The Prophet's Voice March 2009 Update on Gold

As revealed to Embrosewyn Tazkuvel

27 March 2009

Copyright 2009 Embrosewyn Tazkuvel.  All Rights Reserved.

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Namaste Brothers & Sisters of Light,

In the January 2009 issue of the Prophet's Voice I spoke to you about the coming rise in the price of gold and the importance of accumulating the physical metal now in as great a quantity as you can afford, even to the point of finding a second income so you can afford some more.  The primary reason for this is not for investment, but financial security in a world where the value of fiat money (paper money issued by governments with a value declared by the government, but without any intrinsic value) is very unstable and unsustainable.

Several people have continued to inquire about the investment opportunities in gold.  As I have said, I am not an investment advisor, but I will give you some facts and let you draw your own conclusions.

In the year 2000, the price of gold was under $300 per ounce.  By 2009 the price had risen to over $1000 per ounce.  I spoke about the coming rise very clearly in 1999.  During the time gold was more than tripling its price, the production of gold from mines was decreasing!  The law of supply and demand would dictate that when prices are rising producers will produce greater quantities so they can make greater profits at the higher prices.  If the mines did not produce more gold during that time period it was because they were unable to do so.  Its not that the world is running out of gold, but that the days of easy pickings are over.  To find and produce an ounce of gold today is more time consuming and costly than it was in earlier times.

Additionally, a substantial amount of gold is not mined in gold mines, but is the byproduct of silver mining and industrial metal mines such as copper, iron and zinc.  With the worldwide financial crash, the price of commodities including the industrial metals, have also plummeted.  This has caused a large number of industrial metal mines around the world to shut down.  With the prices so low, the mines can't sell their ore at a high enough price to meet their cost of production.  As gold is a byproduct of these mines, shutting them down also has removed a significant source of gold from the world markets.

Governments fear gold.  It is the single greatest threat to the viability of the worthless fiat money they print up.  For decades central banks in the US and Europe would sell an average of 1500 tons of gold a year from their vaults to help meet world demand and keep the price of gold artificially depressed.  Production from mining operations has been steadily decreasing since it peaked in 2000.  The total world production of gold in 2008 was about 2400 tons.  The total gold purchased for all purposes in 2008 was 3700 tons.  The gap between the gold produced by mines and the gold purchased on the market has been bridged each year by the sales of gold from the vaults of European and US banks.  This is no longer the case, as the worldwide financial crisis has made many banks fall, many others need rescuing, and left the survivors running scared.  Now the banks are holding onto their gold and the gap between production and demand is no longer being met.

Every year there were some central banks that were purchasers of gold rather than sellers.  Far Eastern banks in particular have been net buyers most years for some time.  However, all banks combined were still net sellers injecting an average of 1500 tons a year into the markets.  This is no longer the case as China, Japan, Russia, Taiwan and many Middle Eastern central banks have all become avid buyers of gold.  China is increasing its gold reserves from 600 tons to 2500 tons.  In December 2008 and January 2009, Russia purchased 90 metric tons of gold to add to their reserves.  Ecuador purchased 28 metric tons in January.  The central banks of Brazil and India have also stated that they will be increasing their gold reserves.  It seems several European central banks are also poised to become net buyers instead of sellers.  The potential impact on the price of gold from central banks changing from net sellers bridging the annual gap between mine production and demand, into net buyers, now making the gap a chasm, should not be underestimated.

Gold is a far rarer commodity than most people realize.  If you melted all the gold that has ever been mined in the history of the world it would only create a 20 meter cube (65 feet).  By comparison, the total amount of iron produced each year is 6000 times greater than the total amount of gold produced in the entire world for all of history![1]

As I spoke about in detail in the January 2009 Prophet's Voice, inflation will be reigniting in the coming months and years.  It will not hit hard until employment begins to rebound, but when it hits it will be significant.  It is also inevitable given the massive deficits the financial bailouts are ringing up in budgets of nation after nation around the world. Creating worldwide inflation is exactly what the US Federal Reserve and governments around the globe desperately want right now.  And they are purposefully taking actions to insure inflation occurs.  Rising prices, particularly of real estate, are the only way they see to salvage the financial train wreck they created.  But inflation will also push the price of gold higher.  Because gold has unique and rare intrinsic value, inflation doesn't exist in its realm.  When paper money is devalued (inflation) the price of gold just rises in step with the value of the increasingly worthless fiat paper money.  In an example I gave in an earlier newsletter, 2000 years ago a one ounce gold coin in Rome would buy a quality Toga, a nice handmade belt and an excellent pair of sandals.  Today in 2009, a one ounce gold coin will buy a quality man's suit, a nice belt, and an excellent pair of shoes; 2000 years and no inflation with gold.  Imagine that!

Blessings upon you and your family,

Embrosewyn Tazkuvel

 Prophet of Celestine Light

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*The views stated in the Prophet's Voice are strictly the personal views of Embrosewyn Tazkuvel and are not necessarily official positions or opinions of the Church of Celestine Light.