“There’s gold in them thar hills.”
-Mark Twain (The American Claimant, 1892)
Imagine walking in a secluded forest and finding a brick of gold, which has no other owner or known provenance; it’s yours! I suspect anyone doing so would be rather elated. Now, imagine that on that walk you found a mountain of gold containing several times all the gold currently in existence (which, FYI, would fit into an Olympic-sized swimming pool!). You might be okay if you could keep it a secret, but suppose you couldn’t? Needless to say, the price of gold would fall, probably precipitously.
This little thought experiment now has a basis in reality. It has been documented (by NASA and others) that asteroids containing enormous quantities of precious metals orbit throughout the solar system. One purported to contain $10,000 quadrillion worth of platinum (at current prices of about $1000 per ounce) is in an orbit that brings it relatively close to Earth. A recent NASA report estimated the value of recoverable precious metals (including gold) is $700 quintillion (that’s 700 million trillion, or 35 million times U.S. GDP). Of course, this values the treasure at current prices, an absurd presupposition!
Like the starry-eyed miners who flocked to California in 1849, a new gold rush has begun. Investors have poured billions of dollars into private rocket development programs, led by multi-billionaires Elon Musk, Paul Allen, and Jeff Bezos. Do you really think they are doing this so they can build garbage scows to haul supplies and trash to and from the (soon to be obsolete) International Space Station? To go to the moon, where there appears to be nothing of value? Been there, done that! Trips to Mars have been posited by all the players, but that’s simply not realistic. Issues with radiation exposure, inability to carry enough food, water, and oxygen, and other constraints make such a trip unfeasible for at least a generation or two – and any economic benefit, if there is one, much farther off than that. Smart investors don’t spend billions on such long shots. These stories are all diversions. Like the 49ers, they’re after the gold.
One of the aforementioned teams or possibly someone else (from China?) is going to “capture” one of these asteroids at some point, putting it into an accessible orbit around the Earth or Moon. This part is almost certain. It’s an engineering feat; one that is not far beyond current capabilities. Humankind’s legacy has been one of pulling off seemingly impossible engineering feats: think Great Wall of China, the Pyramids, Notre Dame Cathedral (still standing and built with 12th and 13th-century technology), man on the moon (with computers inferior to those in wristwatches today), the Panama Canal, the Chunnel, etc.
It’s what happens next that is not so certain! Will the “owners” of the prize mine it judiciously and become the world’s first trillionaires? Will its very presence and accessibility, with the promise of potentially more to follow, cause a massive decline in the price of previously “precious” metals? Anyone with significant stores of gold (banks, central banks, private hoarders, … ) should seriously consider this risk. How will other financial markets react to this scenario? This is no joke. This is a very real risk and the suddenness of its reality to the general public will give those who have not thought about it much time to react. For reasons I have documented elsewhere, I have always been suspicious of gold (and other precious metals) as a long-term investment, its record versus other asset classes (cash, stocks, and bonds) being very poor and its oft-assumed role as an inflation hedge simply not true. Now, this existential threat to its future value should make any holder of significant amounts of it wary. There’s gold in them thar stars!
Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor* with offices in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372
*Registration does not imply a level of skill or training.