Do governments hate gold?
The answer: Yes — Governments hate gold because they cannot print it, and it is difficult for them to control.
Because they cannot print it or easily control it, gold has little use to them during the never-ending schemes to tax and then redistribute wealth.
India is a recent example of a government trying to control gold imports through increased taxation on imports and imposing rules, such as that importers had to re-export 20% of imports as gold jewelry.
These types of rules are difficult to enforce and smuggling of gold into India skyrocketed. Once gold is in the form of jewelry or physical metals it is very difficult to tax. Below we explore some other granular points about why governments disown gold.
Yes, some central banks do own gold … which seems counter to our thesis but in actuality, central banks own gold for the same reasons that you and I own gold – because it is not the liability of another government.
Why Governments Hate Gold?
A) Legal tender laws mean that all taxes must be paid in fiat currency (such as the dollar in the U.S., Euros in W. Europe, …) not gold or silver (held in physical form). Nothing but sponsored fiat currencies issued by the government is acceptable to pay debts and taxes.
Why do governments pass these legal tender laws? Because in a long running series of decisions from 1921 until 1971 western governments, in response to politicians creating ever larger government spending, countries decided they prefer interference and redistribution over letting capitalism and ingenuity grow the pie for everyone (However, the pie has grown tremendously…looking at GDPs over the last 50 years).
Pursuing perfectly equal pizza slices became the ideal goal rather than a rapidly growing pizza diameter.
But you cannot control pizza slice sizes if you don’t control the pizza cutter. Since wealth is the pizza slice, and taxation is the pizza cutter, the government must ensure that only fiat money gets recognized as wealth since fiat is easier to find and tax than physical metals.
B) Heavily government-regulated industries cannot be bailed out if the currency is not fiat – and if it is tied to a gold standard or some other limiting factor.
Once we see that the government is helping to set the rules for industries, and influences industry via regulation, it becomes clear that government is then liable for when a regulated industry fails.
During the 1930s banks, the world over failed because the government applied the wrong policy response to illiquidity problems. To be sure speculation and double counting of cheques all played a part in the 1930s banking crisis.
But since the US government, along with many others were on a gold standard they could not print more US currency without more gold. In order to increase its gold reserves, the US government seized all gold held by citizens and banned citizens from owning gold.
The UK put into place restrictions which limited citizens to owning no more than four gold or silver coins and restricted any imports of gold for private citizens. The US government paid well below market prices for the seized gold and then raised the price to a higher official rate.
This allowed the government to then print more dollars to bail out the banks. Gold was ‘officially’ banned for individual ownership in the US until the 1970s – but the underground market prevailed and because gold is a physical asset it was easily hidden from government raids.
C) Gold has gained value against all currencies since governments abandoned the gold standard.
D) The existence of gold in the economy is a constant reminder of the poor quality of the government paper, and it always poses a threat to replace the paper as the country’s money.
Even with the government giving all the backing of its prestige and its legal tender laws to its fiat paper, gold coins in the hands of the public will always be a permanent reproach and menace to the government’s power over the country’s money.
E) Central Banks (e.g., the Federal Reserve) are for the most part privately held but controlled by the country’s government. A central bank derives its power to create and control fiat currency from the government.
So long as people use their money the central bank is happy. The problem becomes when people find an alternative to fiat currency. The biggest alternative is gold. That is why central banks hate gold. If people use gold instead of their fiat currency, the central bank loses power.
F) The Federal Reserve operates under a dual mandate. It must maintain price stability while also simultaneously promoting maximum employment.
The Fed hates it when the price of gold rises because it correlates with a rising unemployment rate.
G) The hatred of gold is nothing new. When it operated on a gold standard, the US government was limited in terms of its ability to pursue deficit spending. It could only accrue so much debt.
The gold standard forced the practice of austerity. When the government abandoned the gold standard, it gained the power to finance any national expense by simply borrowing from the Federal Reserve.
Today, no amount of gold is necessary for the Fed to purchase treasury bonds. It is blessed with the ability to expand their balance sheet with zero limitations.
