CENTRAL BANK MARKET RIGGING: Horrified About The Biggest Global Bank Run In History

The Fed and Central banks are manipulating the gold and silver price because they are horrified that the biggest global BANK RUN in history will take down the entire system.  Unfortunately, a lot of investors are still being misled about the fundamentals of precious metals market manipulation.  While the Fed and Central bank are indeed intervening in the gold and silver market, they are also propping up the majority of asset values across the board.  This is especially true for most stocks, bonds and real estate.

Yes, it is also true that billions of Dollars worth of paper gold and silver are dumped into the market in nanoseconds during very light trading days.  Thus, the impact is to cap the gold and silver price, making sure that 99% of investors stay fast asleep.  These are the very same investors who the Central banks are working extremely hard to keep their funds placed firmly in stocks, bonds and real estate.

I continue to receive emails from individuals who believe the Central banks can push the price of gold or silver anywhere they please.  This is total RUBBISH.  However, there is some method to their madness.  It is a crying shame that there are still analysts out there misleading their followers with that sort of superficial nonsense.

All the Fed and Central Banks can do is to keep the gold and silver price from exploding higher.  They cannot push the value of gold or silver (too far) below its cost of production.  Here is a chart from my previous article showing the gold price versus the top two gold miners (Barrick and Newmont) cost of production:

The gold market price was always HIGHER than Barrick and Newmont’s cost of production.  So, as we can plainly see, the Fed and Central Banks NEVER pushed the annual gold price below Barrick and Newmont’s cost of production from 2000 to 2016.

NOT EVEN ONCE….

Which means, the notion that the Fed and Central banks can push the price of gold down to $500 or even zero, is total nonsense.  They CAN’T do it, and they know it.  Furthermore, I have older Homestake Mining Annual Reports from the 1970’s.  Homestake Mining was the United States largest gold producer for more than 50 years.  I plan on writing an article showing how Homestake’s cost of production increased substantially, along with the oil price, during the inflationary decade of the 1970’s.

That means, the surging gold price during the 1970’s was not really due to increased demand, rather it was due to the skyrocketing oil price.  Now, I am going to post these charts again, because it seems as if some folks are still a bit DENSE.  Moreover, I have added another chart for KICKS & GIGGLES.  Please take a close look at the following gold, silver and copper charts:

According to these charts, the price of GOLD, SILVER and COPPER have been tied to the OIL PRICE.  While their movements are not exact, we can see that each moved in tandem with the oil price, especially during the huge surge during the 2000’s.  If we look at the new copper-oil price chart, we can see that the copper price, starting in 2003, moved up and down twice right along with oil.

EXTREMELY IMPORTANT TO UNDERSTAND BELOW:

Investors need to understand that the market “INNATELY” balances supply and demand over the long-term.  For example, the copper mining industry is not going to bring on twice as much copper supply onto the market than the world needs.  Furthermore, the copper mining industry only makes a small percentage of profits to build production slowly.  Thus, small profit margins actually LIMIT the growth of the copper mining industry.

This is the same for the gold and silver mining industry.  While supply and demand play a small role in determining price in the short term, it is less of a factor in the longer term.  The COST OF PRODUCTION is the leading factor in determining the price of GOLD, SILVER and COPPER.

Now, if you read that, you would understand that the Fed and Central Banks CANNOT push the price of gold and silver (too far) below their cost of production.  The only TRICK the Central Banks have, is to CAP the precious metals prices.  And the reason they do this, is too make sure that the 99% of the WALKING DEAD keep funneling their funds into stocks, bonds and real estate.

In Spite Of All The Grand Conspiracies… Americans Still Living Life High On The Hog

I do realize that the American standard of living has declined over the past several decades.  While many analysts believe this is due to the ELITE stealing most of the wealth, it has more to do with the Falling EROI – Energy Returned On Investment.  The falling EROI is destroying our LEECH & SPEND SUBURBAN way of life in the Good ole U.S. of A.  That being said, I continue to see homes and business pop up all over the place.  Sure, some areas of the country aren’t doing as well as others, but the restaurants, movie theaters, stores and highways are full of traffic.  Americans are busy moving everywhere and nowhere spending credit or money they really don’t have.

Moreover, most Americans live in one of these diverse and classy suburban neighborhoods below:

The majority of Americans live in three bedroom homes with two baths and all the modern appliances and amenities.  Actually, a lot of the newer homes have four bedrooms and three baths.  Now, all of these homes are stuffed full of gobs and gobs of furniture, TV’s, appliances and thousands of assorted clothes, books, electronics and all kinds of trinkets and garbage.  In addition, neatly parked in the garage of these homes, Americans have at least two cars.  Although, easy finance has allowed some to be more fortunate to have three cars, a boat, RV and several ATV’s.

