The Key Factor To Drive Gold & Silver To Extreme Values

The precious metal investors are actually sitting on gold mine, and they don’t even know the real reason why this is true.  Many analysts are focusing on the huge amount of debt and fiat money in the system to be invested in gold and silver, but the fundamental root cause continues to go unnoticed.

While the massive amount of debt, derivatives and fiat money are indeed excellent reasons to own the precious metals, they are the mere symptoms and not the disease itself.  The advanced societies of the world were built on an economic system that can only survive if it continues to grow.  Without growth, the $100’s of trillions in derivatives and debts would implode — along with it the Suburban Retail-Commercial-Housing economy.

The key ingredient that drives the growth of the world’s economies is energy.  The most vital energy component of the global economy is oil.  Peak oil would have come and gone, if it wasn’t for the $trillions in new debt that allowed non-commercial oil resources such as shale oil to be extracted.  Basically, the U.S. and world are purchasing a percentage of oil it cannot afford.

There is a great deal of energy disinformation published on the MSM and internet.  Several of the well-known alternative media analysts on the internet have been beating the drum for shale oil & gas.  Even though shale energy has been a boost to the U.S. economy, it will not be long-lived — regardless of the hype and overly optimistic forecasts.

One of the most recent energy falsehoods being advertised, is that the U.S. is now the largest oil producer in the world surpassing Russia & Saudi Arabia.  Stansberry & Associates published this recent chart showing the U.S. as the number one oil producer:

Worlds Top Oil Producers SA2

According to Stansberry & Associates, the United States is on top with approximately 12+ million barrels a day (mbd) of oil production, while Saudi Arabia comes in at 11+ mbd and Russia at over 10 mbd.  These figures are from the EIA – U.S. Energy Information Agency, and do not equate as “OIL”, but rather they represent the amount of total energy liquids.

Because the United States consumes so much oil, it is refining between 15-16 mbd of oil.  Thus it records over 1 mbd of refining gains.  Refining gains occur because you actually end up with a little more volume than you put in due to the refining and cracking process.  Saudi Arabia and Russia export the majority of their oil so they don’t have much in refining gains.

The chart below comes from the PeakOilBarrel.com which I highly recommend checking out as Ron Patterson does a great job presenting updated U.S. and world oil & gas data.

Refinery Process Gain2

Here we can see that the U.S. enjoys a huge refining gain because it refines and consumes so much oil.  Furthermore, that U.S. 12+ mbd Total Liquid figure also includes what is known as natural gas plant liquids and other liquids such as bio-fuels.

These energy liquids are not considered as oil by the industry.  What is considered as oil, is called “crude & condensate.”  If we were to go by the industry standard for oil, this is an update on how the chart should look:

Worlds Top Oil Producers2

The reason why it is important to differentiate between the “oil” & “total liquids” is that crude oil is the higher dollar, higher energy content and more sought after liquid.  Also, the U.S. is only producing approximately 7.7 mbd of actual crude & condensate while Saudi Arabia is pumping out 10 mbd and Russia 10.3 mbd.

So, for the United States to outperform these two countries, it needs to add 2.3-2.5 mbd of oil production.  To present the chart as Top Oil Producers is disingenuous, if you are including less quality energy liquids that do not qualify as oil.

Understanding the energy situation is the KEY for the precious metal investors, even though they might not see it that way presently.  As I mentioned earlier, shale oil and gas will not be an energy resource or savior to count on for the long-term.  Annual decline rates are so high, the only way to increase shale oil production is by massively increasing the amount of new wells.

The U.S. is able to accomplish this feat of increasing shale oil & gas production because it has the largest amount of drilling rigs in the world.  Matter-a-fact, the U.S. has more than half of all the drilling rigs in the world:

World Wide Rig Count

If we take a closer inspection of the table above, you will notice that the U.S. actually has 500 more drilling rigs than all the other countries on the planet if we exclude Canada.  This is just an amazing amount of drilling infrastructure the majority of the world does not contain.

For the rest of the world to be able to duplicate what the United States has done in shale energy production (which it can’t), it would have to seriously increase its drilling rig capacity.

Genius Investing:  Seeing the Trend Before Everyone Else

The secret to successful investing is spotting the trend before everyone else.  Those who saw the 4-part History Channel series, “The Men That Built America.” understand this principle.

