Stock to Flow Nightmare: Uganda Finds More Gold Than Exists in the World
Peter Schiff is rolling in his grave right now.
Oh wait, that dinosaur is still alive?
My bad.
Hahaha wtf.
Worth $12T
LOL! WHAT?!?
What's the market cap of gold again?
Uganda has announced that it has struck a deposit of 31 million tonnes of gold ore, with extractable pure gold estimated to gross 320,000 tonnes.
Hm so if the 320k and 197.5k tonnes estimates are to be believed, Uganda just found 162% of the entire circulating supply of gold in a single deposit. They just found more gold than the world has ever mined since the beginning of time. Insane.
Notice the language:
Worth $12T
All of the articles reporting on this use the same foolish, naïve, and childish language. This idea that supply and demand don't matter and that market caps are set in stone and price doesn't change based on the most obvious factors. As if the price of gold doesn't go down when it gets dumped onto the market. Comical.
When it rains, it pours
This is happening at the worst time ever. We are on the precipice of a financial disaster. Lot of people around the world wanted to hedge against that disaster by storing their value in gold, and then Uganda goes and finds a deposit of gold bigger than all gold in existence? That's insane. You can't make this stuff up.
I knew I preferred silver for a good reason!
Must be my psychic powers.
To be fair, mining gold is difficult.
It will take years if not decades to mine all that gold. Definitely no reason to mine it as fast as possible and tank the value of the asset being mined. The overhead cost of a huge mining operation is significant. No reason to spend a ton of money to mine more gold only to get less money out of it.
In other news, USA goes to war with Uganda to 'protect democracy'!
Pretty much every war is a war of resources and spoils. This gold deposit seems like a boon for Uganda at first glace, but a deposit that big could become a heinous liability down the road. Also, who owns this gold? THE GOVERNMENT? I assume so... Do we really trust any government to efficiently consolidate and allocate resources in a fair way? Scratch that... do we trust ANYONE IN THE WORLD to distribute resources in a fair way? No. To my knowledge I can't think of one single person or entity I'd trust with that much gold. I expect a lot of drama to pop up over something like this.
More like $6T max
It is absurd to think that the world supply of gold could be more than doubled and Uganda would be able to magically extract as much value as they wanted out of that market without making the price go down. At best we can assume that this amount of gold is worth half as much as is being reported. Of course nothing stops demand for gold from going up while supply is also going up, but to simply assume that will be the case is ignorant on the most fundamental levels of economics.
In fact, demand for gold could just as easily decline as the supply rises, crashing the market very quickly. What happens if we enter a massive recession and everyone stops buying gold jewelry? What happens if manufacturing processes change and less gold is used in electronics? What happens if crypto rises up as the new store of value, leaving gold in the dust? All of these things could happen at once, in addition to Uganda dumping more and more supply onto the market and getting whatever they can out of their insane claim.
Seriously though who's going to invest in gold after a discovery like this? First of all, gold isn't even an investment in my opinion. It's a robust hedge. It's that ultimate oh-shit button super low tech solution that only comes into play when all the higher-tech solutions fail. We never want this hedge to actually play out in our favor, because if it does everything is completely fucked.
Derivatives are worthless
With this concept in mind, a piece of paper that says we own gold is rendered null and void. If gold is a low-tech hedge, then buying the higher tech piece of paper/digital-ledger that says we own some is completely useless. In the event that the higher tech stuff fails we will inevitably lose all the gold we thought we owned as a hedge against the exact scenario that happened. Oops! Irony!
The only relevant way to hedge with gold is to physically hold it and secure it ourselves without the trust of a third party. It's one thing to do this with crypto and a completely different story with a physical commodity like gold.
Compare how easy it is to secure millions of dollars of crypto directly in our own homes. Nobody even needs to know if we just learn to keep our mouths shut. Contrast that with securing million of dollars worth of gold in our homes and that becomes a liability nightmare. People get killed for much less than that, which is why everyone wants to outsource that security to the professionals in the first place.
For me it becomes obvious that there's a definitive limit on how much gold a single person should ever own. Probably something like a single gold bar. The big ones are 400 troy ounces (12.4 kg / 27.3 pounds) which has a current value of $724k.
However, at the same time, gold is a hedge and not an investment, so it should really only be 1% of our portfolio max. Which means owning a $724k gold bar implies our net worth is a hundred time greater than that ($72.4M). Certainly possible given the crypto of it all, which is why I believe that crypto will make gold more valuable, not less. The people who believe in crypto (libertarian mindset) are the same ones who will use gold as a robust hedge.
The problem comes into play when the money is spent.
Crypto is easy to spend. I can spend crypto anonymously (or at least pseudo-anonymously) whenever I want. If I send Hive to Binance, no one knows if I actually sold the Hive or where that money went (except Binance: who actively protects customer privacy). Things get even crazier if I start transferring a privacy coin like Monero around.