Simply put, gold limits the power and influence of central bankers. No wonder they hate it.
GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
23-11-2021 1797.30 1789.15 1344.02 1337.93 1595.82 1590.20
22-11-2021 1841.10 1816.05 1370.15 1353.68 1631.03 1613.92
19-11-2021 1861.40 1861.10 1387.30 1383.73 1647.34 1646.14
18-11-2021 1860.50 1860.30 1378.63 1381.46 1641.71 1640.78
17-11-2021 1858.45 1864.90 1383.80 1384.87 1642.68 1648.01
16-11-2021 1872.25 1859.20 1392.02 1384.73 1648.52 1638.88
15-11-2021 1863.80 1859.90 1388.72 1385.07 1627.10 1626.11
12-11-2021 1850.00 1860.55 1381.03 1387.97 1616.16 1624.82
11-11-2021 1859.25 1857.90 1387.93 1387.11 1620.89 1620.09
10-11-2021 1824.95 1859.40 1348.46 1375.21 1576.03 1608.57
Buy gold coins and bars and store them in the safest vaults in Switzerland, London or Singapore with GoldCore.
Learn why Switzerland remains a safe-haven jurisdiction for owning precious metals. Access Our Most Popular Guide, the Essential Guide to Storing Gold in Switzerland here
Looking for Leverage? Silver Sands at a Sub $10 Million Valuation Offers the Highest Leverage Drilling Play Around
Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile. Eric Sprott is the largest shareholder…
Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile. Eric Sprott is the largest shareholder.
Veteran analysts predict gold and silver are on the cusp of another bull run, with some speculating that after a year of consolidation we may see prices rise to $50 per ounce for silver and $2,500 per ounce for gold near term. A further leg up is forecast, and some say precious metals will hit unheard of levels over the next few years as the US dollar staggers. This is big news considering that past silver bull markets have delivered gains ranging from 330% to 900%.
Which brings us to and why its Phase III drill program currently underway makes it the best high leverage silver junior around. ( ), SAND started out with a silver resource of 15 million ounces at its Virginia project in Argentina last year and this is their third round of drilling. Their goal is to have grown that to 50 million ounces by the time Phase III is finished, on their way to 100 million.
But that’s the low-risk part. The leverage comes from drilling the silver/gold Santa Rita vein field in the northern part of the property first explored by Mirasol and Hochschild in 2007. Surface sampling and channel sampling highlights included 340 g/t silver and 5 g/t gold. Mirasol put 7 green field exploratory drill holes into the structure and came up with mineralization in 6 of 7 holes before Hochschild dropped it to focus on their San Jose discovery (now mine).
Silver Sands largest shareholders areand Eric Sprott, who has invested twice – increasing his initial investment by 300%. Commenting on the silver market, Sprott said:
“There’s going to be a shortage of silver. We get information from dealers looking for supply and paying premiums, which is almost unheard of. And when I look at the amount of silver going into ETFs and India, we know a shortage is on its way. The last time silver had a breakout, the price went up 10-fold. Do I think that could happen again? Absolutely.”
Sprott is not the only one with Silver Sands on his radar. In his Gold Newsletter, well-known precious metals expert Brien Lundin firmly put the company into the buy column, reiterating his previous buy recommendation. Speaking to the high leverage nature of Silver Sand’s Virginia project, he described the company as “a great ongoing lever on …… silver.”
SAND is near the end of a Phase III exploration program at its Virginia project located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. Virginia started out with a silver resource of 15 million ounces, and the goal is to grow that to 50 million ounces by the time Phase III is complete.
The right people, place, and resource
Silver Sands hits the mining trifecta of people, place, and resource. The company is overseen by market veteran Keith Anderson who brings to the mix a successful 20-year history of structuring and financing resource companies. Leading a deeply experienced management team, Keith has brought in a top-class investor, executed operations under budget, and delivered a clear roadmap towards the development of a significant resource.
The company’s flagship Virginia project is located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. This year, Argentina was rated the 5th most attractive region in the world for investment, and a global top 10 of silver mining jurisdictions. Furthermore, Santa Cruz ranks above Mexico on the investment attractiveness index.
