  • Loaf of bread 2015:                                $3.95
  • Gasoline 1965:                                        $0.31
  • Gasoline 2015:                                        $2.00
  • 6 Pack of Beer 1965:                              $0.99
  • 6 Pack of Beer 2015:                              $7.99
  • Prices for gold have increased along with other consumer prices and, on average, with national debt.

SO WHAT?

  1. The US seems intent upon creating massively more debt and increasing military activity in Syria, Eastern Europe, and the South China Sea. Based on US experiences in Vietnam, Afghanistan, and Iraq, we should not be optimistic about the benefits to the US economy, international prestige, and the economic wellbeing of US citizens.
  2. We can be certain expanded wars will mean more debt, higher consumer prices, more government influence over the economy, and a lower standard of living for most people in the US.
  3. Gold and silver prices will rise.

BUT GOLD AND SILVER HAVE GONE DOWN FOR OVER FOUR YEARS!

  • Yes, they have. The dominant narrative has been that a strong dollar must be maintained.  A collapsing dollar would be catastrophic to the US economy, war machine, incumbent politicians, and international prestige.  A rising gold price indicates a vote of no confidence in the government, the currency, and the central bank.
  • The powers-that-be want confidence in the unbacked paper dollar, not in gold. It should be no surprise that gold went down after its huge rally into 2011 while the dollar, S&P and bonds have gone up since 2011.
  • But all unreal valuations must eventually end. Anyone not in the top 0.1% does not know the timing, but we can be assured that warfare, welfare, debt, spending, and gold prices will rise while stocks and bonds correct.

FOR PERSPECTIVE:

The gold “officially” stored in Fort Knox is about 147,000,000 ounces, or at current prices, less than $200 Billion.  This amount is little more than a rounding error compared to the cost of the above wars.  In dollar terms the Fort Knox gold is unimportant.

SUPPOSE 99% of that gold has been sold into the market (call it a lease) to suppress the price of gold and maintain the perception of dollar strength.  What part of that process does not make sense from the perspective of a central banker or highly placed government official who must keep the dollar strong?

Assume the Fort Knox gold was sold to suppress gold prices, shipped to Switzerland, melted and recast as 99.99% gold kilo bars, and shipped to China or Russia.  Is that difficult to imagine when we know that China, India and Russia have substantially increased their central bank and private individual gold holdings?

The Internet is filled with supposedly intelligent commentary about why gold prices will continue falling for the balance of the decade.  I’m highly skeptical.  I will change my mind when the US government balances its budget, begins to reduce national debt, and “gives peace a chance.”

Gary Christenson

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2015 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Deviant Investor Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in