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Why Dollar and Euro Are Only Accounting, and How to Calculate the True Value of Gold and Silver

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Igor Pereira
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  • ANALISTA

Many confuse money with money. This confusion is the basis of fiduciary illusion. The dollar (USD), Euro (EUR) and Real (BRL) are coins; are accounting releases, liabilities of a central bank, created and destroyed by decree.

By Igor Pereira, Financial Market Analyst, Junior Member WallStreet NYSE

Gold and Silver are money. They are tangible assets, without counterparty risk, whose supply is limited by geology and physical work, not by a click on the computer.

When we understand this distinction, we can use mathematics to calculate the "true value" of precious metals in terms of fiduciary currency.


1. The Formula of True Value

The price of gold in dollars is not the value of gold changing; it is the value of the dollar changing. Math to find the "fair" or "true" price of gold involves comparing the amount of gold that exists with the amount of cash in circulation.

  • The Base Relationship: Historically, the value of the global gold stock should, in theory, back the global monetary supply (or at least the monetary base) to ensure stability.

  • The Current Calculation:

    • Global Monetary Offer (M2): ~ $137 trillion (and growing exponentially).

    • Global Gold Stock: ~210,000 tons.

    • Theoretical Balance Price: If we divide the money supply by the gold stock, we arrive at prices that make the current $4,000/oz look like a tiny fraction of the real value.

My Analysis (Igor Pereira): Even using conservative metrics (such as only US Monetary Base vs. US Gold Reserves), the price of gold needed to "zero balance" and restore confidence would be often higher than the current market price.


2. Silver: The Most Extreme Math Discrepance

If gold is mathematically undervalued, silver is a statistical anomaly.

  • The Historical Ratio: Geologically, silver is about 17 to 19 times more abundant than gold. Historically, the monetary price ratio was ~15:1.

  • The Current Reality: The current ratio is close to 80:1 (or 70:1 depending on the day).

  • The Mathematical Correction: Only a return to the historical average of the ratio (without counting monetary inflation) would place silver above the $200 per ounce with the gold at $4,000.


Conclusion of Igor Pereira: Mathematical Is Inevitable

Mathematics is the basic building block of the universe, and eventually it imposes itself on financial markets. The trust system is an attempt to challenge mathematical gravity through creative accounting.

But math always wins.

The reassessment of the gold and silver we are seeing is not a bubble; it is the system trying to return to mathematical equilibrium. The "True Value" of metals is much, much higher than the current screen price.

For us, this means that the strategy of accumulation is not only prudent; it is mathematically the only rational bet.


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