The Calm Before The Precious Metals Storm

The financial hurricane hit the world in 2008 destroying huge swaths of assets, real estate valuations, numerous banks and financial institutions.  As the storm cleared, the Fed and central banks stepped in by flooding the world with money to supposedly assist in dealing with the damage while providing special programs to rid the banks of debris and garbage clogging up their businesses.

After trillions of dollars of so-called monetary assistance, the financial damage appears to be repaired giving the public a false sense of security that the storm has finally passed.  Unfortunately, the world has only dealt with the first part of the storm and is now sitting in the eye of the financial cyclone.

Even though we now have the additional drama from the U.S. Government shutdown, up until recently, the economy has been plugging right along.  However, this was a much different story back in 2008 when the public and investors thought the world was coming to an end.

This can clearly be seen by the huge increased buying of Gold Eagles during 2008 & 2009:

U.S. Gold Eagle Sales Selected Years1

Notice in 2007, total Gold Eagle sales were only 198,500 oz, but after the banking and housing collapse in 2008, buying more than quadrupled to 865,500 oz.  Furthermore, when the broader stock markets continued to tank in 2009, Gold Eagle sales reached 1.4 million oz.

As the Fed and central banks continued to print, prop-up and backstop their respective fiat currencies and broader stock markets, the demand for gold continued to decline.  In 2011, Gold Eagle sales slipped to 1 million oz. and down to only 753,000 oz. in 2012.

This is typical market psychology.  A similar but more volatile trend took place during the millennium.  Americans worried about Y2K purchased record amounts of Gold Eagles in 1998 (1,839,500 oz) and in 1999 (2,055,500 oz), but as the 2000 came and went without any major disruptions, demand nearly dried up to a pathetic 164,500 oz.

After the world escaped the collapse of the financial system with the help of the Fed & Central Bank Global QE, economic conditions in the U.S. started to wane in 2012.  This can be seen by the decline of energy consumption in the country:

U.S. Energy Consumption vs Annual GDP2

Here we can see that as energy consumption fell, so did the GDP.  However, there was a disconnect that started in 2011 and increased significantly in 2012 as energy consumption declined, the GDP increased — nothing like manipulated economic data to give the illusion of growth

This is part of the reason why the Fed announced QE3 in Sept of 2012… it had to add additional stimulus to keep the economy from imploding further.  Unfortunately for the Fed, this huge increase in monetary printing would have had a direct impact on the precious metals pushing their prices to new record highs.

To keep the precious metals from exploding higher, price action was capped at the end of 2012 and then after several huge raids in 2013, market sentiment in gold and silver was severely eroded as demand in the West dried up.

In the chart below, we can see how orchestrated manipulation of the precious metals can impact market psychology.

2013 U.S. Gold Eagle Sales

During the first take-down in the price of gold, investors bought record Gold Eagles in April.  However, as gold was hit again in June, buying slowed considerably and has been falling ever since.

The one thing that fiat monetary authorities understand, is market psychology.  To destroy market sentiment in gold, a broad-based approach had to be implemented.  With the help of its member banks and financial networks, investors now question if gold really is a safe haven anymore.

Of course this does not apply to the “1% Educated” precious metal investors as they realize you can’t manipulate fundamentals forever, but it does impact the psychology of the 99% — and this is the group that would ultimately push gold to highs never seen before.

This next chart shows just how desperate the Fed has become in taming the Wild Monetary Golden Beast:

FED QE & Price of Gold

The price of gold presently ($1,310) is actually lower than it was before the Fed started QE2 back at the end of 2010.  Now, some analysts are saying that the reason why gold is under-performing is due to the fact that inflation is not as much of a threat as previously forecasted.

That is an interesting notion if we consider that the price of a barrel of West Texas Oil increased from $85 in Nov. 2012 to a high of $110 recently (quite an inflationary trend) as gold declined from $1,750 to below $1,300 during the same time period.  I find it simply ironic that the price of oil in the United States has risen nearly 30% in the past year as domestic production has increased to levels not seen for over 20 years.

The reason for the big increase in domestic oil production has to do with the so-called success of shale oil in the states.  The hype by the oil industry is that shale oil will provide cheap and an abundant supply in the future.  The United States is banking on shale oil to make the country…. energy independent.

Furthermore, I have stated that an increasing energy supply is vital in keeping a fiat monetary system alive.  However, it doesn’t look as if shale oil will be the savior for the country or the Dollar for that matter.  U.S. oil production increased steadily since 1920.  From 1930 to 1970, oil production increased an average of 1.87 million barrels a day (mbd) each decade.

U.S field Production vs Shale

However, shale oil has pushed domestic oil production up 2 mbd from July 2011 to July 2013, which is five times faster than its historic rate.  Shale oil production is increasing at an exponential rate.  The problem with any trends that increase exponentially, is that they decline is the same fashion.  With all BOOMS… comes the inevitable BUST.

Shale oil should be used to assist the United States into transitioning to a more smaller, local and sustaining economy.  Unfortunately, it is being utilized today just to keep the illusion of perpetual growth forever.

Many analysts including those from the Austrian School of Economics believe the U S. has trillions of barrels of oil resources, so there is no need to worry about energy shortages in the future.  A large part of these supposed oil resources are found in geology called OIL SHALE.  This should not be confused with shale oil (tight oil) that is being extracted from the Bakken and Eagle Ford in the U.S.

Oil shale is not even oil, but rather a form of kerogen shale that needs a great deal of energy to heat, extract and then refine.  Several large oil companies have been working on making this resource commercial in the states.  But, bad news just came out recently when Shell announced they were going to abandon their oil shale project:

Shell Abandons 800 Billion Barrel Deposit, Beaten By the Regions Geology:

The belief that technology can always overcome natural limits just took a big hit this week when Royal Dutch Shell PLC decided to shut down its pilot oil shale project in western Colorado after 31 years of experimentation. The ostensible reason is that the company has opportunities elsewhere. Shell says it wants to shift resources away from the intransigent rock and move it to profitable opportunities.

…Proponents of oil shale claimed in 1981 that it would be economical to process if oil were to reach $38 per barrel and stay there. The threshold price kept escalating along with the price of oil all the way up to $80 in a 2008 study by the U.S. Bureau of Land Management.

And, yet here we are. Brent Crude, the de facto world benchmark, hovers around $108 dollars. The average daily price for the past three years has remained above $100. In the face of these consistent record high prices, Shell is abandoning oil shale development. And, Shell isn’t the only one. Another international major, Chevron Corp., pulled out of its project last year.

Large oil companies are getting out of the oil shale business at time when the world is experiencing the highest average oil prices.  As the article stated, not only is Shell abandoning its oil shale project, Chevron pulled out if its project last year.

The reason why I include ENERGY-OIL in a precious metal article is that it is directly related to the future valuations of gold & silver even though investors don’t see it that way.  They rather focus on short-term information that reinforces their belief in the metals than longer term fundamentals that will guarantee much higher rewards.