Sure, the ELITE control more stuff today than ever… but so do AMERICANS.  We have more CRAP filling our homes, garages and storage facilities than we did 50 years ago.  I mean… who in the hell stored their stuff in a private storage facility 50 years ago??  I would imagine very few.  Today, if you don’t have a storage unit… something is definitely wrong with ya.

Our motto used to be “As American as Baseball and Apple pie.”  Now its, “Americans work jobs they hate to buy crap and garbage they don’t need.”  Amazing what 50 years can do to a society.

Anyhow, if you think the Americans are the only ones at perfecting the COOKIE-CUTTER Suburban housing development, think again.  The Chinese have taken it one step further… LOL:

Yes, that is a real picture of a suburban housing development in China.  Talk about cookie-cutter.  You can’t get any more identical than that.  Well on the other hand, you will see some blue color mixed in here and there.  Some owners decided to stand out from the rest by installing a swimming pool.

Regardless, Americans have more stuff today than ever.  So, things aren’t really all that bad in West’s Greatest Empire when we compare ourselves to the poor slobs living in many other third world countries.

Okay, so what does all that have to do with precious metals manipulation?  Good question.

You see, the majority of the American’s wealth is tied up into STOCKS, BONDS and REAL ESTATE.  Also, these assets are where the Federal, State and Local governments receive the overwhelming majority of their tax revenue.  Rapidly falling values in any of the assets listed above is the DEATH KNELL for governments.  So, it is in the best interest of government to make sure Americans remain BRAIN DEAD when it comes to understanding real money such as Gold and Silver.

While many believe this may be a Grand Conspiracy to manipulate Americans, it’s not.  Rather, I call what has taken place in the United States, as decades and decades of WINGING IT.  That’s correct.  Shooting from the hip by growing and expanding our economy without any regard for wisdom, prudence and long-term thought.

For example, individuals who live in a large metropolis like New York City, you have my sympathies.  This picture below shows what a construction company had to deal with as it pertains to the massive amount of old underground infrastructure.  Many of the water and sewer pipes in big cities are 50-75 years old.  Well beyond their life expectancy.

Folks, we are in BIG TROUBLE and most Americans have no idea.  Thus, Central bank market intervention is to keep this INSANELY COMPLEX world of ours going for another day, week, month or year.  Unfortunately, time is running out.  Not because the Central Banks are running out of paper to print money, but because the cheap and affordable energy that runs the system…. IS RUNNING OUT.

I wrote about this in my article, THE BLOOD BATH CONTINUES IN THE U.S. MAJOR OIL INDUSTRY:

That article received the most FACEBOOK hits ever at 1,300+.  Which means, some people are finally WAKING UP.  Precious metals investors ignoring the energy data are making a big mistake.  Why?  Because the Fed and Central banks can continue manipulating the markets forever if it wasn’t for the coming ENERGY CLIFF.

Unfortunately, a lot of folks in the “Alternative Media” believe in the “Abiotic Oil Theory.”  This is the oil theory that suggests oil is made deep below the mantle of the earth which allows oil fields to magically refill… so there is no real threat of peak oil.  Individuals who believe this nonsense, such as Jerome Corsi and his book, BlackGold Stranglehold, have lost all sense of logic and reason.  While many of these individuals who believe in the Abiotic Oil Theory are quite intelligent, I am surprised how completely STUPID they can be on this subject matter.

REAL PROOF…Why Abiotic Oil Is Another Lousy Conspiracy Misleading Investors

Those who perpetrate the Abiotic Oil Theory say that the Russians are producing more oil than ever because they are drilling ultra-deep wells tapping into this limitless supply of oil.  Well, if that was true… SOMEONE NEEDS TO TELL THE RUSSIANS.  The Russians aren’t drilling ultra-deep wells to get to their oil, rather they are drilling a hell of a lot more horizontal wells, just like the insane U.S. shale oil industry.  The proof is shown below:

In just two years, Russian horizontal well drilling has increased from 22% of the total in 2013 to 34% in 2015.  Folks, horizontal wells aren’t ULTRA-DEEP WELLS tens of thousands of feet down.  Rather, they are more like the typical shale wells that are 7-10,000 feet down with long laterals to get to the oil.  If Russia is drilling more horizontal wells, just like the U.S. shale oil industry, they are also running out of cheap high quality oil.

A few months back I stated that I was going to write an article on this subject matter.  I need to do so because a lot of people are still being mislead by this erroneous conspiracy theory.

