Thursday, February 2, 2017

Will Mining Gold on the Moon Be The Same Thing as Quantitative Easing?

K emails:
Thoughts on this Billionaire closer to mining the moon for trillions of dollars in riches ?  Would this be like "QE for precious metals", thus making them less scarce and thus (potentially) no longer suitable as a store of value?  Let's also consider the possibility that it isn't limited to one billionaire being able to mine the planets for riches.  What if technology allows several billionaires to do so?  Would that be a "game changer" for what we currently think of as sound money?
RW response:
 Mining gold on the moon and bringing it back to earth would not be exactly like Quantitative Easing. With QE, the Fed generally directs funds to the banking sector, causing the boom-bust cycle. Moon gold would be put into the gold market by the billionaire miners. It, thus, would not benefit banks directly but the sectors where the moon gold miners would spend the money that they would get from selling the gold.
This, of course, would put significant downward pressure on gold prices if there was enough gold mined and put on the gold market. That said, as the article points out, the project would require, at a minimum a vehilce that would make a soft landing on the moon, travel 500 meters across its surface, and transmit high-definition video and images back to Earth.
In addition, it would have to mine the gold and ship it back to earth. This does not strike me as a project that will be finished by the end of this week. 
However, if the moon does prove to be a harsh mistress (apologies to Robert Heinlein), and dumps tons of gold on us earthlings, it is possible that markets would move away from gold and adopt something else as a general medium of exchange.


  1. Assuming such a thing is cost effective, look towards Spain and the destructive economic impact that massive gold inflows had on the Spanish economy for the likely result.

  2. The unit price of gold would not fall below the unit cost of extracting it. Otherwise, no one would bother. Barring unforeseen advances in technology or the discovery of super-rich deposits, that extraction cost seems likely to remain high for quite a while.

    Due to this expense, there's no real analogy to fiat currency inflation, which can be effected by literally typing some zeroes on a keyboard.

  3. Good points above.
    There's always the DeBeers strategy.

  4. I'm surprised you didn't note the difference between QE which is nothing but an increase in fiat money and that of the mining which generates the useful commodity of gold.

  5. Efficient gold mining requires liquid water. As a result on the moon either inefficient ancient methods viable only for the best deposits or large amounts of gold bearing rock would need to be shipped to the earth for processing. Either way it won't be cheap any time soon even with robots, if ever. Thus the impact would be on the order that is seen as new mines open and old ones shut down.

  6. What are the expected costs per ounce to find and bring back?...also, research the promoter,Naveen Jain.

    After InfoSpace imploded and Jain was sent packing, an investigative report uncovered all sorts of evidence about how much of InfoSpace's revenue was a huge scam, involving outright lies and "lazy susan" deals, where InfoSpace would "invest" in a company, who would turn around and pretend to buy InfoSpace services as a way to boost revenue.

    The whole thing stinks, and you would think that, given the situation with InfoSpace, the backers of Intelius' IPO would have done a bit more due diligence before agreeing to take the company public.