Following up on highly successful Phase I and II exploration programs, Silver Sands is nearing the end of its Phase III program which comprises 2,685 metres of drilling across more than 16 holes. The program is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect.
Overall, the Virginia property has the markings of an exceptionally large epithermal vein system yet only a tiny fraction outcrops at or near surface. Silver Sands has just started to scratch the surface of the property’s potential. By the time Phase III is completed, the company believes it will have grown its resource from 15 to 50 million ounces, on the way to 100 million plus.
Phase III will comprise 2,685 metres of drilling across 16 holes and is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect. This will all be driven by a low-risk model that involves mostly drilling gaps and extensions between high-grade intercepts along known vein structures.
Adding ounces on the low-risk journey to massive upside potential
The 59,750-hectare Virginia project is a low to intermediate sulphidation epithermal silver deposit nestled in the mineral-rich Deseado massif, roughly 100 kilometres south of Newmont’s Cerro Negro Mine, one of the largest gold mines in the world.
Through initial discovery in 2009 and four follow up drill programs between 2010 – 2012, defined an indicated resource of 11.9 million ounces of silver at 310 g/t and an inferred resource of 3.1 million ounces of silver at 207 g/t, which were documented in an NI 43-101 technical report filed in 2014. Mineral resources are contained within seven conceptual open pits including Naty, Julia North, Julia Central, Julia South, Ely North, Ely South, and Martina.
Phase I and II drilling subsequently identified four new conceptual open pits – Ely Central, Ely North Extension, Julia South Extension, and Martina NW. Drilling confirmed the Ely structure can be traced over 2.3 kilometres in strike length from north to south, open along strike and at depth. The Naty-Julia structure now extends to over 3 kilometres in strike length, open to the north and south, and at depth.
Phase I focused on exploring new high-grade silver zones to expand on the existing NI 43-101 and consisted of 2,831 metres across 18 drill holes along with 80.5-line kilometres of IP surveying. Phase II followed up and yielded some impressive results, testing several new prospective zones through 3,104 metres of drilling across 20 holes. New discoveries were made in areas of lower IP chargeability, showing potential for strike extensions of known veins, as well as new discoveries within previously untested linear trends of lower intensity.
Phase II also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012. Furthermore, drilling intercepted high-grade silver mineralization at the Ely North, Martina, and Julia South targets.
Highlights from Phase I and II exploration programs include:
• 639 g/t Ag over 9.60m
• 625 g/t Ag over 10.80m, including 1,110 g/t Ag over 5.70m
• 560 g/t Ag over 9.98m, including 1,578 g/t Ag over 2.87m
• 476 g/t Ag over 4.0m, including 929 g/t Ag over 1.85m
• 198.5 g/t silver over 33.5m
• 123.43 g/t silver over 8.5m, including 168.34 g/t silver over 3.9m
Phase II encountered phenomenal grades at shallow depths. It also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012.
A New Vein Field Target That Looks Like Virginia
Adding to the positive results, an IP survey to the northeast of the existing vein field identified 17 targets with a chargeability response similar to known veins in the main field, suggesting that a new vein field akin to Virginia has been discovered. The 37.5-line kilometres of IP surveying has since been worked up for drill targeting.
“In Phase II, we hit some of our best holes ever and encountered phenomenal grades at shallow depths – this is pretty big stuff, indicating tremendous upside potential,” said Keith Anderson. “Our main goal with Phase III is to climb to 50 million ounces, on our way to 100 million plus. Nothing is set in stone, but it’s definitely within the realm of possibility, especially when you consider the size of our property.”
In addition to identifying new mineralized zones and a key target area for expansion, Virginia’s potential is unique in that the property has never been explored to depths greater than 150 metres, while surrounding miners have successfully encountered mineralization to depths as low as 450 metres.
Furthermore, silver veins in the south and east portions of the Virginia property do not outcrop to the surface and require deeper drilling than what’s been endeavored so far. If Silver Sands encounters mineralization at lower depths the resource potential could very well double or triple.