Now, the reason I have been laying out all this information is to explain Central Bank precious metals manipulation and how it’s all tied together with energy and the markets.  If you are only looking at the COMEX paper trading and daily charts, then you only have a small window of the overall market manipulation.  Furthermore, precious metals price rigging is only a small part of the total amount of Central Banks market intervention.

David Stockman discussed this in his recent interview, Fiscal Bloodbath Coming This Fall – David Stockman, on USAWatchdog.com.  In the interview, Stockman goes on to say that the Fed and Central Banks have propped up the Bond market by purchasing $20 trillion in Treasuries and Bonds over the past 20 years.  This doesn’t include the Trillions spent propping up the global equity (stock) markets.

All this is being done to hold off the world’s largest bank run in history.

Central Banks Terrified About The World’s Largest Bank Run In History

What the Fed and Central Banks are really worried about, is the WORLD’S LARGEST BANK RUN in history.  This is why they are now throwing everything and the kitchen sink to prop up the markets.   We must remember, all the debt, derivatives and money printing is being done to keep people from freaking out and starting a global bank run.  Thus, the Fed and Central Banks are manipulating the market by controlling “MARKET PSYCHOLOGY.”  This goes well beyond gold and silver price rigging.  It’s a full spectrum, wide-ranging, all encompassing market intervention never seen before in history.

This chart provides the reason (numbers) why Central banks continue to rig the markets:

According to data for 2015, of the $369 trillion in global stocks, bonds and real estate, gold and silver only represent $3.1 trillion or less than one percent of the total.  Actually, David Stockman, in his interview posted above, states the the global bond market is closer to $100 trillion.  Regardless, the massive amount of money-digital printing has been done to prop up the $366 trillion in stocks, bonds and real estate.

We must understand, ALL THE DEBT & LEVERAGE in the system is the same as when banks in the 1920’s loaned out a great deal more GOLD CERTIFICATES than they had gold in their vaults.  Printing and issuing a lot more gold certificates worked fine until the point, it didn’t.

In all reality, the U.S. and global financial system are already DEAD.  The citizens of the world just don’t know it yet.  The only thing that is holding it up is a lot of HOT AIR and Central bank market intervention.  However, the factor that will take away the Fed and Central banks printing press, is the disintegration of the U.S. and global oil industry.

I am working on an article about the U.S. OIL INDUSTRY IS NOW CANNIBALIZING ITSELF.  While there have been news releases stating that the oil majors, such as ExxonMobil and Chevron, are now making profits…. this is nothing more than white noise obfuscating the facts.

For example, ExxonMobil, Chevron and ConocoPhillips reduced their capital expenditures (CAPEX) by a stunning 40% Q1 2017 versus Q1 2016.  The major reason for the reduction in CAPEX spending is that these companies are in desperate need of free cash flow.  In the past few years, they have been borrowing money to pay for CAPEX, or worse… dividends.

Many investors who are shareholders in ExxonMobil or Chevron, do so because they get a nice fat quarterly dividend.  The oil companies realize that if they start cutting dividends, what is the motivation for investors to hold onto their stock???   This is especially true as ExxonMobil and Chevron’s stock prices continue to fall due to lower oil prices.

We are now experiencing the beginning stages of the disintegration of the U.S. and global oil industry.  While the Central banks continue to prop up the markets with money printing and massive liquidity, the biggest GLOBAL BANK RUN IN HISTORY is on its way.

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66 Comments on "CENTRAL BANK MARKET RIGGING: Horrified About The Biggest Global Bank Run In History"

  1. “I continue to receive emails from individuals who believe the Central banks can push the price of gold or silver anywhere the please. This is total RUBBISH.”

    they can push the price of GLD or SLV anywhere they please up or down. and since physical sellers go by GLD and SLV, that heavily influences the price of the physical.

    “They cannot push the value of gold or silver (too far) below its cost of production.”

    sure they can. they can black-pool subsidize any producers they care to, if they feel the need.

    • gman,

      LOL.. you just like to post comments to hear yourself talk gibberish. I just posted a chart showing that the Gold Market Price has been above the Cost of Production for the past 16 years and you come back with… THEY CAN PUSH THE PRICE LOWER.

      Please continue posting rubbish as it provides motivation for other commenters and higher traffic on the site.

      Well done…. LOL

      steve

      • “Please continue posting rubbish”

        you speak of manipulation, but seem unable to realize the implications of it. you speak of “their desperation” to maintain the status quo, but seem unable to consider how far “they” will go.

