Bigger Than California or Alaska: North America’s Ominous New Gold Rush
When you hear the term “gold rush,” you probably think of California in 1849, or Alaska and the Yukon in the 1890s and early 1900s.
And when you hear about massive amounts of gold stored in armored vaults, you might think of the U.S. Gold Depository at Fort Knox, Kentucky.
Above a certain age, you will immediately recall the James Bond movie Goldfinger.
James Bond getting beaten up by Oddjob in Fort Knox gold vault.1
But there’s a new “gold rush” occurring in the U.S. right now — and it’s unlike anything you’ve learned about in history or seen in the movies.
In fact, it’s downright ominous.
Gold is piling up in U.S. vaults. This time, however, it’s not so much a sign of new wealth as it is an economic danger signal.
Forewarned is forearmed, as they say. So, let’s drill into this…
First, you’re probably wondering about this new gold rush.
Before I lay it out, take a guess where it’s occurring.
Stop reading for a second or two — just guess. Where’s the gold?
If you’re using history to guide you, you’re probably thinking it’s in the same places as the previous gold rushes, like California or Alaska.
Yes, there are still some superb exploration companies out there — lots of gold yet to find and recover. But it’s not what I’m talking about now.
If you pay a bit more attention to the metals markets, you might think it’s happening in a big mining state like Nevada.
Good thinking, but no… not Nevada, either.
In fact, this new gold rush dwarfs all the combined gold output of Nevada.
Yes, it’s that big…
In fact, this new gold rush is delivering metal to vaults much faster, and in many ways far easier, than mining it out West, even in the most mining-friendly jurisdictions.
Another hint: the new gold rush doesn’t involve mining at all.
OK, enough guessing.
The new U.S. gold rush is all about wealthy individuals and risk-averse institutions and funds buying already-mined gold from across the world. They’re shipping tons of it — literally — into the U.S. and storing it in vaults.
Keep in mind, I’m not talking about safe deposit boxes or store-bought private safes here. They’re buying way too much gold for that.
Instead, it’s going to depositories approved by the Commodity Exchange in New York — better known as COMEX.
That is, ultra-secure, well-guarded, concrete and steel warehouses that are relatively close to the city.
According to the Wall Street Journal:
Bullion vaults approved by the Comex division of the New York Mercantile Exchange house a record 29.7 million troy ounces. … Almost three quarters of that gold — weighing as much as nine, fully loaded Boeing 737-700 airplanes — has arrived in the past three months.2
In effect, the amount of gold pouring into the country has skyrocketed over the last three months.
This chart shows the increase…
Hmm… Something is definitely going on here. Per WSJ.
We’re talking about 22 million ounces of recently-acquired gold in total.
That number is astonishing. It’s well over three times the entire annual gold output of Nevada in recent years3.
Or, to look at it another way, consider that a new, world-class gold mine might deliver 200,000 ounces per year. For example, that’s about the annual output of Victoria Gold’s new Eagle Mine in the Yukon.
So, 22 million ounces of gold is equal to about 110 Eagle Mines.
Let me say that again. The equivalent annual output of 110 new “Eagle-class” gold mines has flowed into Comex storage since April.
For more perspective, the entirety of world gold mine output in 2019 was about 110 million ounces. So, in just three months, the U.S. has imported about one-fifth of all world gold mine output from last year.
The logistics to make this happen are impressive, too.
One gold transport executive told the WSJ that that, “gold has reached America from all over the world. The flows into New York are unprecedented.”
Logistics firms are working around the clock to move product. For obvious reasons, security is paramount. The gold usually travels as air cargo, and now there’s a scramble just to obtain aircraft.
In recent months, global airline traffic has plummeted. There’s far less cargo space available and there are far fewer flights and airline routes. Consequently, quite a bit of gold has moved via private planes under charter.
I discussed this issue at the end of March, just before the massive inflow of gold to U.S. storage.
I also discussed widespread shortages that were making gold unavailable for retail buyers, along with steep markups over spot prices.
Well, now we know what was happening. Deep-pocketed buyers scooped up all the gold they could lay hands on, then shipped it to Comex storage, if not to their personal antivirus-bunkers.
Why are all these wealthy moneybags and institutions buying vast amounts of gold — entire, Nevada-scale levels of output — and storing it?
I mentioned the crux of the issue a few days ago in my article about President Trump moving the country towards building new icebreakers.
Another key problem, from the outset, is money. The U.S. government is effectively insolvent, in terms of cash flow in and expenditures out. At the federal level, nothing works anymore absent ‘money creation’ by the Fed and public debt incurred by the Treasury.
In other words, the U.S. government is broke.
We saw clear indications of this last September, when the so-called “repo-market” exploded. Then, even before the virus hit hard in March of this year, the Treasury was having trouble selling bonds.
It was only the Federal Reserve magically creating about $3 trillion in alleged “money supply” that saved the day.
In the past week, you may have seen headlines about the U.S. national debt breaching $26 trillion. Or may you did not hear about it, because it’s not something that the bankers and politicians want to highlight.
And face it, that $26 trillion of debt is utterly unpayable; not by any semblance of productive output that generates cash. Even paying interest will be problematic, which is why the Fed has just promised super-low interest rates for the next two years.
Here’s the takeaway…
And please! If you remember nothing else of this note, remember this.
- We are on the verge of a dramatic reset of currencies across the globe, sooner or later (and I think sooner). Purchasing power will drop through the floor.
- Wealthy people and large institutions everywhere see both a looming, global-scale currency crash, along with a dollar-crash. So, they are accumulating gold — hence, the big movements of physical gold into storage.
- While most everyone is distracted by coronavirus, racial tension and national-scale problems in the U.S. — while people are glued to the “news” and reading rabble-rousing, online commentary — the people with serious money are accumulating gold.
In the end, the moneybags of the world fully intend to come out on the other side of this storm with their balance sheets intact.
Well, for many years, Bill Bonner, Jim Rickards, I and many others at Agora Financial and St. Paul Research have discussed the importance of owning gold.
We’re turning out to be far more right than we wanted.
So I’m saying it again, only more forcefully.
Follow the lead of all those smart, rich people who are filling U.S. vaults and get some gold for yourself!
Of course, there are many ways to buy gold, both online and at local sellers in most cities.
I should also mention that Agora Financial has a relationship with a firm called the Hard Assets Alliance, which deals in precious metals.
Hard Assets has in-stock supply right now, with among the lowest premiums in the business and the easiest website interface to navigate, bar none.
(Note: Agora Financial owns a share in the Hard Assets Alliance. We’ll collect a small cut if you open an account and buy. But we wouldn’t have made that deal unless we liked how they treated their customers to begin with.)
Whatever you decide to do — and however you get some gold — it will do you much more good, over the long haul, than just watching the unravelling of America on television.
On that note, I rest my case.
That’s all for now… Thank you for subscribing and reading.
Managing Editor, Whiskey & Gunpowder
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3 Nevada produces about 5.8 million ounces per year, cumulatively, from every mine in the entire state. So, 22 million ounces — in just three months — is about 3.7 times the entire annual gold output of Nevada.