Dear Craig,
Nope, you are much mistaken in your reasoning.
The $3 million number is not meaningless, nor is the silver
being counted multiple times. What NORFED means by $3 million
is perhaps not exactly what you would mean, though.
The audit represents a count of the silver and gold in the
warehouse against which any form of warehouse receipt, paper
or digital, has been issued. The audit does not offer to
account for any of the gold or silver pieces which have been
purchased and placed in circulation separately.
Indeed, why should there be any such audit? The function
of the audit is to establish that the warehouse receipts
are 100% redeemable for precious metal. I don't know if
you've looked at these warehouse receipts, but they make
the point that they are redeemable for a fixed amount of
silver in ounces. They also bear a face value, and they
indicate that this face value is based on a $10 base price
per ounce of silver. ($500 base for the gold, I think.)
We don't need an audit for physical coins that have not
ever been in a warehouse. The function of an audit is to
establish that there are not, say, two paper warehouse
receipts for every silver piece in inventory, which would be
a bad thing. Instead, the audit appears to establish that
a third party has examined the warehouse receipts issued
and has examined the warehouse receipts redeeemed and has
examined the warehouse inventory of gold and silver held
for the future redemption of these papers. And it is all
good.
Not counted in the audit, and not of any interest to the
auditors or the customer for Liberty warehouse receipts,
is the gold and silver that has never been warehoused in
exchange for a warehouse receipt of any kind.
You are right that the ounces in the vault against which
paper warehouse receipts remain outstanding is 44,265 of
silver and 25 of gold. However, it is the larger number
of ounces which is of interest, because the figure that
I related was the amount of Liberty dollars in circulation
in any form. Obviously, some significant amount of gold
and silver has already been redeemed.
As well, I think we have a misunderstanding of what is meant
by Bernard when he says that $3 million is in circulation. To
use James Turk's terminology, I believe he is saying N$3
million.
In other words, where you say that 52,310 ounces of silver
and 52 ounces of gold represents less than $500,000 in
value, you are using the Federal Reserve Note concept of a
dollar. I presume you are multiplying 52,310 by about $4.5
and 52 by about $320. Doing so, I get $252,035.
Using the face value that appears on the silver and gold
pieces and on the warehouse receipts, of $10 and $500 for
silver and gold respectively, Bernard gets a total of
$549,100 in that warehouse. One could write N$549,100 for
NORFED dollars.
Assuming a ~20% increase in warehoused metal since September,
I get an N$ figure of N$658,720 for the present warehouse
valuta. This suggests that about N$2,341,280.00 in gold and
silver pieces are in circulation, never having been a part of
the warehouse operation.
My guess is that the weight of gold:silver in the warehouse
is actually a higher proportion of gold than the general
circulation. Fine. As it is 99.901% silver in the warehouse,
I'll use that figure to start. Taking that ratio, I'd get
N$2,338,954.91 in silver and N$2,325.09 in gold. We know
those figures can't be correct, since the silver pieces are
worth N$10 and the gold N$500. So, I'll round the gold figure
down to the nearest $500. That means subtracting $325.09 from
my gold figure and adding it to my silver figure. Now I get
a slightly different proportion: N$2,339,280.00 in silver
and $2000 in gold pieces in circulation.
Converting to ounces is easy: 233,908 ounces of silver have
been placed into circulation as Silver Liberty pieces. And
4 ounces of gold have been placed into circulation as Gold
Liberty pieces. Great. Those figures are my estimate of the
physical metal in circulation which has never been in the
warehouse, assuming a 20% increase in what is in the warehouse
since September.
Now, if we want to do an "apples to apples" comparison, the
metal in circulation by the various free market money vendors
is best compared ounces to ounces. For the Liberty dollars, I
am using my estimate of what is now in the warehouse plus what
has never been in the warehouse to get a total estimated
circulation of each metal. I invite the currency vendors to
correct these figures.