    • good post gman
      “In Spite Of All The Grand Conspiracies… Americans Still Living Life High On The Hog”
      its not in spite of its because of the conspiracy between the fed and the various governments around the world than america is still living the high assisted by worldwide mind control. For abiotic oil read about prof Kantrowitz http://www.prouty.org/oil.html Abiotic oil is real though it may also have low erioei i dont know.
      There is massive propaganda trying to disguise reality from the masses. read davide irving or watch https://youtu.be/97L_SJrPl6g its unmissable but not directly related but shows how we are kept in the dark…

    • robert sinclair | May 10, 2017 at 7:48 am | Reply

      Heres a article quoting professor Arthur Kantrowitz turned to the geologist beside him and asked, “Do you really believe that petroleum is a fossil fuel?” The man said,”Certainly” and all four of them joined in. Kantrowitz listened quietly and then said, “The deepest fossil ever found has been at about 16,000 feet below sea level; yet we are getting oil from wells drilled to 30,000 and more. How could fossil fuel get down there? If it was once living matter, it had to be on the surface. If it did turn into petroleum, at or near the surface,how could it ever get to such depths? What is heavier Oil or Water?” Water: so it would go down, not oil. Oil would be on top, if it were “organic” and “lighter.”
      Professor Kantrowitz was the inventor of Laser guided propulsion.

      • The name fossil fuels was an invention to give appearance of scarcity and so supplies could be restricted and prices elevated. Which sounds the most logical,
        rotten vegetation lasting over hundred years with more found all of the time or the other.

      • robert sinclair,

        It really doesn’t matter if oil, natural gas and coal were made from cow dung, rat feces, or Alien excrement deposited millions of years ago. The IMPORTANT POINT TO GET THROUGH ONE’S SKULL is that the cheap stuff is running out…. PERIOD. So, we can bicker ALL DAY LONG about meaningless SEMANTICS while the collapse of the U.S. EMPIRE heads over the cliff.

        Which is the typical pastime for most intellectuals. They bicker, whine and complain about totally meaningless stuff as the world around them falls apart. I find this extremely fricken HILARIOUS.

        steve

        • i agree, but you should not dismiss other theories out of hand. Especially with insulting remarks it weakens and undermines your position.

      • silvercountry | May 16, 2017 at 1:21 pm | Reply

        Are you serious haven’t you ever heard of tectonic plate movement. The earth’s crust is always on the move. How do you explain shell fish fossils found on the mountain tops. According to you they must of had wings and the earth is flat.

  2. “They cannot push the value of gold or silver (too far) below its cost of production.”

    why not?

    • Because the paper to physical ratio on the Comex would go 666/1.

      Can’t have that. It would be higher than the stupidity/gravity ratio.

      • “Because the paper to physical ratio on the Comex would go 666/1”

        no it wouldn’t. they’d just print more certificates.

        • gman, yes they can print certificates but shanghai wants the goodies – http://didthesystemcollapse.com
          and currently pay 8% premium (for silver) rather than hold an a$$-wipe certificate. In the process, the vaults of the western CBs (and the BIS) are getting cleaned and when they can no longer lease gold bullion into the “markets” then it is game over (the fizzical market will overwhelm the paper pushers at the CONeX/LBMA-complex) and prices will gap higher very quickly (on a lack of bids in size). This is not IF, this is WHEN… True, it has not happened yet but it is certain to happen at some point. TPTB fight this and their inevitable demise with all they’ve got but are loosing nonetheless. They know it, Steve knows it, and the PM-gurus who have been terrible in their timing (and thus rightly been ridiculed for) know it, but it does not change the outcome that they will be proven right in the end. And I give you the memo personally, since you ARE SO special and yes, you’re very welcome 😉 Good luck to you and to all, we will all need it.

          • El que descubre a los espías | May 9, 2017 at 11:27 am |

            You can´t a Government peson understand simple logic

          • I dont quite fully understand your comment and i dont know how anyone know how much gold they have, if central banks and the esf work together they can probably keep things going longer than we can imagine. but the international trade uses dollars as the world reserve currency and all of the central bank countries control their currencies values by dollar reserves in other words they’re all in on it. gold market conspiracies are internationally concerted including china otherwise the game would have been up by now. As steve said punters have to be kept in the paper ponzi. its easy to manipulate companies mining gold and control its value. you just have by up large blocks of shares. They could be borrowing at zero interest and selling unmined gold or leasing the same theres share buy backs and stuff we cant even imagine. It is nieve to think that they cannot have a very firm grip on these markets. They have controlled most peoples beliefs and perceptions on most everything else. if you believe for one that man landed on the moon take another unbiased look into it.