The future energy situation is more important to the precious metal investors than are Comex inventory levels or sensational articles based on superficial information.  The world is now passing out of the EYE OF THE STORM and back into the FINANCIAL TYPHOON.

Energy is the blood that allows the fiat monetary system to survive.  Shale oil has been hyped by the industry and broadcasted by the media because it is the only thing left to keep the illusion of growth.  Without energy growth the Dollar would surely die.

Even though the Fed and Central Banks have been able to manipulate, control and divert interest away from the precious metals presently, the rear of the PRECIOUS METAL HURRICANE is still approaching.

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73 Comments on "The Calm Before The Precious Metals Storm"

  1. Excellent article Steve. Thank you.

    It has been reported in the Wall Street Journal, that the US will soon over-take Russia as the worlds largest producer of oil and natural gas.

    Greg Hunter of the US watchdog dot comm site seems to totally agree with this WSJ piece and its statistical investigative findings, on his weekly news wrap up. http://www.uswatchdog.com posted today.

    I was wondering if this article has taken into account that the US imports a massive amount of petroleum from Canada, who is the largest provider of oil to the US. Exporting 50% more than Saudi Arabia does! What is your take on this WSJ article?

    • OutlookingIn… many gold and silver bugs do not believe in peak oil and also think the United States are on they way to energy independence. Greg Hunter is a good guy and does great work, but he is just misinformed on the energy subject… as well as many others.

      I looked at that article where it claims that the U.S. is now beating Russia. They combine all liquid energy and give it a Barrel Equivalent. This is a bit disingenuous as it lumps ALL LIQUIDS as oil… and they are most certainly not.

      Porter Stansberry just put out a new chart showing the same sort of nonsense. In the chart below you will see that Stansberry & Associates places the United States at number 1 at over 12 million barrels of oil a day beating Russia and Saudi Arabia.

      However, the U.S. does not produce 12+ million barrels a day (mbd) of oil. It only produces 7.7 mbd and the rest is bio-fuels, natural gas plant liquids and refining gains. This is what the chart should look like after I made some corrections:

      If we are comparing “OIL”, we are talking about “Crude & Condensate” which is the industry standard for oil. Here Stansberry & Associates compares Russian & Saudi Arabian oil production compared to the United States TOTAL LIQUID PRODUCTION… which only 7.7 mbd is oil.

      For the United States to produce more oil than Saudi Arabia or Russia, it would need to add another 2.3 mbd of oil production. I believe the U.S. will increase its domestic oil production in the next few years, but the 40% annual decline rates of shale oil fields will make it hard for the U.S. to keep this high oil production level. I see a peak and decline in U.S. oil production within the next several years.

      And.. I can honestly state that the U.S. will never become energy independent unless it cannot afford to purchase imported oil so it is forced to live on what it produces. That is the only way the U.S. would become energy independent.

      steve

  2. Sorry – wrong URL

    Should be http://www.usawatchdog.com

  3. Let’s not forget it pollute’s the environment,uses mass amounts of water,and causes earthquakes.This has been a Wall Street scam from the beginning. Similar to GLD & Eathanol.

  4. In mathematics there is an entity called an imaginary number (i). In political economics we have GDP (Gross Domestic Product) which is also an imaginary number promulgated by the same organization that blatantly lies about labor statistics, the US Government. Reagan changed GNP (Gross National Product) to GDP. GNP included imports and exports; GDP does not include imports/exports. Since the US has run trade deficits mostly due to crude oil imports this change to GDP has created an illusion of economic growth when in reality economic growth has been declining. GDP also includes ALL government spending.

    The only perfect limiting factor to growth is energy which enables life to exist. The sun is the source of all energy, which can be stored long term (fossil fuels) or shorter term (renewable).

    (Short Version) All matter is composed of the elements shown in the Periodic Chart of the Elements, alone, in compounds or mixtures. The First Law of Thermodynamics states neither matter nor energy can be created or destroyed. Only their composition can change. We will never run out of anything only its form has changed. For example natural gas, CH4, one carbon atom and four hydrogen atoms combine with oxygen from the atmosphere to form carbon dioxide, CO2, and water, H2O and release heat. Only Mother Nature can over years change CO2 and H2O to CH4 using energy from the sun.

    Matter can exist in three states, only water can exist in all three states in nature, ice, water and steam or water vapor. To change state requires energy. The energy required to change state is called latent heat. You can have water or ice at 32 degrees Fahrenheit. To change state you must add or subtract energy.

    Changing composition slowly is called corrosion or rust. Iron becomes rust (iron oxide) and to be changed back to iron requires energy (smelting). Coal oxidizing fast is called burning and becomes carbon dioxide. Carbon dioxide is converted back to coal over millions of years.

    Changing state very fast is called an explosion. There are two types of explosions, deflagrate at subsonic speeds and detonation at supersonic speeds.

    The discovery of crude oil in 1859 at Titusville PA saved the whales as kerosene replaced whale oil for lighting. Crude oil is refined by fractional distillation with gasoline separating at 150 C, kerosene at 200C, and the fuel oils at 300-370 C. Gasoline was an unwanted byproduct and dumped in the rivers until the gasoline engine was invented in 1884. Nine years later Rudolph Diesel invented the diesel engine. Diesels can be made 25 times more powerful than gasoline engines and are more efficient (30 vs. 50 percent). Gasoline detonates from a spark plug thus limiting size of piston otherwise you have the equivalent of a bomb. Diesel deflagrates from heat of compression from fuel being injected.

    All large engines are diesel because of this limitation on gasoline engines. As diesel becomes more expensive the price of every thing will go up, especially food. Diesel is a necessity for our way of life while gasoline is a byproduct they found a use for. Kerosene is now jet fuel. The price of gasoline will drop as people are squeezed to buy food and other necessities. The survivors of the coming collapse will end up living like the Amish and Mennonites.

  5. steve,
    let me remind you. although your concept of EROI is good, picking out austrian school to promote yourself is not good. this only proves that you’re a shallow guy, who doesn’t understand austrian economics.

    • judejin,
      let me remind you. although one might argue for Keynes, ad hominem smearing of our host is not good. this not only proves that you’re a shallow guy, who doesn’t understand economics.

      Edited by SRSrocco

      • who argued for keynes? i’m for austrian economics. do you really understand what i said?

        • Judejin, While I certainly sucribe more to the Austrian school of economics than the current madness, many unfortunately have the stupid belief that their way of doing things will bring back GROWTH. They fail to understand resource depletion and the current state of ecological overshoot. Many of them are also dipshits when discussing the problems with the environment that we now face. And as Steve points out, many do not understand the difference between expensive oil and conventional oil.

          No use arguing about this however, as REALITY is now in the driver seat, so we’re about to take a pretty wild ride..

      • Here! Here! (Begins smacking table top with palm off hand.)

      • I just want to make sure that we can keep a healthy debate without resorting to negative synonyms.