Men Who Built American History Channel

The docudrama starts out with the first man highlighted in the series named, Cornelius Vanderbilt.  Vanderbilt also known as “The Commodore”, made his original fortune in the ship & steamboat business in the mid 1800’s.  However, the Commodore noticed early on, that the railroads were starting to increase its presence in the transportation and shipping industry.

Vanderbilt decided to sell his nautical assets to buy up railroads instead.  The Commodore and later his son, William went on to control much of the railroad business in the United States.

Again, the key to success is to be able to spot the next great investment trend before others realize it.  The majority of investors in the world today have their wealth tied-up in assets that will become increasingly worthless in a peak energy environment.  These assets will disintegrate in value due to a falling energy supply.

Some of the top gold analysts such as Jim Sinclair believe if the dollar was backed by gold then it would restore confidence and faith in the monetary system.  Even though this sounds like a good plan on the surface, it does nothing to change the impact of a falling energy supply on the world’s economies including its $trillions in paper assets.

U.S. Debt & Gold Backing2

The small chart on the bottom right is forecasting the decline in Available Net Oil Exports (ANE) created by Jeffery Brown.  ANE is nothing more than the oil exports available to the remaining 155 oil importing countries minus the top 33 oil producers domestic consumption as well as China & India.

Available net oil exports peaked in 2005 at 40.6 mbd and declined to only 34.4 mbd in 2012.  This means the oil importing nations now have 6 mbd less of oil to import than they did just eight years ago.

Interestingly, the price of oil has risen more than three-fold since this time period — amazing how increased competition on top of falling supply can push the price of a commodity much higher.  So, here we can see that there are additional energy factors to consider besides overall global oil production in the total energy environment.

Why?  Because Available Net Oil Exports have declined even though overall global oil production has increased since 2005.  Of course, you won’t find this sort of analysis coming from Stansberry & Associates or even the folks at Casey Research.

Don’t get me wrong, the majority of analysis coming from these organizations is excellent, however I believe their energy information and data is faulty.  This is a critical assessment as energy is the vital foundation of the economic markets.  Thus, their energy analysis will mislead many investors into a much different future than what I perceive from the data I am seeing.

This is where investors need to educate themselves so they can see the INVESTMENT TREND before everyone else.  Presently, precious metal sentiment is in the toilet.  This is due to the manipulation and machinations of the Fed & Central Banks.  Fortunately for the frustrated gold and silver investors, the monetary authorities cannot squeeze physical gold, silver or oil out of a Federal Reserve Note.

Gold and silver will become some of the best investments in the future as they are a store of “Economic Energy”, a term coined by Mike Maloney.  On the other hand, most paper assets are not a store of this economic energy, but rather what I call, “Energy IOU’s.”  Energy has to be burned to create the economic activity to satisfy and pay back these paper assets.

The world is holding onto trillions of dollars of Energy IOU’s masquerading as assets that will have no future…  and the future is now here.

The U.S. economy and world are heading toward an ENERGY WALL and the majority of the public and investors are not prepared for the ramifications.  Certain investments will hold their value or show significant gains, while the majority will decline.

Gold and silver will be driven up to extreme levels in the future as investors switch out of increasingly worthless paper assets and into the precious metals to protect their wealth before it evaporates.

Have you made the correct investment decisions?

The SRSrocco Report will be putting out public and paid reports in the future that will explore, analyze and discuss how energy will impact the precious metals, mining and overall economy.

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28 Comments on "The Key Factor To Drive Gold & Silver To Extreme Values"

  1. Excellent article Rocco. Same as less oil available for exports means higher oil prices, less silver available to industrial users and investors/savers will mean higher silver prices – eventually.

    Say Rocco, one potential fault in your logic – ok, so the US has a huge number of rigs at their shale oil operations, and has to constantly add more, but shale oil output is constantly rising as well. 0,25mbd in 2007 to 2mbd today. I can see that shale is probably uneconomical to extract at current oil prices, but at realistically rising oil prices, wouldn’t it be sustainable for quite some time? So they have to add more wells – does it matter, if adding more wells is rewarded with more oil? I think you’ve mentioned 1:5 EROI for shale oil. This is clearly not as easy to extract like light sweet crude, but 1:5 still sounds sustainable to me.

    • Markus,

      I don’t believe there is fault in the logic, but you do bring up an excellent question worth exploring.

      FIRST: There are only so many sweet spots and drilling locations in these shale oil fields such as the Bakken & Eagle Ford. The sweet spots are exploited first as they are the most profitable then the lesser quality dead-beats are saved for last. Not only will the locations run out (sooner than many realize) but the last wells to be drilled will provide the least amount of oil.