          • Rob, *they* are levered at >>200 paper units to 1 physical unit PM in both au and ag at the CONeX/LBMA. India/Russia/China/Turkey suck up all the yearly mined gold single-handed and this is just what they let us know by the official numbers. This is completely unsustainable. Therefore, the demand for physical metal is bound to overwhelm the printers of naked short contracts. These worthless paper claims set the “price” – what a farce, but it will end and when it does (without warning) you better be on the right side of the trade when the hammer falls. Till then, they will do anything in the paper-realm to defer that inevitable day. However, they ain’t no alchemists and don’t possess the philosopher’s stone either… tick tock tick tock

          • With stocks of approx 80 years to flows of 1 year. thats 1/80th changing hands and thats diluted at 200 to 1 theres in the pricing market thatsa lot of gold in tight hands possibly dipping in and out of the market.

          • Rob, yes, when 199 realize that “their gold” does not exist and is nothing but an unbacked paper claim?

  3. Have you not stated that the price oil will only continue to fall. so wouldn’t this means the same for gold?

    • Bruno,

      Yes, I have stated the price of oil will continue to fall. However, the value of GOLD & SILVER will decouple from the COMMODITY PRICED MECHANISM to their HIGH QUALITY STORE OF VALUE. So, I see much higher gold and silver values as most other assets implode.

      steve

      • Assets like copper, lead and zinc would fall with oil but gold and silver would decouple and go higher?

        • Condee,

          Yes… exactly.

          steve

          • the dollar to gold ratio in 1913 was $28.80 and now the same, is $7313 so the gold price should be around that figure. there is only one reason it isn’t and thats because its rigged and its always been either set by government or rigged since 1934 anyway. in fact the price in 1913 was 20$ and ounce so it must have been rigged even then.
            whos to say that it will ever decouple? and go much higher?

    • “so wouldn’t this means the same for gold?”

      1) at some point, the value of g/s will increase
      2) simultaneously, the value of everything else will increase much faster.

      • If the concept of money as stored tradeable wealth is still around then Gold and silver will increase in value. There are many levels of collapse and even if we are going into the darkest level of collapse there are many stages along the way.

        • Exactly. Plus a collapse will look quite different for a person living in an apartment complex in New York vs. a person working his own land in a rural area of Eastern Europe. The level of dependence on oil and infrastructure is very different for those two people. Most New Yorkers wouldn’t survive in the environments most of the world’s population live in currently.

  4. Hi Steve,

    The consequence of your prediction of lower oil prices is lower gold prices since lower oil prices push down the lower bound of manipulated gold price.

  5. I meant the upper bound. And I guess you are going to reply that we every other investment is going to do much worst than gold.

    Maybe but I think the death throes of the system will be violently volatile and could go on for decades​. Not clear that gold or anything else will work.

  6. Steve, I saw Gail at Oil Price posted a long article the other highlighting her opinion that sounds a lot more in line with your own view. It seems like you said, more people are coming on board, although the price of the metals doesn’t show this.

    • EricP,

      Yes, Gail understands a great deal of what is taking place in the oil market and its impact on the overall economy.

      As it pertains to the gold and silver price, they will continue to be controlled by the Central banks until the system starts to break down. We could see this take place in late summer or fall, it could be postponed until things really fall apart in the next several years.

      steve

  7. leverett Jess | May 8, 2017 at 1:28 pm | Reply

    In this scenario – is it best to go heavier in physical and lighter in miners?

    • leverett Jess,

      That’s a tough question. However, physical may be the best bet as there is less risk than owning miners. I hear that some investors own some miners, but do so with funds they don’t care if they lose it all.

      steve

      • That’s me, for instance. Right now (on a dollar basis) im about 4 dollars fizzical PM : 1 buck stocks, and about 80% of the stocks are miners. They are a leveraged bet assuming that a) they don’t go bankrupt or dillute their shares to worthlessness (mis-Management) b) they are not nationalized, c) that the stock exchanges / brokers don’t all go bust and the paper markets remain intact (or are rebooted after a bank holiday) and d) these then valuable certificates don’t get stolen from me one way or another by the bank (bail-in). Many of these points are valid also for regular stocks and if I loose it all, so be it. It would suck but that’s the risk I’m willing to take at this point.

        • I may add, everything we decide – especially financial decisions – is somewhat a gamble. Fizzical fiat banknotes/coins -> new currencies / loss of purchasing power; PMs -> risk of being outlawed / confiscated / heavily taxed; Stocks -> see above; Bonds -> wave the principle good-bye; real-estate -> 07/08-reloaded. I think it’s a safe bet that PMs will eventually increase in value/purchasing power (drastically so) but whether one can/does/is allowed to hold on to them and reap the fruit after all the effort and pain, time will tell. I see them as alternative savings when things will go bad (and they will… or rather, they already did – right now were only on time-limited “debtly” life-support).