        Enigma, while its always appreciated that members stick up for hosts, Judejin has been one the first members to comment on the site and has added a great deal of excellent data.

        Even though we disagree on subjects, I don’t take them personally.

        steve

    • Judejin… My mentioning of the Austrian School of Economics is not to be negative, but rather to reinforce a philosophy that they do not yet understand. Those at the Austrian School always state how the Keynesian philosophy will be a failure and they do so not because they are degrading those who follow the mindset, but because they disagree on fundamental reasons.

      I have mentioned the Austrian School because they are an integral part of the “Gold Is Sound Money”, but they fail to grasp energy and the EROI. I have read a few long papers on their assumptions of Energy & the EROI and I have to say, I disagree with them.

      As you know, I don’t degrade or call them stupid… that I leave for the fiat monetary scientists. Because many in the Gold Camp follow the Austrian School of Economics such as Peter Schiff, they have made erroneous assumptions of energy & the EROI.

      This is why I bring them up as they have a strong following in the Precious Metal Camp. They do not believe in Peak Oil or the implications of a falling EROI. I see the future valuations of gold and silver increasing because of energy constraints and not just due to huge debts tied to paper and fiat currencies. This is what sets me apart from the Austrian Schooler.

      steve

  6. GoldSilver Guru | October 5, 2013 at 12:55 am | Reply

    Once again, other great article!
    Im based in Australia and we get very little in terms of what is “really” going on with Gold & Silver. I totally agree there is a PRECIOUS METAL HURRICANE approaching and nobody is listening!!! Every spare money I have goes into Gold and Silver and wait until the CRASH!!!

  7. Everything you just said in the article is interesting but it is meaningless.
    We must understand that we are living in a different world, different from the past.
    Presently we have to deal with powers that are “infinite powers”.
    They can do anything. We cannot forecast the future on the base of statistics or on historical data.
    Statistics counts for nothing now.
    They (the banksters) can do anything, and the Governments can do the rest.
    80% of the gold exiisting out of earth is in their hands.
    So, what are we talking about.
    We are little slaves, enslaved forever.
    BUT, there are true solutions to our problems.
    First of all, forget gold!!! Gold is a stupid investment currently, because we have to think to the present time; what will happen in 10 years form now is a question point; I could die in 10 years.
    When you talk to people and you wanna talk effectively, you must suggest true solution for NOW !!!
    Now, the best thing you can do is investing in productive tangible assets such as land and commercial real estate; cultivate a piece of land and the products in the neighbourhood, renting rooms in your apartment and so on…….
    The best solution is PRODUCTION
    Buying gold is for stupid people

    • daniel… I appreciate the comments, but your statement, “Buying Gold is for Stupid People”, throws in the face 2,000+ years of what mankind has thought of real money. Technology today has not made gold any less relevant than it was 2,000 years ago.

      We hear silly comments by MSM analysts and others who say gold is a Barbarous Relic. Funny, so are bread and brooms. The Romans baked and ate bread and swept their floors with brooms. I imagine there is at least one broom in every house today and we still eat lots of bread, but you never hear these called Barbarous Relics.

      Gold and silver are money because they are STORES OF ECONOMIC ENERGY. I think if you understood that principle more, you may have a different opinion.

      However, our minds have been programmed to think a certain way and a few sentences or paragraphs will not change this way of thinking.

      Lastly, focusing on PRODUCTION only is not the key either. If you were to reduce our modern high tech manufacturing economy to its basic function it would actually be the “Manufacturing of Waste.” That term is a subject for a different time and place, but in a nutshell, TECHNOLOGY has not made our lives any better, it has allowed us to move around faster and use up resources quicker.

      steve

  8. Excellent article – well put together and reasoned. Thanks in particular for explaining the difference between Shale Oil and Oil Shale. Essential reading. Please keep it up and Many thanks !

  9. Steve, what do you think caused the fall in the gold eagles sales numbers? Lack of supply or lack of demand? Back in 2010, the Congress changed the mandate of the US mint. The US mint only needs to produce as many gold eagles as the Treasury Secretary considers to be enough. There is some big discrepancy between gold eagles sales numbers and those of silver eagles at the moment. Somethings is not right.

    • Adolf… ever since the second take-down in the precious metals in June, demand dried up in the West. The reason why Silver Eagle demand is still strong is due to Hedge Fund buying. I have spoken to someone in the Biz, and they tell me that its not JOE-BAG-OF-DOUGHNUTS buying Silver Eagles, its large buyers and Hedge Funds.

      I gather they believe silver is a much better bargain at $18-$23 than gold at $1,200-$1,400. I do not think the fall in Gold Eagle sales has anything to do with lack of supply. The Fed & Central banks have pulled off a good one by making the retail investor disillusioned out of buying gold & silver presently.

      steve

      • Thank you for your perspective. To be honest, I don’t think gold eagle sales numbers are important. The US is very small compared with China, India and the Middle East in terms of the demand for physical gold. People in India and the Middle East usually buy low and sell high (at least according WGC’s demand trend reports). If the cartel keeps pushing the price even lower, this will only create bigger demand for physical gold in that part of the globe.

        • Adolf… I actually agree with you. Retail demand in the West is not a critical indicator. However, Gold Eagle sales represent the overall market sentiment in the retail sector. I believe when things get really out of hand with fiat currencies, they will not be able to produce enough Gold Eagles.

          steve

  10. i don’t think the austrian school can be wrong on the spurious “peak” concept.

    humans had peak whale oil before humans discovered crude oil. humans had peak “something” throughout history, but humans always found a substitute or a even better alternative.

    the current model of the world is heading towards to a collapse not because of “peak” something, but because the fiat money ponzi is fundamentally unsustainable.

    the current fiat-money based crony capitalism/socialism hybrid has too much overhead, wastes too much energy, robs the efficient/capable to feed the inefficient/lazy.

    austrians believe the above are not true capitalism and once we get rid of fiat money ponzi scheme run by the fed/polictians and all the interventionist govt meddling of economic matters, the world will recover and solve temporary resourse constrainst thru market mechanism.

    the market if left alone(free of govt and meddling and fiat money print) should be able to deal “peak” anything!

    thus austrians are certain that in such an idea world, humans can find a much better alternative energy source to replace crude or even silver in industrial applications in the future.

    i just read online somewhere scientists invented a super tiny carbon-based structure that is 100 times stronger than steel and conducts electricity better than silver.

    if human society is breaking apart, do not blame it on nature, never ever!

    every time, it is because of human stupidity.

    declining EROI is useful to explain that in the current model, it is accelerating the collapse or accelerating the mining costs of gold/silver.

    but like i said before, even in a rising EROI environment, a stupid tyrant can ruin the world by insisting doubling the money supply every year!

    i urge everyone to study the basics of austrian economics and learn to apply its theory and philosophy to real-world problem.

    i believe austrian economics is the only correct economics.

    steve may have differences with the austrians regarding the importance of EROI.

    like i said above, i don’t think the austrian economics is wrong. i think it’s more like steve doesn’t really understand why the austrians think EROI is not important in the framework of the austrian economics, where the market can deal with any restraint thru supply/demand!

    leave EROI to the market!

    i like the EROI concept, because this allows me to see the mining costs of gold/silver are set to rise rapidly in the future.

    other than this, i don’t think EROI is very important. the world has far more important issues to worry about: the fed, the welfare state, crony capitalism, etc!