Meanwhile, If I have a $700k gold bar in my basement, uhhhh... how do I spend it? It's not divisible and nobody accepts gold as payment. I basically just have to sell the entire damn thing all at once and hope I get a fair price without garnering too much attention. So many variables and ways that things can go wrong. Gold is still profitably counterfeit to this day.
Conclusion
The entire concept of money and value itself is purely abstract. Money isn't real. We make it real through our abstract economic systems.
This whole situation with Uganda shows us that physical money can literally just be found sitting in the ground even after scouring the Earth for this resource for thousands of years. Seems like the whole "gold asteroid" scenario is coming into play after all, but Uganda doesn't even have to go into space to get it.
I hate to take the crypto vs gold angle, but do we see this problem in crypto? Look out someone might dig a hole and find 400M Hive inside! lol, yeah not gonna happen. Truly, crypto is grossly underestimated. Most people out there simply do not understand the value of a provably scarce digital asset controlled by no one that is impossible to counterfeit. I suppose at the end of the day this is a show-not-tell situation. Trust is earned and proof is required. Mainstream adoption awaits.
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I looking at the Ugandan claim with a lot of skepticism. I’ve yet to see any independent confirmation. If it sounds to good to be true…
Did I not mention how it sounds totally ridiculous?
:D
Yep, call me skeptical../
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You know I read your heading and my immediate thought was "that's where the next war will be" and then as I was reading TA DAAAA!!! Like @preparedwombat says, it might not even be true but if a country wants to get into Uganda for whatever reason - wouldn't that be a great cover story? I'm sounding like a nutcase for sure, but this kind of stuff happens everywhere all the time and people don't even realise it.
I've never been a fan of gold and far prefer silver, but I'm totally biased because I don't have any gold anything, only silver stuff 🤣
It'll be interesting to see what the markets do in the next few months if this turns out to be accurate.
It’s totally bogus.
If it were real, armies would be all over it.
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I wonder if Peter will talk about it, but probably he won't. It's crazy that after all these years he still doesn't get crypto
If you want to see what might happen to Uganda to extract even more of their new found wealth I suggest reading Naomi Klein's 'The Shock Doctrine' for an idea of how the US/Imperial Core have used war and economic shock therapy to privatise swathes of Latin America and Asia over the last 70 years.
Bix Weir - Road To Roota has been talking about this for years
https://www.youtube.com/user/RoadtoRoota/videos
He talks about that the FED was actually created because they found HUGE amounts of gold in the Grand Canyon. Just waiting to be dredged.
Like the Uganda story, but really played out.
However, that said, when other currencies collapse, many people will use gold for trading/exchange.
(depending on how far the economy collapses)
Clif High had data showing that people in America were panning for gold to pay for food.
The problems i see is what size of gold pieces will actually be tradeable?
As in, will 1 oz buy a gallon of milk? or 1/10 oz? Or 1 gram? Do we need to carry .9999 fine grains?
I expect the price of gold to skyrocket...
but i also expect the price of food to go up and up and up
But, but, i agree with you, silver will be a far better investment.
Seems like people are not getting the whole idea of how crypto is never in a competition with either gold or fiat. Crypto can't be found somewhere like that unless we put it there, if this news is real then Gold might take a hit but it depends of how they manage the situation. This is something that's not to be joked with, if it's a fake news, then we should think about the reason behind such claim .
great post, crazy how much gold was found at one time. the last paragraph sums it up. Crypto is that asset.
https://peakd.com/goldandsilver/@freebornangel/5nszsk-how-to-make-imitation-gold-and-silver
If you buy coins you have a better chance at not getting ripped off as the enforcement for counterfeiting is harsher than for fraud.
I think folks are really gonna be mad when they find out that chocolate mountain and the grand canyon make uganda's find look puny.
Time to trade gold for silver, imo.
Yeah silver is much more fun.
Kills vampires and werewolves.
And you can get more for a way cheaper price.
Clearly superior.
Vampires are killed with wooden stakes.. js
We are truly living in a simulation
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Yep.
It’s sometimes like we are on TV living our lives to a script.
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Why don't we just ask the big bang experts for the real caps for gold and other metals?
Heard about it... Waiting for independent assessments. If true I hope it doesn't become a resource curse for them.
As for the rest of us... Less gold, more crypto
Yep, mixed feelings for sure
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Putin and Biden's handlers are both working overtime eyeing all that gold
Each will take a place in our heart.
Where you are will dictate the ones you hold dearly.
One argument I see plausible moving mainstream is the fact the market needs gold as much it will need crypto for efficiency.