  8. DisappearingCulture | May 8, 2017 at 4:40 pm | Reply
  9. Im doubting the accuracy of those oil price vs gold/silver charts?. Didnt the oil price spike to 147 in june 2008, then drop to 33 then back up to 100 range then back to 40 range.
    Was there alot of disparity from tar sands crude, WTI, Brent, And sweet dubai prices?Did you average different oil prices for accuracy or to make it fit your narrative?

    • curt,

      Yes, the price of oil spiked to $147 in 2008 and fell to $33 and then back up above $100 for three years. Yes.. the charts are very accurate.

      steve

  10. David Akers | May 8, 2017 at 5:29 pm | Reply

    I forwarded a link to Lix Beer. lol

  11. Steve

    If the price of gold is kept above the costs of several top producers, and also is strongly correlated with oil price, could there be some oil price management to keep some top oil producers afloat as well? There should be more than just a fundamental correlation between oil and gold price, there must be a fast-acting mechanism of maintaining that correlation. Otherwise there can be a lag measured in years, and only a loose correlation.

    So, is there any data suggesting such oil price management?

    • Reader,

      That is a tough question. There could be Central bank market rigging to keep the oil price elevated, but I don’t know if it would be possible over the long haul.

      This falling oil price was forecasted by the HILLS GROUP ETP OIL MODEL. They forecast that the oil price will head lower towards $20 by 2020. If their analysis is correct, this will totally gut the U.S. and Global Oil Industry.

      It will be interesting to see how things unfold going forward.

      steve

  12. Neil MacLeod | May 8, 2017 at 6:46 pm | Reply

    Nice work — as always, Steve.

    Cheers, surfeitndearth (TFMR)

  13. Steve, I would say one of the best of your articles with great analysis, charts and viewpoints on almost every issue of the world….I greatly appreciate your time and content in this article…well done my friend…please keep it on…thanks. regards

    • Bhavesh,

      Glad you found the article interesting. I believe it puts the entire market rigging into perspective. I wouldn’t be surprised to see the markets hit a brick wall by the end of summer or fall. Of course, they could REALLY PRINT money, but at some point, this highly over leveraged market will come tumbling down.

      steve

  14. I listened to your interview this morning with Jason. You can tell he was not really buying your EROEI concept.

    Just like most Americans who think that money (more debt) can solve any PHYSICAL problem.

    It’s gonna be brutal.

    First heard you with James Howard Kunstler. Love your work.

  15. abiotic oil could have taken hundreds of thousands of years, to accumulate, maybe more. we’ll use it up in a few hundred years. it’s definitely not dead dinosaurs.

    • I wouldn’t have any idea what oil is made up of Delacroix BUT my mind will not allow me to believe it is dead dinosaurs.

      Interesting eh?

    • Diogenes Shrugged | May 9, 2017 at 6:59 pm | Reply

      You’re right — oil did not come from dead dinosaurs. Instead, think vast, shallow seas choked with lipid-rich algae, a CO2-rich atmosphere and millions of years. Bringing up abiotic oil is always a dead giveaway that a commenter is poorly educated. Go get a degree in petroleum geology and then come back and try again.

      • Harryflashmanhigson | May 10, 2017 at 6:47 pm | Reply

        Amen, brother. Don’t think that qualifications and critical thinking and decades of painstaking research will convince the halfwits though. It’s what they want to believe, just like religion, no amount of reasoned argumentation will shift them!

  16. Hi Steve,

    There are a few issue,s which in fact does effect the price of oil
    that is the quality of oil as there more then 30 different grades of crude. So some
    oilfields with highly sought crude will be much more profitable and same goes for those oil companies who own many of these fields.

    Do you have the Eroi for natural gas as this is a massive growing industry globally
    such as we can see with Syria. Natural Gas is much cheaper to transport and even they are building plants to convert natural gas to diesel/benzine.

    Even without the energy factor in this modern insane economic model the economy will crash like it did big time 100 years ago globally. Too much levered debth/credit can just never be sustained. Even with 0% or – % there are limits which will hit the wall.

    Still I am convinced human mind will find a solution and we will transit in a new model which will be more sustained.

  17. Rodney Morris | May 8, 2017 at 9:37 pm | Reply

    According to Barrik’s website, they plan to produce a maximum of 5.6 million ounces of gold in 2017 at the maximum cost of $810 per ounce. This means subsidizing half the price of the production would cost the government a measly 2.2 billion. That should halve the price of gold. The gold producers will have to split into those that receive government subsidy (for whatever return favor the government wants from them) and those that cease to exist. Easy. No need for conspiracy or paper price manipulation. The fact that the price of gold has been holding above the cost of production up until now only means that no one in the government cares about it. It affects the economy just as much as the price of technetium. And technetium fits the definition of money just as much as gold: fungible, divisible… whole nine yards.