    • Having read most of the posts here, I tend to agree with you judejin. The only comment I would add is that I suspect you’re mixing Austrian economics with its philosophical equivalent: Objectivism. Perfect fit. I think Steve is viewing it absent the philosophy. Just my two cents.

      • i’m for both austrian economics and objectivism. they come from the same philosophical roots.

        • I believe that Steve is pushing for a more practical, pragmatic worldview. Austrian economics, while noble in philosophy, in theory, can never achieve its goals in practice. It is a world of IFs — if we can get rid of government, meddling, money printing, … come on! People will ALWAYS have some kind of government, meddling and money printing. Austrian economics in extremis is a pipe dream. However, the EROI concept has very practical implications to governments and meddlers, as well… With less oil, the US Army has less resources and less world police powers. Then the rest of the world can maneuver the US into accepting a gold standard which would put an end to the geometric rise of dollar supply. The only way to corner the elites is to let them face the limits of natural resources.

          • the elites will resort to killing billions if they really buy into the “peak” concept!

            the austrian and objectivism/libertarians are not “if”and unrealistic. just listen to jessie ventura just said in media. there’re many ppl who understand it!

          • anon… good points.

            judejin… the Elite does not have to resort to CULLING the masses, resource depletion will do it automatically. Furthermore, many of those who think the ELITE are going to take-down the system, need to realize they will be killing their own GOLDEN GOOSE.

            Most of the elite’s power is in controlling the resources and currencies. They don’t want to believe in Peak Energy as it will destroy their wealth. No matter, the falling EROI will impact the Elite as much as the poor.

            Rome was a perfect example.

            steve

    • judejin,

      there is no such thing as a free market. get a clue. totally free without proper regulation is an organized crime market. maybe you’re shot dead if you’re a creditor or your legs broken if you’re a debtor. Explain to me how the mythical “free market” can work without influence from corrupt politicians and regulatory agencies of various stripes.

      most of human history has been a gift and a barter economy. The mythical free market is a construct of your thought paradigm.

  11. I don’t want to spend too many lines complementing the author. But this essay not only contains vital information, it may well be presenting empirical data in very original ways. And by the way, some damn good comments here as well – thanks guys.

    “The world is now passing out of the EYE OF THE STORM and back into the FINANCIAL TYPHOON.” This more than a clever metaphor. I think it’s verifiable, deadly accurate, and therefor potently germane. I’ve read a variety of books on peak-oil AND economic collapse; each is an albatross to the other. And we are definitely in the eye of the storm. But rather than recap other important points in this essay, it may be useful to expand on another general point – since heckling continues from the balcony.

    Regarding economic models, from my perspective, the school of Austrian Economics contains the concepts and formulas that just plain work. The collected works over time form a solid body of science. But there have been very few, to date, that combine EROI with Austrian Economics to construct accurate models of our current situation. And that is the importance of these essays, this web site, and it’s informed contributors. I agree with Steve that the “followers” of the Austrian economic perspective, as a group, misconstrue the fundamentals of EROI. I also agree with Steve that Greg Hunter is one of the good guys. He is sharp, has an excellent, brave perspective, and is himself a public service. He may not not incorporate EROI as some of us do – but maybe that will evolve.

    Speaking of that group… The term “gold bugs” is used as a negative to slander an entire concept. But if we can pick a group and identify them as real gold bugs, we have to look no further than Murphy’s Le Metroploe Cafe. These are good guys performing a thankless job and shining a light in some very dark corners. Firmly in this camp is Adrian Douglas and he was certainly an adherent to both the Austrian school and peak-oil. Jim Willie of course, is another who pays respect to the Austrian school and peak-oil, but like Steve does not limit himself to a single toolbox.

    The Austrian economic concepts are like math rules. Add, subtract, multiply, and divide until you get the job done. To understand Keynes, Keynesian economics and it’s pit falls – use a bit of Austrian economics.

    At judejin: Austrian economics (or, the market, if you like) will deal with scarcity partly through supply and demand. On that point I think you are correct. But to extrapolate that this must be good for our current situation is a stretch. And to extrapolate that market forces could enable infinite growth is a misunderstanding of physics, not economics. The Austrian school makes no attempt to defy the law of gravity. Utilizing Austrian tools, where applicable, to comprehend the effects of peak-oil is the opposite of shallow. And the resulting synergy is about as deep as the Mariana Trench.

    • who said the austrians aim for growth? please understand what the austrians are saying before you come to any views about them!

      leave the market along! growth is for keynesians!

      from your paragraphs, you’re a keynesian without realizing it! a keynesian gold/silver bug contradict yourself, ok?

      in the austrian framework, ‘peak’ and ‘growth’ are both spurious concepts. all the austrians want is a purely free market!

      when something becomes scarce, the market will allocate it and adjust to it accordingly. even if it entails temporary drop of living standards for all, so be it! sooner or later, driven by profit motives, smart entrepreneurs will find alternatives!

      that’s why austrians worry about the fed and the all-powerful govt, but don’t worry about what’s happening naturally in the market.

      • “Keynesian Gold/Silver Bug” Hey, at least you came up with an original oxymoron.

        Please continue documenting your diffused thoughts. That moves us past the discovery phase.

      • judejin — good god man, can’t you see the wishful nature of your philosophy? all you want is a purely free market? you know, the free market doesn’t really care what you want, or any of us wants, for that matter. human nature and by extension human history isn’t based on any particular wishes…

  12. steve, as u easily noticed my English is poor but all the same I’ll try to explain better my opinion, in fact my mind wasn’t programmed to think the same things despite the truth.