In gold:
e-gold 54,733.05
e-Bullion 17,974.2689
GoldMoney 5,244.038 (30 Sep 02 figure)
Liberty Dollar 66
Crowne Gold 1,366.026600
=============
subtotal 79,383.3835 ounces troy Au
In silver:
e-gold 143,769.39
e-Bullion 26,003.5076
GoldMoney
Liberty Dollar 296,700.00
Crowne Gold
=============
subtotal 466,472.8976 ounces troy Ag
In platinum
e-gold 396.99 ounces troy Pt
In palladium
e-gold 394.08 ounces troy Pd
Now, I go visit Kitco.com and get a gold price of (ack!)
$317.20; silver is at $4.46; platinum at $590;
palladium at $278. (And rhodium, on which nobody is
yet basing a digital currency, is $690. Well,
tantalum is also very expensive.)
No doubt, these figures are much more momentary because
of the volatility of the gold price of the US dollar,
as well as its price in other metals. The total dollar
figure of free market money in circulation by the above
listed entities is $27.6 million, rounded to the nearest
tenth of a million. You can work out exact figures for
yourself. About 91.2% of this market is gold.
In the gold free market money economy, sticking with ounces
troy for our comparison, e-gold has 68.95% of the market,
e-Bullion 22.64%, GoldMoney has 6.6% and Crowne Gold
has 1.7% of the market.
Within the silver free market money economy, by ounces,
the Liberty Dollar has 63.6% of the market, e-gold has
30.8% of the market, and e-Bullion has 5.57% of the market,
more or less.
Converting it all to dollars I leave as an exercise for the
reader. No doubt you have to decide for yourself whether to
evaluate the Liberty Dollar as $10 in circulation for every
ounce of silver, or not. Since the Liberty Dollar uses a
very different exchange rate from the spot price of silver,
and has good justifications for doing so, I won't attempt
the comparison here.
I should note that the exchange rates bid and ask given on
the e-gold site are also a bit different from the spot price.
Notice please that the comparison above is based on published
data only. The figure for GoldMoney is noted as being quite
a bit out of date, but it is the published figure I was able
to find on their web site. No doubt more bars have been bailed
into their system in the time since.
The other statistics on the economy are a bit harder to come by.
For example, e-gold publishes spend data for the last 24 hours.
I think that figure does not (cannot) include the spends in
the 1MDC portion of the e-gold economy, which are frictionless
and thus must account for some significant amount of action.
Nonetheless, we only have the published figures we have, and
we've been told never to expect spend data for 1MDC.
Across all metals, total activity for the last 24 hours on
the e-gold system was $2.277 million. Given that e-gold
has about 66.46% share of the free market money economy
I estimate a total activity across all currencies (listed
here) of $3.426 million. Great.
Assuming similar results for each of 365.25 days a year
we have an economy which represents $1.25 billion in annual
activity right now. It has good prospects for growth.
In individual account holders, e-gold indicates 568,434
total accounts. Applying the 66.46% figure, the total
in all free market money currencies would be about
855,290. It is certainly a mistake to assume that each
account represents a separate individual, but I don't have
a ready rule of thumb for estimating how many are repeats,
though I suppose I could look at funded accounts instead.
If we make the simplifying assumption that there are 855
thousand folks involved in our industry, and that they each
have an average income of around $38K, then the total dollar
value of our portion of the economy in terms of income
controlled by participants is $32.5 billion. Again, this
figure is probably high.
(Assuming that there are no funded e-gold accounts that
don't have at least some gold in them, the published figure
is 185,492 accounts which are funded with some gold. That
suggests a total economy of 279 thousand folks, controlling
about $10.6 billion in annual income. By the way, this
figure is probably also high, given that many of those
individuals who have e-gold accounts also have at least
one e-Bullion or GoldMoney account.)
While it is clearly a big economy we are in, it is a very
small portion of the total economy. Thus, the path to
growth is probably in market development or what has been
called market creation - recruiting new participants into
our part of the economy.
There is clearly much we can do to prompt new customers
to join our fold. No doubt, the ongoing cratering of the
world economy at large is going to provide a fertile
ground for our message - that better money is better for
the individual.
Regards,
Jim
http://cambist.net/
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