!BEER
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True/
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BEER.hmmm.. the uganda story is apparently fake..
https://www.monitor.co.ug/uganda/oped/commentary/our-much-acclaimed-huge-gold-discovery-is-mere-fool-s-gold-3849986
I have to disagree with you quite a bit. Personally you have FUD on gold which is apparently a fake story. Second of all gold has been re-hypothecated 100 x over by banks which of course dilutes the known supply by magnitudes. Fundamentally that's BULLISH. The BRICS countries love gold.
Second you ask who will take gold? Well first of all it's a lot more liquid and convertible than HIVE. For fucks sake dude every Jeweler will convert gold or silver for CASH. There's barely a comparison even with BTC. I can see a jeweler or bullion dealer but not too many crypto for CASH places. Hive is even more niche and a bigger joke in comparison.
https://twitter.com/peterschiff/status/1539307288686903297
I'm chiming in because I like gold a lot and in these depressed times I would rather own it than BTC atm. I own both but BTC is a joke in comparison only because it hasn't even found it's floor.
The truth of the claim is largely irrelevant as the themes I've touched on are relevant no matter what happens. Themes of market cap, scarcity, derivatives, hedges, overhead costs, blah blah blah.
I like gold.
I think gold is awesome.
Doesn't mean anyone should put more than 1% of their net worth into it.
Also in the long term it's totally irrelevant if Bitcoin has "found its floor" or not.
You have no idea if this is the floor.
No one does.
I can guarantee Bitcoin will outperform gold over the next 5 years.
Only a day-trader should care if it's "found its floor".
But yeah I'm not really arguing with you here gold seems like an extremely legit play.
I'm an idiot pretty much have 15% of my net worth in bullion.. or am I heh
10% is in crypto and 1% in stonks. Real-estate is my biggest asset even though I have a mortgage left (small in comparison to equity). I'm doing all right as long as we don't go mad max.
Yeah but there is no way for anyone to win in the apocalyptic scenario.
Some people spend 15% of their surplus income buying cigarettes.
I'm sure you'll be fine.
I remember reading an article where Nasa will extract gold from other Planets and Gold will be worthless I think it's the similar situation create fud and there'll be lots of naive people to believe it.
https://twitter.com/VersedMoney/status/1542609500007440384
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It might, the number of people that are scouring landfills looking for the digital wallet with their lost keys on it.
If its true it will be mental - it will probably cause turmoil in Uganda - I hope not for their sake.
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I call bullshit on that find. If it were true why would they ever announce it? It’s a piss ant country that Russia or China would take in a morning.
Gold is and always will be money. While I’d never put my entire wealth in it, about 5% of it is probably the number.
It is BS
Hey... I'm over here.
When it comes to anything - not your keys, not your
cryptogold.LOL
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The idea of gold when the proverbial shit hits the fan is ridiculous. Russia learned a lesson: buying a ton of gold doesnt do much good if you cant sell it.
It is one of the most non-liquid things you will find.
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Ouch, my Russian bear feels hurt
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I call BS
It is
I like gold. I like gold jewelry. I like how it is very conductive. I like how you can basically say all electronics we all use today have gold in them. I like how it doesn't tarnish and its shine does not loss its lustre. While the increase in its supply will affect its price, we can all agree that with its proven track record for use and appeal, no matter what it will always have a value from its use and attraction.
Give me a name of a rich person that does not show bling. Even the most "humble" crypto millionaire/billionaire has a piece of jewelry made of gold in their body.
I can't help but still read Pomp's Substack and this piece talking about a potential disconnect between paper and physical gold is an interesting follow up.
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Silver is just better vs Vampires
Btw, we‘ll see how reliable this turns out to be mineable without causing serious war, if the numbers are right.
One more reason to invest in reliable crypto assets. Like you said, no one is ever going to "discover 400 million Hive".
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Cool line for sure
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Sounds like Uganda is about to get some freedom knocking at its door.. perhaps from a couple places like Russia and America. Not sure if that’s going to be a good find for them necessarily lol.
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Yep, if this turns out to be true.
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STOPCheck out the last post from @hivebuzz:
The only gold I own is my wedding ring. The rest is Silver and even more is crypto. I just hope that this bet is good enough to provide for me when I am old.
If we get to the point where I need to exchange gold for goods, we will be fucked totally.
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Great post!!
Oh boy - I cannot handle another war or a movie which creates aware but does not change the reality of poor people. However, awareness is the first step for change. Soon "Blood Gold".
https://www.monitor.co.ug/uganda/oped/commentary/our-much-acclaimed-huge-gold-discovery-is-mere-fool-s-gold-3849986
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Oh man, I couldn't agree more! Crypto is so underestimated. Not biased, but HIVE is really underestimated. I still don't understand why the government would own all these resources by default. That doesn't really sound fair to me.
I just found 23 Million Bitcoin down the back of the sofa.
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YIKES ... well ... since my backyard is all sand, I'll just keep doing what I am doing... buidl and hodl...
Killer summary statement:
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Taken as a whole:
Very convincing argument.
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