Golden Slumbers, Carry That Weight


Golden Slumbers is based on 16th century poem and part of a string of medleys on side 2 of the iconic Abbey Road album.  Legend has it McCartney saw the poem in a piano book, couldn’t read music but liked the words and recreated it with his own tune.

Carry That Weight apparently was referencing the trouble the band was having, amongst themselves and with their label.


Golden Slumbers, Carry That Weight

Once there was a way, to get back homeward…

Obviously gold was money and once backed world currencies. Because central banks still hold it and accept it, some even still buying it as a reserve, it technically still is a currency. It represents no one country and unlike paper money it has no pledged faith and credit against it. It’s no one’s liability.

Still, seems it comes and goes in popularity, its history of appeal during crisis labeling it a form of insurance. Is that why long term fans perpetually seeing danger around the corner are labeled gold bugs?

Despite its storied history as money, when it slumbers, pundits are quick to mock its appeal. It’s a barbarous relic, a pet rock of the gullibly paranoid. It’s an investment that yields nothing.

“I would characterize gold not so much as a hedge against monetary disorder, but as an investment in it.”

“The price of gold is the reciprocal of the world’s faith in central banks.”  – Jim Grant 

Exploding debt, bubbles, QE, and negative interest rates all qualify as monetary disorder and should be testing our faith in central banking. So it could be argued today’s central bankers prefer gold in slumber – it’s more difficult to pitch desperate policies as solutions when such a historic indicator of non-confidence starts blinking.  Is this why assets are at historic highs and gold isn’t?

Sleep pretty darling do not cry, and I will sing a lullaby…

Conspiracy theories around the manipulation of gold prices abound, especially during slumber.  There are myriad examples of unexplainable large price and volume swings during the very early and illiquid trading hours. There’ve been stories of major banks with significant derivative risk exposure to gold. The bugs are a passionate maddened bunch. But even if you’re not sold on these theories, you can’t deny central banks have been all-in the asset manipulation business generally and cannot afford any vote of non-confidence.

Others argue for a return to a gold-backed standard, something that would necessitate gold exploding higher. The problem with this notion is that it would require central bankers to admit they’ve been wrong all along about their fiat currency debt feeding ways. Could the plight of global finance really reside in such stubbornness, even arrogance?   It has until now.

Whatever lullaby you believe the cause of gold’s slumber, it’s now an interesting time.  If a new form of currency like a Bitcoin can emerge, clearly there is demand for alternatives. If gold can no longer contain the madness of central bankers maybe it’s new roll could be to reflect it.

So, for some perspective, how much gold is out there?  Various sources suggest all of it ever mined is somewhere between 155-171,000 tonnes. Let’s use the number of 166,500 tonnes.   (  About 50% jewelry, 19% investment, 18% world governments and 13% other.

That’s 5.353 Bln ounces.  At today’s price of $1350 all the gold in the world is about $7.22T.

Annual gold production is about 3000 tonnes, or about 96,452 ounces, or $130B.  Anyone’s guess is good but some call this peak production.

Global debt has risen approximately $60 trillion since the credit crisis alone, equating to 461 years of production at current rates! Since 2008 global central bank balance sheets have grown over $10 trillion largely via QE, almost 77 years of gold production.

 Mention that 10 trillion to some people and they glaze over so lets visualize. A tight fresh packet of $100 bills from the bank is $10,000, about a half-inch thick. $10T is a stack 500 million inches tall, or 7,891 miles. If you stack straight up, space is only 62 miles up.

 Currently there are about $13 trillion of global bonds trading at negative yields. While even sand yields more than this $13T, gold’s lack of yield sure seems less an issue in light of central bankings trip to the stars. Remember gold is the currency with no debt or call against it, unlike dollars, yen, euros, yuan, pesos or any other paper money you can name. A currency you can’t print.

The US government’s 8133.5 tonnes of gold is the world’s largest holding, worth about $353B at today’s price. On $20T of debt, $353B equates to what the US would pay in interest in one year if they could fund at an average of 1.77%. At peak Bernanke Fed QE3, $353B equates to about 4 months of printing.  $353B is about 4.5 years of US food stamps handed out or 7 months of US military spending. It’s not even half of the crisis TARP bailout package.

Italy has the world’s 3rd largest government holding, 2452 tonnes or $106B. By comparison, today’s EU systemic hot topic is Italy’s troubled banking system looking for a bailout, sitting on a whopping $400B of non-performing loans.

Japan’s entire bond market out to 15 years is essentially negative yielding.  The BOJ owns half the stock market too and still promises to do more printing.  Swiss 50 yr bonds are negative yielding – a return to the 1% they yielded a year ago would wipe out 1/3 of their value.

In a world of big spending, big debt, big problems, and big central banking experimentation, the gold market isn’t so big anymore.

Obviously of all this gold mined, only a small fraction of that $7T is available for trade, ‘Cash for gold chains’ infomercials be damned. A survey of the top 500 asset managers in the world as of a year ago showed assets under their management totalled $78T. Just a tiny asset allocation from this group along with continued buying by China and India could easily rocket gold out of slumber. A number of very smart respected managers are in. It’s difficult to have conviction on anything in this central bank manipulated world, but the bullish setup is there now more than ever.  Other assets are hitting at historic highs. And while like sand, at zero gold yields more than $13T of negative yielding government debt, sand isn’t a central bank reserve asset. Yet.

For the record, the dynamics of market size in this astronomical world of numbers is even more striking when looking into the silver market. The number for tonnes in existence is quoted as 778,000 tonnes or 25B ounces. At $20 that’s $500B in size. Annual production rates are running 887mm ounces, or just under $18B and supply has been in physical deficit for a few years. Not to rekindle memories of the Hunt brothers because this isn’t the world they played in, but it wouldn’t take that much to squeeze the silver market.

From the original maestro himself, a good question…

“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?”  – Alan Greenspan, June 2016 –


Boy, you’re gonna carry that weight a long time



“Golden Slumbers” 

Once, there was a way to get back homeward
Once, there was a way to get back home
Sleep, pretty darling, do not cry
And I will sing a lullaby

Golden slumbers fill your eyes
Smiles awake you when you rise
Sleep, pretty darling, do not cry
And I will sing a lullaby

Once, there was a way to get back homeward
Once, there was a way to get back home
Sleep, pretty darling, do not cry
And I will sing a lullaby

“Carry That Weight”

Boy, you gonna carry that weight
Carry that weight a long time
Boy, you gonna carry that weight
Carry that weight a long time
I never give you my pillow
I only send you my invitation
And in the middle of the celebrations
I break down