      SECOND: The problem with rising oil prices is that it KILLS THE ECONOMY. We witnessed this back in 2008 when a barrel of oil hit $147. According to some estimates, the price of a barrel of oil above $110-$120 is the level where it kills economic activity. So, even if the price of oil were to rise providing more profits and net cash flow for the shale operators… the public cannot afford that oil.

      THIRD: Don’t mean to nit-pic but that EROI ratio of Shale Oil is 5/1 and not 1/5. The reason why this is important is the ENERGY RETURNED should be on top or the first number, while the ENERGY INVESTED is on the bottom. Thus, shale oil provides 5 barrels of oil for every barrel of energy cost that is invested. If we show the opposite, then it become a net energy loser.

      I highlight this because the Modern U.S. Food Growing & Transportation System has been estimated to have an EROI of 1/10. Which means for every 10 calories of energy expended (invested) in the system, it only returns 1 calorie of energy (as food) to the market. Thus, we have a huge ten-fold energy loser.

      Even though shale oil does have a positive EROI of 5/1, according to Charles Hall, one of the leading experts on the EROI, he believes modern societies such as ours needs at least an 8/1 EROI and more like a 10/1+ to sustain our way of life. I will get into that more in the future.

      LASTLY: Shale oil is increasing in an exponential trend. I provided chart in a prior showing the U.S. domestic oil production from 1930-1970 increased at 1.87 mbd per decade. Shale oil in the U.S. has increased 2 mbd in just the last two years. All exponential trends decline in the same fashion in which they increased.

      While shale oil production in the states will continue to grow for the next several years, the peak will be much sooner than most realize and the decline will be breath-taking to watch.

      steve

      • Thanks for the reply.

        On your first part: makes sense. Do you have any data or articles on hand that go into more detail on this? While it is of course logical that that would be the practice.

        Second part: When oil prices around 100$ do clearly NOT kill the economy, another 10% price increase won’t either. I personally will not be happy, but also will not be terrified of another 10 or 20 or even 50% price increase at the gas pump, or the supermarket for that matter. And I don’t even earn that well currently. I think we are on the same page when it comes to the mindset that the economic level in the western world is not sustainable at this level and is artificially propped up, but I just don’t think another 10% increase in the oil price will do the economy in overnight.

        Third: thanks for the clarification on how to express EROI values. Other than that, all I see frankly are assumptions. You can’t directly compare agricultural EROI to oil EROI. If you got enough oil at 5:1 EROI or even lower, you could sustain an agriculture as inefficient as we have right now. Eventually you’re going to get more efficient at extracting it. So imo it mostly depends on what reserves are.

        I mean, who’d have assumed, in 1850, that you’d actually go through all the trouble to drill dozens of feet deep to get some black stuff out of the earth that you could eventually turn into lamp oil. What grew out of some crazy people digging into hard rock was the biggest industry in the world.

        A lot of assumptions back then were wrong, dead wrong. We have no guarantee either way this time, but I wouldn’t be surprised if shale and other, even harder to come by forms of energy, were to sustain the world for another 100 years, or even longer, if at a lower level, and progressively replaced by renewable energies.

        Metals ore grades are falling, and as far as I’ve read agricultural land around the world is deteriorating – I don’t know how much these two factors will play into the oil picture. I just know I like being a metals investor in this environment. Especially silver, in regards to photovoltaics, although we’d have to mention you can realize PV cells with copper and zinc as well.

        Your last point: that is one hell of an assumption. First, I don’t see an exponential trend, more like an upwards trend. We don’t know how it will develop. Might continue upwards, might flatten out, but we have no, absolutely no way to be sure that a trend that starts out fast will come down fast as well.

        Rocco, you have done some excellent work on EROI when it comes to metals, and you really woke me up to it. So, I don’t mean to piss in your pool. Just want to give some honest feedback. It is usually the most helpful ;). Thanks for all the hard work, I will continue to look forward to your articles.

        • Markus,

          I always enjoy the debate and the feedback. That being said, let’s get back to facts so there is no grey area here or “assumptions.”

          According to this article: 10 out of the last 11 US recessions were associated with oil price spikes. You can read more about it at this link: http://www.theoildrum.com/node/9789

          Maybe you are not impacted by $100 or 10-20% more oil prices, but the overall economy is.