    I simply think that, as I said, the world is NOW far different from any other any time in the past and statistics or history or even the story of gold itself are no more important for us, because we have to consider and evaluate other elements

    but if wanna go on and buy gold and silver, please do, so it will be maybe easier for me to sell some of the gold I have accumulated under the guide of “Mike the jenious”

    buying gold is stupid because it is a non productive asset which suffers from ups and downs (more downs then ups currently) made for fun by the banksters who enjoy expelling some of us out of gold.

    yes, many of us got out of gold because in terror; the terror of losing a huge lot of money

    when u suggest somebody to put money into gold and you perfectly know that gold can go down 35% in the short time, and then, maybe another 30% (we will see……..but I think gold is going down to 1100-1200 $ by the end of the year), well, what I think is that you are a criminal
    so, this is why those few jenious who suggest gold as an investment now, they are criminal
    because most people cannot accept a loss of that proportion, expecially if they invested in ETF or in gold shares (paper gold) and so many did so, because you cannot buy all physical; in fact it easier and less expensive, but, of course, when gold goes down the temptation to sell is stronger and selling is easier, so, when you lose, normally you sell and the lost is forever; this is why people like me, who cannot accept a loss of nearly 40% of their asset, waiting for better times, people like me have now a huge loss in their patrimony and that money will not come back anytime soon.
    Of course I have physical gold too, but as soon as it goes up to 1900-2000 I am going to sell 80% of it because I am willing to make different investments now: investing on myself and in productive assets

    remember steve, we are living now in a different world dominated by infinite powers like the white house, jp morgan and so on……. they can do anything like God
    they can destroy all paper dollars in the world: it is enogh that they say…….well, from tomorrow on…..the current dollar is dead……..poeple!!! do go to banks, bring your dollars with you and take the new dollar, you deliver 10 dollars and we’ll give 1 new dollar !!!
    yes they can !!!!
    or, they can say: well, people, from today gold is being nationalised and you have to bring all the gold you have to the bank and you’ll get a certain amount of dollars per ounce, fixed by law (maybe 500 per ounce)
    yes, they can !!!!

    dont forget that much gold is in the hands of mafia and terrorists too; so the Governments will never allow the criminals to take advantage on the price of gold

    so, steve, things are much much more difficult to understand than you think and people like those stupid criminal gold sellers had better to shut up and go to hell

  13. steve, those professional gold sellers are just taking profit on our terror and we will never protect ourself by buying gold
    those who bought gold above 1350 are losing now and many of them are losing a huge lot, like me.
    and this is a shame

    nevertheless, it is better to give an explanation to my pessimism

    banksters can destroy the dollar, and they can do it in a night
    it means that you wake up tomorrow and listen to the radio one saying that the current dollars are not anymore good; you have to take them back to the bank and you will receive the new dollar……..yes……
    but you will give 10 dollars and receive 1 new dollar in exchange !!!!

    or they can say tomorrow that all the gold in your hands is being nationalized and it will be paid to you a certain amount of money (new dollar!!!) which means that the price of gold will be fixed by law

    listen steve, these banksters will never ever accept the idea of losing the war
    they will win
    Mike Maloney is making a lot of money and most of his customers are losing a lot of money
    this is nothing but the truth
    in fact all those people who bought gold above 1350$ are losing money now

    gold will go up in the future?
    yes? and when?
    tell me !!!
    tell me when?

    he says within the end of this decade

    too much time steve

    too much time

    life is now

    LIFE IS NOW !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11

  14. those who think of buying gold in order to become rich one day are surely stupid

    gold will never make you rich

    it is making you poorer currently

    it is too late guys

    you had to buy it when it was sold at 400-500 $ an ounce

    today it’s too f… late

    those who invest in gold are being slaughtered

    • daniel…. just a few points:

      First… you made your point clear

      Second… its okay to disagree

      Third… you don’t understand energy so I can see you can’t see the value of gold

      Fourth… I am making an assumption here, but it seems as if you lost some money in gold and it appears you are a bit frustrated. If that is the case, I totally understand.

      Lastly… Peak energy will destroy the value of most assets. Gold and silver will be some of the safest stores of value. I never said they would make someone rich. However, they will offer a much better way to protect wealth.

      steve

  15. Glenn Timberlake | October 5, 2013 at 8:39 pm | Reply

    I have a couple questions. I read an info-thing (technical name) about Coober Pedy, Australia at Arckarinza Basin. It claimed a huge amount of oil in shale was discovered there to the tune of 233 billion barrels which might be found to be closer to twice that. It said Linc Energy was involved and Barclay’s Bank was involved. I think iwhat I read came from something on Money Morning Energy Advantage. What is the true story here?
    Also, I understand the huge amount of natural gas in the US could be used in the big trucks like Boone Pickens talks about and also in smaller vehicles especially if the EPA approved its use as methanol. John Hofmeister, past chair of Shell Oil mentioned this quite strongly in an interview – I believe on CNBC.. I understand the large engines on trains are being converted to Nat gas. Wouldn’t this negate the negative affects of the lower oil energy requirements by a huge amount? We would need much less gasoline and diesel and it would be a cheaper and cleaner fuel. Wouldn’t this be a boon to our economy?

    • Claims of most mineral finds turn out to be inflated promises of a pot of gold at the end of a rainbow to lure the lemmings into investing or entice the banks to lend. Financing the project provides salaries for the perpetrators and they will keep the goose that lays the golden egg alive as long as possible. I suspect another case of shale oil/oil shale comparison. There is more gold dissolved in the ocean than exists on dry land however there is the problem of extraction; gold extracted on gold invested.

      Concerning natural gas to power machines and not be a smart a** but you could use dried camel dung which Arabs use for cooking; should work in Watts’s 1781 steam engine. Today’s machinery is all run by internal combustion engines using liquid fuels with diesel having the highest energy per unit volume. I believe natural gas detonates thus limiting its size to gasoline engines (see my earlier comments on detonation/deflagrate).

      Natural gas is only available in metropolitan areas in North America by pipelines, bottled gas or rural gas is propane. Natural gas is available in rural Canada where it was installed by Co-ops without government help or correctly in spite of government.

      Locomotives are run by electric motors powered by diesel powered generators. This permits using locomotives in tandem, 2, 3 or more. Electric motor on each wheel allows tandem hookup since it eliminates the need to synchronize mechanical connections.

      To save time reading comments ignore grammar school drop outs who never made it past third grade where capitalization is taught or have other neurosis.

      • “There is more gold dissolved in the ocean than exists on dry land however there is the problem of extraction; gold extracted on gold invested.” Great example of EROI

    • Glenn… Roy brought up some excellent points. On the subject of LINC ENERGY, while they do have a great deal of supposed shale reserves, the land is located in remote regions of Australia. The United States was able to tap into Shale because we have the infrastructure of pipes, roads and water…. not so for Linc Energy. The cost to produce this resource would be a fraction compared to the cost to build the infrastructure that isn’t there.

      This is indeed the big problem for the rest of the world. Furthermore, the United States has half of worlds drilling rigs:

      So, you can see the U.S. can drill wells like crazy which is the only way to make shale energy grow. Because the decline rates are so high in Shale gas & oil, massive drilling is the only way to increase supply to offset declines. The world does not have this drilling capability.

      Lastly, the notion that the United States can transfer the trucking industry to run on natural gas will never happen. Where I live, UPS is running their trucks out of a satellite hub on LNG – Liquid Natural Gas. I have spoken to some of the UPS guys and the company that is providing the LNG.

      LNG’s energy content is 58% of diesel, so you need a larger amount of LNG. Thus, a trucker needs 1.7 gallons of LNG to equal the same as a gallon of diesel. This means the tanks have to be much larger and have to be kept at a cool -260 degrees. Then only certified LNG attendants can be used to fill up the trucks. They wear protective wear as a drop of LNG can blind a person.