    It’s been proven that oil resources are renewable. The oil price has only one direction, and that is DOWN. The labor price has the same direction, same is the machinery price. And once we have a credit crisis, the price of credit will head the same direction. As we are not on gold standard anymore, the gold will behave as a commodity and its price will also go down.

    There are two cases when gold price may disconnect from its cost of production. First, if the elites have to adopt a new gold standard. I would expect this to happen after a massive money printing and triple digit inflation. Pay attention, it is AFTER and not DURING the inflation. The price of gold goes up with inflation just as any other price. The disconnect may happen AFTER the inflation, when governments decide to tie the money to gold. They don’t have to. They can tie it to something else: energy, grain, corn. As you can imagine, we still have 20-30 years before this AFTER inflation period.

    The second case is if we dig out all the gold and there will be no more to dig out. Obviously, then there is no more production and no more cost of production. The price of gold will be determined as the price of Picasso paintings. Once an ounce gets on the market, people will bid on it and the highest bidder will win. How much time we have until then? I don’t care. The grand kids of the people I will ever know will not survive til then.

    Other times when gold may increase in price beyond its normal spread with the cost of production is when the markets are falling and the governments are promising monetary interventions. Then investors know that once the money floods the market, gold will go up in price anyways, and stocks will go up selectively. Some stocks will never survive the crisis. In such times, the money from riskier equities naturally flow into gold. Once the markets are set for the new run, as it was in 2011, it’s a good time to get rid of gold and enter the markets.

    Cost of production plus profit is a measure of consumer interest. Price parts from the “cost of production plus profit” equation when the product becomes an investment vehicle and earns money. Then it acquires a P/E ratio and its price starts depending on the earnings it produces. At this time, gold doesn’t produce earnings, so it doesn’t have a price component based on the earnings. The cases when gold price may part from its cost of production are discussed above and are not anywhere in sight. They need long periods of time to develop. I would now stay in cash to buy gold at the bottom of the market only to move back to stocks when the government starts resquing the economy with new QEs.

  18. We have nuclear submarines. What’s preventing the use of nuclear powered mining equipment? Small nuclear engines powering tractors etc.

    • Diogenes Shrugged | May 9, 2017 at 7:15 pm | Reply

      Your capital, labor and compliance costs will stop you at the “back-of-the-napkin” stage. As an investor, are you going to place heavy bets nothing will ever go wrong? And what are you going to do with all that nuclear waste?

  19. Production cost FOLLOWS price of the commodity. If the Price per unit of the commodity is $1 then no reason to produce any of it at $800. On the other hand, if Price is $100,000 then cost of production will rise to $80,000 per unit, or wherever is profitable.

    • Diogenes Shrugged | May 9, 2017 at 7:35 pm | Reply

      Wrong again. The prices for certain rare coins sometimes take huge leaps upward. That obviously has no bearing on their cost of production. An artist’s cost of production doesn’t change (music, paintings, pottery, etc.) but the prices his work fetches certainly can. If you can find a sucker willing to spend $100,000 for $800 coins, why would you spend a hundred times more to produce each one?

  20. silverfreaky | May 9, 2017 at 12:07 am | Reply

    Rodney.

    One point you forget.What about the eastern world?If it’s true that china had a lot of gold, then you have to calculate with that.
    China is the greatest debt holder of the united states.

    For china is the USA a big market.This relation we should not forget.For this reason they bought a lot of bonds.In vice versa!

  21. So if the stock market crashed and bonds too how much longer until your credit card no longer works and there is a bank run?

    • DisappearingCulture | May 9, 2017 at 7:38 am | Reply

      “…how much longer until your credit card no longer works and there is a bank run?

      If credit cards don’t work and gas stations or grocery stores accept cash, it would be 24 hours or less.

      If you need cash and don’t have it, gold and silver are the most liquid things to turn into cash. Until the PM dealers want to give you paper checks instead of cash.

  22. silverfreaky | May 9, 2017 at 7:56 am | Reply

    They smash the miner companys.14 days in a row down.
    There is no resistance at all.Maybe the bankster wanted to buy the good juniorminer via the great producers.
    They can do what ever they want.Even the best junior miners nearly 50% down.

  23. IMO when the fan hiccups the milliniums will move to crypto currencies because for them the web is a way of life.
    However when the shtf fan physical will be the only real thing

  24. I call this BS… Israel controls the Golan heights and it has more oil than Saudi Arabia

    Answer by M.A
    Yes. This is one of the best kept secrets. You can imagine that if this went into production, then the disputed Syrian land issue occupied by Israel would come to the forefront. This is why it gets no play but this is one reason Obama was working to overthrow the Syrian government. They would not have political people on the Strategic Advisory Board if they did not need political strings pulled.

    also : Massive oil discovery in Alaska is biggest onshore find in 30 years

    http://money.cnn.com/2017/03/10/investing/alaska-oil-discovery-repsol-spain/

    • 1,000 million equals 1 billion

      Therefore 1 billion barrels of oil will last for 2.74 years if we use 1 million barrels per day (1000/365 = 2.74).