          EROI is EROI. It doesn’t matter if we talking about agriculture, labor or oil… it’s all the same thing when you convert it to the EROI. You must understand that each barrel of oil plays a part in the economy. You need 3 barrels of oil just to pay for the infrastructure of the roads, refining costs, transportation and the depreciation that goes along with that whole system.

          As you are well aware a 1/1 EROI would not help us because that comes from the WELL BORE. The oil has to be transported, refined and as I stated above, you need all the infrastructure as well as the maintenance and etc. So a EROI of 3/1 is needed just to sustain this system. I haven’t even gotten to all the barrels of oil it takes for everything else.

          Does that clear things up at all?

          Lastly, if you were to show that chart above of U.S. oil production to a mathematician, they would look at it and state that the shale oil trend is indeed heading up in an exponential fashion. It may not be excatly an exponential trend, but its close Its definitely not LINEAR. Linear was the move up from 1920-1970.

          Anyhow, once we factor in the huge decline rates and the massive amount of drilling, once the locations run out… then yes it will fall in the same fashion that it went up. If all drilling stopped today in the Bakken, you can take 40% off the oil production by the same time next year. So if they are producing 850,000 barrels a day presently, in one year with no new drilling that falls to 510,000 bd next year and 305,000 bd the year after. That’s the math of 40% annual decline rates.

          steve

          • Still not crystal clear, but yes, that info was helpful. Of course it will be interesting to watch how the production trends continue. Looking forward to more articles from you on the topic. Thank you.

  2. lastmanstanding | October 16, 2013 at 8:00 am | Reply

    I recommend watching the “Men that Shape America.”

    Anyone who is awake will shoot this pos doc full of holes. These guys worked people to death to achieve their fortunes without remorse…I will leave it to you to do your own research.

    My favorite quote from the mini-series is when JP Morgues father says to the son JP jr. ( who is teamed with Edison to monopolize the invention of electricity).

    “Son, I’d like you to accompany me on this trip to England (Instead of messing around with edison), we need to remember where our loyalties lie.”

    Of all of the people that watched this deal, I wonder how many even realized wtf he was even talking about?…and then their is the wonderful, charitable Rockefeller family.

    • Lastmandstanding,

      I actually agree with you. These men used some of the worst tactics to become the wealthiest in America. However, it does not change the fact that seeing a trend before others is still a valid way to invest while others miss the boat.

      steve

  3. Great stuff, as always, SRS! You’ve certainly added nuance to my understanding of the larger energy picture, and how that will impact the mining industry and precious metals.

    Thank you for your tireless research and work!

  4. Thanks for the great work SRS. I agree that they worked people to death. They would have done so in a declining industry or a rising one. And other industrialist/capitalists would have done the same. Marx was right in his critique of capitalism. But that didn’t make socialism or communism a good idea. A non-corrupt capitalism with local economies and sound money is our only hope, and I fear there are too many powerful people opposing that for me to see it.

  5. Yahoo finance has an article this morniing by John Kemp, “Column-
    Why shale oil plays really are different”.

    He rebutts critics of shale oil and makes a few decent points. I’m wondering if you are familiar with his articles? Would this make a worthwhile article to critique?

    I’ve been investing in oil and metals mining for 25 years and have to agree with your research almost 100%. Great web site, keep up the good work. And thank you for your diligence.

    • glenn,

      thanks for the heads up on the article by Kemp. It is also posted at the PeakOilDrum in the comment section.

      Kemp states that the shale skeptics were predicting that production would peak since the Bakken was producing 300,000 barrels a day. Many of the skeptics including Rune Likvern of Fractional Flow and Art Berman of Labyrinth Consulting have been stating that shale oil and gas would peak, but have not given a figure and time. Instead they have stated that the peak would be quicker than most realize.

      Kemp underplays the decline rates. Hell, the North Dakota DMR – Dept of Mineral Resources put out this chart below from their Williston presentation a few years back which I added the EROI ratios. Furthermore, my chart was published on a Zerohedge article last week from Jim Quinn of the Burning Platform’s Blog:

      Again, the chart showing the huge decline rates of a typical oil well in the Bakken, comes straight from the North Dakota Dept of Mineral Resources. So, I don’t know why Kemp is stating that the declines are not that severe…. hell, they are severe, and the state agency is the one admitting to it.

      Also, Kemp exclaims from the data he has obtained that the peak will be between 2015-2025. I highly doubt that the peak will be anywhere near 2025 with annual decline rates at 40%. Let’s say that the Bakken does peak at 1-1.2 mbd in the next few years… what does that do for the United States after that???