      The United States does not have the ECONOMICALLY RECOVERABLE amount of natural gas that has been hyped. Furthermore, most of the Shale Gas companies aren’t making any money at natural gas under $6-7 mmbtu. So, if the price was to rise to say $8-$10, then the price converted to a gallon of diesel equivalent would not be as attractive.

      Glenn… at some point in time, the world is just going to have to realize that it needs to be much smaller, local and sustainable. What we are doing presently, is the exact opposite.

      steve

  16. Steve, my thanks for your continuing to publish quality articles such as this! While I have been taking them for granted in the past month or so, with the effective closure of the Oil Drum, you are now one of the few voices in the wilderness maintaining the focus on the key pivot of fossil fuel availability not only to the precious metals sector, but the wider economy as a whole.

    Daniel: Ever hear of the fable of the ant and the grasshopper? Some of us are simply geared to save, others to live in the moment and pay little heed to tomorrow. Not much use trying to change us.

    • Simon… thanks for the comments. I too miss THEOILDRUM. However, Ron Paterson has now started PeakOilBarrel.com where he does great updates and provides nice charts.

      You know, the reason why I started my site because I saw no one researching how energy will impact the precious metals, mining and overall economy. The problem with our world today is that it’s too specialized.

      The oil guys know what they are doing and the mining guys focus on their industry. Basically, THE LEFT HAND DOESN’T KNOW WHAT THE RIGHT HAND IS DOING.

      The engineers working on the Huge Alaska Pebble Project which is a large copper, moly, gold & silver mine have forecasted 25 & 45 year mine plans. I just find that simply amazing that anyone can forecast a mining plan that far into the future without any idea of what the energy situation will be like in just a decade.

      I really believe we start to run into big problems with Energy here in the next 2-4 years. Also, I imagine a good percentage of the fuel we are currently buying, we cannot afford.

      steve

      • The Oil Drum basically committed suicide. They were a good site until what Jim Kunstler described as egg heads took over and adopted the GM model, “We’ll make what we want to make and you can buy it or lump it.” The Oil Drum decided to cover only oil. Since specialization is for insects this didn’t work out and they went tits up. This left almost no one but Kunstler covering the spectrum of energy, economics, politics and resources especially food.

        Almost everyone is committed to the status quo which is physically and mathematically unsustainable. Our owners have the resources to maintain the status quo by control of the media and the currency to herd the lemmings which are much easier herded than cats. The rich set up Foundations in which they still controlled the currency but escaped taxes. I use the term currency where most writers use money. We don’t have money but Legal Tender which our owners have dictated by threat of use of their monopoly on the use of force to be Federal Reserve notes. The Federal Reserve is owned by a group of private banks, many of which are foreign owned.

        Most of the Foundations are propaganda facilities that fund Institutions which promote the status quo. Some hire trolls to monitor the internet and try to discredit any exposure of the status quo propaganda by various means. They will present false information, divert or change the subject or clutter the blog with extraneous lengthy posts. Ad homonym attacks are another favorite device. As your blog gains traction as I hope be aware of these things. The Laws of Nature are 1. Survival and 2. Propagation. There are people whose wealth and subsistence depend on maintaining the status quo.

        Industrial agriculture expending ten calories to produce one calorie of food is unsustainable and will cause a world wide “Arab Spring”. The Amish and Mennonites will fare best.

        • Roy… I agree with you as it pertains to TOD as well as the Elite trying to maintain the status quo. I actually enjoy listening to the interviews on Kunstler Cast.

          Most people don’t realize that the Elite’s Wealth is tied to maintaining the notion of INFINITE GROWTH. This is why shale has been HYPED, because a growing energy supply is necessary for maintaining a debt based Fiat Monetary System… as you probably realize.

          steve

  17. Steve, I have read three times your writings here; I’m quite starting to understand your views about energy.
    once again though, I see that you are confident on the power of the market, or, better, on the power of the forces that play their role in the market
    but what I said is that there are “infinite powers” involved in the game
    they stamp money in the most powerful country in the world
    they can do anything, also taking your mother to the slave market in Africa and sell her: you will only know one day that your mother desappered

    they will never allow anyone of us to tale profit from gold beyond the limit they have decided

    yes, I am frustrated !!! but not from the huge loss I suffered
    I am frustrated because I was so idiot to listen and believe all the nonsenses that some gold sellers invented in order to sell more gold

    these gold sellers are close to the concept of criminal
    they forecast the future on the base of statistics: what happened in the past…….., the Romans, the Celts, your grandfather, the 18th century, the 19th…….. it is all bullshit
    because today we have Al Quaeda; we have financial terrorism, monetary wars, we have nuclear bombs, we civil wars coming soon, poverty spreading around us……

    and, again, I repeat, in my opinion the US Government will never allow gold to go up in price more than they have decided

    and last but not least, do you really think that Mike Maloney, Mark Faber and all those great genius are smarter than the real genius working at JP Morgan, the FEd, Goldman Sachs????

    come on!!!!

    having a certain amount of gold is wise
    how much? (you may ask)
    in my opinion not more than 5-10% of your patrimony
    the rest must be invested in productive assets and in YOURSELF by increasing skills and competence

    Simon: yes, I’ve heard of that but it is not a matter of ant and grasshopper
    it is a matter of investing and producing in the short-medium time (productive assets, yourself)

    if someone comes to you and says: “Simon, do invest in gold because in 2035 you’ll be ok!!! ”
    well, in 2035 maybe your wife will be having her third kid from her second husband

  18. By the way, Simon and Steve
    DON’T PUT ALL YOUR EGGS IN ONE BASKET !!!!!

    instead of listening to genius Maloney or to those other failed people
    why don’t you ask Warren Buffet, or Bill Gates, or Zuckerberg about gold????

    do invest in yourself
    learn how to be a plumber, a carpenter, an electrician, a mechanic, do buy land and build up your house by yourself, do cultivate land, buy old houses and make them new again

    make your brain work guys

    stop listening to criminals

    • daniel,
      i think you have very limited understanding of the financial markets.

      currently there are 100 trillion dollars parked in bond funds alone globally, holding worthless government bonds and junk bonds.

      while 2 billion dollars can buy up the entire above ground stock of silver.

      so every ounce you bought is a god-sent gift and acturally a lot of true wealth when the reset happens.

      those pundits have been advocating buying gold/silver since 2000. they may have not foreseen the last 2 years of brutal correction. but again, focus on the number of ounces, instead of the dollar value of your bullions!

      always remember there are less than 1 ounce of gold/silver per capita worldwide, every more ounce you buy ahead of others will put you way ahead of the sheeple!

      do not whine like babies if you are not on margin!

      life is hard!

      just imagine all those poor souls holding worthless paper will one day wake up to find it is too late for them to buy gold/silver.

      right now, it is very very early to buy gold/silver! not late!