      BUT the world use around 80 million barrels per day. Therefore we would need a find of 80 billion barrels of oil to last us 2.74 years.

      At this consumption rate we would need a find of 800 billion barrels (Not 1.2 billion) to last us 27.4 years.

      Now I am not an expert BUT I am a realist; “Who can tell me where this amount of oil is going to come from EVERY DAY?!

      Obviously not out of my backyard!!!

      Here in Australia our politicians can’t even guarantee a continuous supply of gas (LNG) to the domestic market and yet are telling us at the same time; “We are the biggest exporters of coal and gas in the world”. Lol

      Nothing adds up!!!!!!

  25. Diogenes Shrugged | May 9, 2017 at 10:49 pm | Reply

    Steve, the Annual Gold Price vs. Oil Price chart shows good correlation until recently. The oil price is headed down now, but you (and nearly everybody else) are predicting higher gold prices. That’s a strong divergence from the 76 year trend that you’ve shown. Falling EROI over that period has been gradual, but the recent divergence in gold and oil prices was relatively sudden. This would suggest that falling EROI alone can’t account for the divergence.

    I would suggest that gold will head higher only if the mining cost of production heads higher, and that it will fall hard when the U.S. dollar debt money system falls more convincingly into a deflationary collapse. In other words, gold will rejoin the oil price trend line rather than oil rejoining the gold price trend line. But this is purely contingent on the deflationary financial collapse, not EROI. Money born as credit (i.e. IOU’s) was fabricated out of thin air, and will return to thin air when those IOU’s default. That will leave fewer dollars in circulation to buy gold with.

    Think of it this way. If, after the financial collapse, there are only a hundred dollars left in circulation in all the world, one of those dollars would buy all the gold in China. That’s way less than a penny per ounce.

    Most pundits and commenters are stuck on the notion that the central banks will just print to infinity to compensate lenders for their losses (i.e. non-functioning loans). But the vast majority of past bailout monies never made it into general circulation. Banks are reluctant to lend when the population has maxed out its credit card. And that’s how each of us counterfeits money out of thin air — with our credit cards. So it’s becoming increasingly clear that bailouts — infinite “printing” — has hit limits. The central banks cannot stave off catastrophic deflation much longer. (Probably why everybody’s busy rattling sabers now.)

    There will be no debt jubilee, and the debt-money machine will not rise from the ashes to begin again, at least not for a very long time.

    Oil prices fell because consumers can’t afford it the way they used to. Boosting production to compensate for the shortfall in consumption only made matters worse. Consumers of gold (i.e. monetary “insurance”) will sell their gold when times get rough. At that point, prospective buyers will, for the most part, be out of money. That’s going to absolutely smash the gold price. The only buyer left with enough money to preserve the gold price (and mining operations with it) will be … not broke governments … not broke central banks … not the unemployed and tapped-out general public … not the bankrupt corporations … then who?

    Then, at long last, EROI will enter the stage and hit this species like a comet the size of Bingham Canyon. I would suggest we all start watching old westerns on YouTube, because that’s how things will look if we ever get back on our feet again. Horses. Guns. Low-tech farming. And if we’re lucky, whisky and dance hall girls.

    Good article. Thanks.

  26. Under $1K gold is still possible.

  27. My wife is not an economist but she is a very good observant of society.
    We do quiet a bit of traveling by auto, grandkids in all directions. I put together a bag of junk silver and some oz rounds to buy gas to get home just in case of a SHTF event while on the road.

    She pointed out the guy at the gas station might not have a working knowledge of pm value but did agree he might value a box or two of any popular caliber of ammo which does have an inherent store of value.
    Just hope I can find that last tank of gas which would get us home to our wood stove.

  28. If i look at the fundamentals for silver zinc lead (gold) i see an estimated worldereserve off 20 years, correct me please but that meams they are become rarely? 20 years is peanuts. So if i look at the price today $16,75 than i must conclude that this is total ridicule and dangerous. These metals should be be much more expensive nad threated wich much more carefullnes because off their special qualities(Lead/radiation silver/antibiotic/reflection/best electrical conductivity and lowest transition resistanceand) They should be have been in a fully recycling circel for years ago i think, at least if you want that next generations(comming 200 year) have acces to these metals?

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