The final episode of Gold Rush Alaska aired last weekend. For those who missed our initial commentary on it or if you aren't aware of the show, a group of unemployed and down on their luck guys from Oregon sold their last remaining assets and pooled together about $250,000 and, despite having next to no mining experience, they headed up to Alaska to try to “make it rich” looking for gold.
In the end, the show ended up making an excellent point about why gold is such good money. These guys ended up bankrupting themselves, nearly dying on numerous occasions, being chased by bears, stalled by government regulators, working through most of the day and the night in dismal often freezing conditions for more than four months and after all of that the total amount of gold they found ended up fitting in something about the size of a large shot glass!
Now, contrast that to Ben Bernanke who spends his days slurping ice cream at Washington Nationals;)
games, getting his beard trimmed and taking his limo into work and at the flip of a switch, can create $600 billion, as he did in his second try (QE2) at making his laboratory economic theories work.
So, a dozen guys practically dying, working all day and night and getting chased around by bears came up with less gold than fits in a typical bar glass – about 8 ounces. Ben Bernanke, who has never had a real job his entire life, however, can press a button and create an amount of money that is the equivalent of 428,571,428 ounces!
See anything wrong here?
The total amount of gold ever mined in all of history is about 5.3 billion troy ounces. Worth about $7 trillion at today's prices.
Contrast that to the annual GAAP deficit reported by the US Government of over $5 trillion.
In other words, the US Government creates almost as much debt and liabilities, per annum, as the entire amount of gold ever mined in the history of the world is worth.
Put another way, the US Government's “official” debt of $14 trillion would have been the equivalent of having been in debt to twice the amount of money that ever existed, pre-1971 when money was tied to gold. That's a lot of debt!
Interesting, that, how the debt took off after the last vestige of gold convertibility was removed from the Federal Reserve Note.
Getting back to the Gold Rush Alaska crew, however, they ended up spending $250,000 and wasting four months of their life and ended up with 8 ounces of gold worth about $11,200.
And this during a time when gold stocks have been performing very well. If they would have just closed their eyes and picked a gold stock on the Toronto Stock Exchange or NYSE or AMEX they would have likely doubled their money over the same time period. Losing almost all their money would have been almost next to impossible, and they wouldn't have had to even leave the comfy confines of their home.
But, they said they wanted to “get rich”. Well, even still, many gold mining stocks have gone up 10:1 and even much more than 100:1. It would not have been far fetched for them to turn $250,000 into $2.5 million just by investing in some of the most well managed mining companies in the world – as we do here at TDV. And even $25 million isn't out of the question.
Take for example Osisko Mining (TSX: OSK). Some of us here at TDV participated in their financing in;)
2005 at $0.25. Today that stock trades at over $13. That is 52:1.
Most of the crew on Gold Rush Alaska seem kind-of crazy. Certainly their leader, Jack, who is older and is the only member of the crew with any mining experience, seems to be completely crazy.
As example, numerous times during the show something would get plugged up or jammed. Jack, the leader of the operation would walk up, tap it with a wrench, squint and say, “I think it's plugged up with gold!”
Needless to say, he was quite incorrect on each count.
But, the main point is, that Jack and the gang should have just learned the ropes of investing in junior gold mining stocks – some of which are managed by crews with numerous discoveries under their belts – and invested their $250,000 into that.
However, they appear to now have a hit show on their hands and they've apparently already signed up for a second season with the Discovery Channel. So, maybe they've found gold of a different kind… in reality TV.
But we thank them, nonetheless, for the entertainment and for reminding us just why gold makes such a good money. Someone should buy the DVD Box Set for the Bernank next Christmas. Although Ben would likely just watch the entire show and say that it is proof that he needs to print more money – in order to “stimulate” the economy and help out those poor guys.
Some people never learn.
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