  19. there is only one truth

    life is hard

    and there are no easy roads to personal and financial success

    the best path to walk on is always the hardest

    • in the last two years, the hardest way to walk on is the road that gold/silver bugs are on!

      just to prove your point!

      so hang in there! even if your wife walks away, so be it.

      keep buying gold/silver, she’ll regret one day.

      its funny the jap govt touting goverment bonds are saying women want to marry guys who buy govt bonds because it means the guy is reliable.

      your bullions can easily “buy” a lot of these poor girls who have no idea their country is going down into a shit hole!

      but i strongly suggest that we avoid these nuclear contaminated girls because their DNA could already be damaged.

    • Daniel. You have written lots of wise words. I am sorry about your losses. Speculating on the stock or bond markets as well as commodity markets such as gold is very difficult. There are sharks everywhere waiting to eat you up. Markets are manipulated and the majority of retail investors loss money. My view for what it is worth is there needs to be a real bloodbath in gold before it goes up again. Real pain so that even the most ardent gold bugs sell up. At this point it will go to new highs. Gold should be viewed as an insurance policy for when things go tits up but only put 10% to 20% of your money into it and are prepared to have it locked up for ever if necessary. Your are right about governments confiscating gold. They have done it in the past and they’ll do it again if they need to.

  20. Daniel, I think you’ve got your point the across now,
    Go and preach somewhere else.

    Steve, thanks for the article.

  21. Following article by Koos Jansen is particularly relevant. Through week 39 total chinese gold demand is 1660 tons. For 2013, Jansen estimates demand at 2170 tons. This is about double the official data reported by the world gold council. Jansen gets his data from the sge -based on gold delivered from sge 49 vaults. By law all imported gold, domestically produced gold and scrap must go through the sge. Jansen pointed this out in an article dated 9/19/13. Imo, this site is a must read for serious gold investors.

    http://koosjansen.blogspot.nl/2013/10/week-39-shanghai-gold-exchange-physical.html

    • Norm, Thank you for the Jansen data link.

      GFMS (gold field mineral services) and WGC (world gold council) gain their pedigree from the older Consolidated Gold Fields.

      These are also members of the LBMA (London bullion market association) which ‘basic’ annual membership fee cost $8,720.00 per year, with the premium member fee costing $15,920.00 per year. These enjoy premium member status.

      The WGC is responsible for the ‘World Gold Survey’ which has “sponsors” who financially support the creation of the report. The following are some of those sponsors;

      Commerzbank GPM
      RBK Capital Corp
      Goldas
      Polyus
      Valcambi SA
      Dubai MCC
      Scotia Mocatta
      Johnson Matthey
      Tanaka PMG
      Barrick Gold
      Standard Bank
      Rand Refinery
      PAMP
      JP Morgan
      Newmont
      Societe Generale

      Kind of like the ‘Fox Family” in charge of the hen house!

      These entities are also members of the LBMA and would no doubt, have great influence on the production of the report and what it contains. This report has come to be recognized as being massively manipulated. Its good in a sense, that it gives you an overall direction as to the manipulators thinking. As with ANY financial data, due diligence is called for.

      Jim Sinclair has called the GFMS and the WGC a front for the bullion manipulation cabal and a vehicle for the misdirection and misreporting of the facts.

      • OutLookingIn…. I don’t trust the GFMS & WGC data either, but I use it as a guideline. When I put together a previous article using the World Gold Council data showing how Gold Scrap had fallen tremendously, it could be much worse than what they have reported.

        However, at least what they reported is BAD ENOUGH…LOL. I also believe the demand is much greater than what GFMS or the WGC states. We have to remember, GFMS provides the data for the WGC.

        I totally agree with Jim Sinclair’s comments on GFMS & WGC.

        steve

        • Control of the main stream financial media and not so main stream.

          The ‘Financial News’ is owned by the ‘Dow Jones Company’ which was owned (for the past 106 years) by the Bancroft family. This company also owns The Wall Street Journal, Barron’s Magazine, Factiva, Market Watch, Brummell Magazine, Wealth Bulletin, Smart Money, and many others.

          December 13, 2007 the Bancroft family sold their 64% control of ‘Dow Jones Company’ to NewsCorp then headed by Rupert Murdoch of FOX fame. Or is that “infamy”! He renames the company ‘Dow Jones Indexes.

          In February of 2010, Rupert Murdoch then sells 90% of Dow Jones Indexes to the CME Group of Chicago fame. CME Group now has financial control of the Dow, S&P500, COMEX, The Wall Street Journal, etc. etc. etc.

          Look here for the list;
          http://www.en.wikipedia.org/wiki/List_of_assets_owned_by_Dow_Jones

          The CME Group is the worlds largest generator of derivatives in all their forms.

          The stink that rises from Chicago is NOT due to the rail stock yards! This amount of power and reach is near impossible for ANYONE not to take advantage of. As for the power behind the scenes when it comes to manipulation and control of financial markets and financial media news, one need not look too far from the lake shore!

  22. guys, I thank you for your kind reply
    I also thank the unkind

    you always say that I am complaining because I am ignorant
    yes, ok, I might be ignorant
    but I do think that deep inside you keep me in some consideration

    I wanna tell you this
    why don’t Warren Buffet or Bill Gates buy all the silver existing on earth?
    silver is worth nothing I guess
    some guys – we can call them genius – invented a new kind of element called Graphene
    graphene is making silver worthless
    in Italy you can find as much silver as you want
    families are getting rid of silver

    now Maloney would answer……….: “families don’t know anything about precious metal”

    one day in the past I used to think to be wiser than common people
    I thought of being wiser buying gold while my friends were buying houses or productive assets

    today I think I was wrong

    a friend of mine bought 4 apartments in Padua, near the university
    he is renting these houses to students getting $ 400 dollars per each room
    so, 16 rooms x $ 400 makes a monthly income of $ 6400
    the 4 houses cost him about $ 440.000 in the year 2000
    today the value of those houses together is around $ 2.000.000
    please, compare that investment to gold

    my aunt bought a house in Rome in a nice place for $ 25.000
    today’s value is $ 600.000 and she is renting it for $ 1750 a month

    gold is for losers if taken as the main investment

    gold is good only for those who think that we are going to face a cathastrophe in the near future
    but as I explained to you before, there will not be any chance for us to take advantage of any future
    cathastrophe because the USA will not allow anybody to take profit from gold

    so, if you think economically……. you are right, gold may go up to stratosphere
    but if think rationally and politically, who will soon realize that it is impossible for gold to join stratosphere because gold will be taken away and nationalized

    • Hey just to let you know I do buy both Real Estate and Silver/Gold. I bought Real Estate at the Peak of the Market in USA (Different areas have different cycles) and I am losing $500 a month on 1 Property and the property is upside down I owe the bank more that it is worth but I am keeping it because I know real estate has a cycle just as commodities. My Family Also Bought Properties and they are making positive cashflow. As far as real estate goes where I live, I believe we have hit the bottom and it is a good time to buy with other people’s money (Bank, Investors, Hard Money Lender, ect ) because when commodities hit their peak you can pay back the loan with your profits and that how you make money. Just make sure you have positive cash flow and don’t make the same mistake as I did and get into the real estate hype.

