We all want our fair share in life. Unfortunately, with the onset of the greatest financial disruption since the Great Depression I suspect that getting your fair share will become increasingly difficult in the years ahead. But there is still a small window of opportunity remaining – a period of time when the increasingly debased dollars in your bank account haven’t quite caught up to the reality of the extreme scarcity of most tangible assets.
You see, the world is currently awash in financial assets. There are more equities, bonds and real estate securities in existence today (as measured by dollar-denominated value) than at any other time in human history. And the growth rate of these financial assets has been absolutely stunning over the past several decades – a classic exponential curve.
In contrast, hard assets in the real world – things like precious metals, antiques, gemstones and fine art – have only experienced linear growth. This makes them quite rare when compared to financial assets.
How rare?
That’s something I wanted to find out. So I asked myself a hypothetical question. What if everybody tried to get their “fair share” of hard assets? In other words, what if we split the world’s supply of tangible assets evenly among the total world population? How much would there be per person?
But let’s assume for a moment that we only care about the richest 10% of the global population. Why do I make this distinction? Because poor people, regardless of whether they live in developed or emerging markets, have a very limited ability to invest in anything. They will almost certainly not get their “fair share”. As unjust as this sounds, it is the truth. Only the world’s middle class and wealthy have the means to realistically protect themselves financially against the coordinated central bank debasement that we now face.
Taking the richest 10% of the world corrects for this situation. So it is only this select group that I will divvy up the world’s tangible wealth among in the calculations below. But don’t worry. It is actually much easier to make it into the world’s richest 10% than you might think at first.
As of March 2020, the world’s population reached 7.8 billion. According to investment bank Credit Suisse’s 2019 Global Wealth Report, it takes a net worth of just under $100,000 (including primary residence) to belong to the richest 10% of the global population. The people who fit this description are the usual suspects – many North Americans, Western Europeans and Japanese, along with China’s rising middle class.
So how much is your fair share of the world’s hard assets? Read on to find out!
It is estimated that the total stock of above ground gold is around 170,000 metric tons, or 5.5 billion troy ounces. This king’s ransom represents about 90% of all the gold humanity has mined throughout history. This is due to the fact that gold is almost always recycled and, therefore, never truly lost.
If we divide this massive gold stash evenly among the richest 10% of the global population (780 million people), we come up with a modest per person “fair share” of 7 troy ounces each. At the current spot price of $1,800, this amount of gold would only cost you $12,600.
The numbers for silver are even more shocking. Although estimates vary widely, if we (generously) assume that there are perhaps 1,360,000 metric tons of silver stockpiled in the world today, it would translate into just 56 troy ounces for each of the world’s wealthiest individuals. Even with today’s usurious premiums on physical silver bullion ($22 an ounce, delivered), your fair share would cost a paltry $1,232.
And if you thought the numbers for silver were nuts, just wait until you hear how rare platinum is! We can safely predict that there are no more than 12,000 metric tons of platinum in the form of bullion, jewelry and scientific equipment in the world. If we split this (probably overestimated) amount evenly among the world’s richest 780 million people, we would come up with a scant 1/2 troy ounce per person. Even when paying an elevated premium over spot to acquire physical metal, your fair share of platinum would only cost you $500 to $600 today.
But what happens when we move beyond precious metals?
Here’s a hint. Antiques are just as rare as gold and silver, if not more so.
For example, numismatic experts believe that up to 65 million of the iconic U.S. Morgan silver dollar have survived in mint state condition. Perhaps a slightly smaller number of U.S. silver Peace dollars are also extant in mint state. These U.S. silver dollars were struck in massive quantities, making them relatively common today. They are so common, in fact, that there is probably the same number of Morgan silver dollars as there is old foreign silver crowns (silver dollar-sized coins) in existence. Some well-known examples of foreign silver crowns include the British crown (a pre-decimal 5 shilling piece – last struck in 1937), the French 5 franc (last issued in 1871), the Mexican 1 peso (last minted in 1914) and the Japanese 1 yen (also last struck in 1914).
So let’s assume that we divide the world’s estimated supply of mint state U.S. silver dollars and foreign silver crowns equally among the world’s wealthiest 10%. That would be 65 million Morgan dollars plus maybe 40 million Peace dollars plus another 65 million foreign silver crowns for a grand total of 170 million coins. These are probably excessively kind assumptions about the surviving populations of large silver coins, but we’ll use them anyway.
Once we divide our 170 million coins among 780 million people, we find out that your “fair share” is only about 1/5th of a coin. Of course, we can’t split a coin into fractions and still have it retain any numismatic value. So about 78% of the wealthiest 10% of the population will never, ever get their fair share here. This is in addition to the poorest 90% of the population who will also get a big goose egg. Only 1 in 5 middle class/wealthy individuals could possibly have the honor of owning one of these impressive pieces, representing about 2.2% of the total global population.
And the price tag? A mere $50 or $60 will get your foot in the door with a PCGS or NGC certified mint state Morgan silver dollar. For those interested in learning more about this subject, please read my beginner’s guide to investing in slabbed Morgan silver dollars.
It is insane to think that rare coins have been so devalued in the modern age that $50 is enough to buy an entry level investment grade example. But it is completely true. And coins aren’t the only category of tangible asset that has been neglected during the raging paper asset bubbles of the past decade.
Vintage watches are also incredibly undervalued. These include pre-1990 watches from world-renowned brands such as Rolex, Omega, IWC, Hamilton and Longines, among others.
A quick search of eBay reveals that there are approximately 40,000 vintage watches for sale on the platform at any given time. Now I’ve tried to filter out examples that I consider uninvestable. This means I’ve excluded parts watches, quartz watches and gold-filled or gold-plated watches. If we conservatively guesstimate that the remaining 40,000 specimens for sale on eBay represent just 0.1% – 1/10th of a percent – of the surviving vintage watch population, it means that there are around 40 million old collectible watches out there.
It seems like a lot of watches, right?
Wrong.
If everyone in the global middle class wanted to own just one of these horological treasures, we would quickly discover that only 1 in 20 people would have their wish fulfilled! High quality vintage watches, like most hard assets, are obscenely rare. Yet $500 to $1,000 will allow you to choose from a wide range of desirable examples. $1,500 to $3,000 will get you a superlative solid karat gold dress watch or complication-laden sports watch from some of the finest manufacturers out there.
So what is going on in the world? How can hard assets that are so scarce be so cheap right now?
I have a theory on this.
In my opinion, the financial authorities have spent the last 30 years striving to answer a question that nobody asked. What if everything that humanity once held in high esteem – precious metals, gemstones, antiques, fine art – was suddenly ignored and treated as though it was worthless? It is a bizarre sociological experiment doomed to end in tears.
So why would the central bankers even attempt it? That, at least, is somewhat easier to answer. If everyone is chasing paper assets instead of tangible assets, it gives the world’s monetary authorities unprecedented control over the global economy. At least while it lasts.
But the outcome of this perverse experiment has been surprising.
The value of hard assets didn’t drop to zero as the central planners had hoped. Instead, they stubbornly maintained a bid – albeit at reduced prices – in a financial world madly obsessed with worthless unicorn IPOs, securitized junk debt and exotic derivatives.
Now the pendulum is slowly but surely swinging the other way. This threatens to destroy the fake economy that the world’s central bankers have so painstakingly tried to build. Your only protection is to diversify your portfolio into hard assets – precious metals, antiques, rare coins and other tangibles. It is imperative that you get your fair share of these undervalued assets while bargain pricing still abounds.
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