      As far as commodities I bought silver when silver was $10 and also bought when it was $45 as of right now my average is about $30 per ounce. I do believe in cycles and feel that silver is ready to peak in 2020 but I will be selling sooner maybe 2015 -2016 and paying off my loans on my proprieties and moving to something else.

      I do understand your frustration as I was also frustration because I was telling everyone I knew to buy silver and how I bought at $10 and now it was worth $30. Boy was I wrong, they bought at $45, $35, even $30 and now are looking at me as idiot because silver is $21. I am telling them the same thing that I am going to tell you if you have the physical just hold it because it will go up and you will be happy even if not your life time you can pass it to your kids. As of now I don’t tell people what to do I just keep doing what I need to do to which is keep my future secure. I still buy a little silver here and there but if in the future silver goes to $5 and not $100 I make sure I don’t feel the loss and can pass it on to my future generations.

  23. my aunt bought that house in 1966

  24. rich people are rich because they get money every month without working

    gold is a speculative asset

    you buy it and you HOPE that it is going up in the future

    houses and commercial real estate: you buy them and you are certain of getting a monthly reasonable income from them
    maybe it will not be fireworks but surely you get a monthly income, no matter is temporarely they are going down

    so, guys, make your choice

  25. no matter if …….
    sorry for the mistakes

  26. but nevertheless, guys, dont be disappointed
    I own gold too
    but if I could go back I would prefer to have a building today instead of that amount of gold

    bye and thanks to anybody for sharing with me ideas and suggestments

    beware of pickpockets!!!!

    remember what Oscar Wilde used to say:
    when you meet someboby who forecasts the future
    be careful because he is trying to mislead you and steal money from you

    • daniel…. you’re free to comment as you wish, but I would like to point out that the folks reading your large number of repetitive comments may come to the same conclusion as me… and that is you are not winning over anyone with your style.

      Less is more…. maybe you might be open minded enough to let that sink in.

      steve

    • Don’t be put off Daniel. You’ve made lots of good points. A balanced debate is a good debate. I have appreciated your input.

  27. “Jim Sinclair has called the GFMS and the WGC a front for the bullion manipulation cabal and a vehicle for the misdirection and misreporting of the facts.”

    Many folks think Sinclair is a clown but I respect his opinions. In the 2003 lawsuit, Barrick Gold/JPM vs. Blanchard (gold dealer), barrick and jpm alleged that the western central banks had leased to the bullion banks 4600 tons of their gold at the end of 2001. The source of this allegation was the world gold council. The WGC however, to the best of my knowledge, has never acknowledged the western central bank leased gold in their quarterly statistics. Why? Leased gold probably accounts for the vast majority of their reported gold reserves.

    I know that Steve is working on a gold recycled report. Look forward to reading it.

    Another area which I do not understand is the comex gold futures. Seems to me if you had mucho cash, say $1 billion, a hedge fund or senior gold producer could say buy 10 contracts for immediate delivery and sell 10 contracts several months in the future at a slightly higher price. Do this repeatedly over say a 30 day period and I believe you may be able bust comex registered stock. Don’t think the western central banks have much gold these days to lend to the bullion bullies. Yes, I sure this is far more complicated – for example, how do you get around limits?

    Registered comex gold stock is only about 20 tons and most of it has already been spoken for.

    I did call a senior gold producer last week and posed this question. Their response was that we do
    not speculate. Makes me wonder if they’re working shareholders or the bullion banks who are probably short many thousand of tons of gold.

    • the major gold producers are completely destroyed and controlled by the fiat money masters. they are like junkies controlled by the drug dealers!

      but nothing can defy supply/demand, they can’t print gold out of thin air.

      china’s per capita gold holding is only 5 grams, which is very tiny.

      the good news is someone is taking delivery and buying up the silver eagles. it could well be buddies of the fed and the cartel, who know before the public that the game is finished.

      buffett is a guy with little sympathy for the poor and the unlucky. he either doesn’t see the fed is destroying the middle class or doesn’t care. i think he doesn’t care!

      you would think someone of his age, a grandpa figure would stand up and speak the truth? is he jewish?

      the cartel is dominated by jews.

      but at the same time, austrian economics was founded by jews too!

  28. Great Post

    Thanks for the Info

  29. STEVE,
    thanks for your suggestion
    I don’t wanna win anything

    sorry for being boring by explaining my point

    I just wanted to tell people to keep their eyes wide open because
    it will take a lot of years before they take advantage thru precious metals

    and I am not always saying the same things

    did u know about Graphene??
    do most people know about it?

    Graphene will make Silver slowly desappear from the industrial use

    think of it

    and last week I was in Geneva (Switzerland) speaking with a precious metal expert
    working at Patek Philippe
    he told me:”Daniel, if you wanna lose money, buy silver”!!!!

    enough said for the time being

    sorry for bothering you all

    • daniel… first of all, Industrial Demand has not been and will not be a much of a factor in setting silver’s value in the future. Yeah, Graphene may indeed replace silver in a percentage of industrial applications, but again… you fail to grasp energy.

      secondly, Graphene production is very expensive, and even when they get the costs down, it still takes a great deal of toxic chemicals to manufacture it.

      Thrid, Energy will become in short supply here in the next several years. We must remember, Rome collapsed even though it had plenty of resources around it.

      steve

  30. Steve, do you have any contacts with refineries? How do they price their sales? Do they have long-term contracts with the industrial users? Are long-term contracts typical or just a small fraction of the market? Are long-term contracts indexed to the Comex silver or the prices of long-term contracts are negotiated on a deal-by-deal basis?

    • Adolf… some mining companies do have term contracts. However, I don’t have the specifics on the industry at large. I plan on chatting with some folks at the refiners shortly, so I will provide that information later.

      steve

  31. daniel, judejin,

    your style is identical. is ok, just odds, you know

    i do agree with you, you are wrong, ok

    make your brain work, do not whine, life is hard!

    your poor girls are belong to us

    thank you, no
    dlae

  32. Dale,
    think of your mother
    our girls are in the safe

    and make your brain work
    and go to work

    you will never get rich with gold and silver
    but maybe or surely poorer

  33. ACHTUNG BABY

    WHY AND BECAUSE

    there is no way, for you or all of us, to increase the demand for gold and thus influence the price of gold

    gold is totally under their control (banks)

    you understand it ??? yes or no??

    encourage people to buy gold in order to get rich is by criminal

    BUT

    to encourage people to buy gold to protect their purchasing power can make sense, but you first need to inform people that their purchase power will be still at risk because, as I said, the banksthat have total control on gold

    it is as if someone offered you to escape by car to save yourself and giving you a gun to defend yourself, but without telling you that the banksters and their friends will follow you and find you anywhere with planes and helicopters and will be armed with atomic bombs

    bye bye
    take care

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