      Once drilling stops, oil production falls off a cliff.

      As for Kemps “Manufacturing Model” of shale oil and gas… Art Berman proved that the manufacturing model doesn’t work in shale gas because there are only a few counties in each field that contain sweet spots whereas the remainder of the wells in the field(s) are not productive and the majority are not commercially viable.

      I will get into more details about shale energy, but the fact remains, any trend that moves up exponentially, will decline in the same fashion. Because shale oil and gas production have increased in a huge way in such a short period, is really not something to brag about when we finally witness the nasty rapid declines in the future.

      steve

  6. Let’s assume that conventional crude were completely gone tomorrow and shale/tar sands/deep ocean oil is the ONLY thing available. Do you have an idea what the price (in 2013 $$) of a barrel of oil would be? A gallon of gas or diesel?

    • webbster,

      That is a tough question to answer. Deep water is able to produce oil cheaper than shale oil and many companies are making money at the present price of oil. The problem though is the huge decline rates in Deep Water. Thunder horse Rig is one of the largest offshore rigs in the world and was supposed to produce oil for 25 years at a peak of 250,000 barrels a day:

      Here is a chart of Thunder Horse oil production:

      Thunderhorse never hit 250,000 but did produce over 200,000 barrels a day for over a year and a half before it went into terminal decline. The chart shows that production has fallen to zero.. that is due to maintenance. However, production was about 70,000 barrels a day before the shut down, which was a third of its peak production.

      So, the real problem is not the price per barrel, but the huge decline rates. Furthermore, one of the huge factors not being considered in shale oil or gas is the EXTERNAL COSTS. For example, the huge fleets of trucks that frack and transport shale energy are destroying the local roads. Estimates are that road repair in some states are in the $billions, but state and county revenue from the shale energy companies is only a fraction of this amount.

      The shale energy companies would rather keep their profits (wait a minute… they don’t have many profits…LOL) rather than pay their fair shale in repairing and maintaining the state and country roads… they rather have the tax payers do that. This is another example of supposed inexpensive shale oil and gas, but the opposite is true if we factor in all the external costs.

      Also, as I mentioned in a previous comment, as the price of a barrel of oil goes above $120, it DESTROYS ECONOMIC ACTIVITY. This is the dilemma.

      steve

      • I think economic activity starts restricting at even much less than $120/barrel, perhaps more like $80/barrel starts causing heavy breathing. We built this country on oil priced REALLY low, wasn’t oil something like $1.69/barrel right after WW2?.

        Ironically, the $80-ish price required to make fracking desirable is just the price that economic activity starts getting punished.

        • webbster.. you are correct. I believe we cannot afford high oil prices as the economy is being kept alive by monetary printing in the $trillions. Even though prices at say $80-$100 puts stress on the economy, $120 would through it in a recession.

          steve

  7. High quality article as usual.

    I think investment in PMs will give us sense of safe and stability when energy, commodities and food price goes sky rocket in hyperinflation. However, I am not so sure it will provide much of the feel rich effect because as energy become more scarce, there will be growing conflict over energy. Everything we own will become ‘need to have’ rather than ‘nice to have’.

    • Joe,

      Thanks for the reply. The reason why I believe that Gold & Silver Investments may indeed give the individual significant gains, is due to the huge move by investors out of worthless paper assets and into the precious metals. Because there is very little in the way of physical bullion supply out in the market when we consider that only 1-2% are invested.. this is a powder keg waiting to happen.

      I am not saying this will occur tomorrow, but we must remember people put currency away in their retirement plans for decades. So what if we have to be patient and wait a few more years.

      steve

  8. Did I miss it or did you mention the next great trend? Perhaps you were speaking of PM’s?

    • Greg,

      Sorry… I should have been more specific. It was the precious metals. However, they will not be the only investments that will be the GO TO ASSETS. I will get more into that in the future.

      steve

  9. I have a hard time believing that 1% is invested in metal. And even if that is the case, they certainly are not holding most of their wealth in metal.

    Gold and silver attribute something like a MILLIONTH of ONE PERCENT of global financial assets. Obviously that is something of the point you were making in this article, but that is just insane.

    A small investor like myself can own a millionth of the entire silver market fairly easily

  10. So how was the Great Depression as bad as it was? As far as I can tell, oil was dirt cheap, water tables were full, agriculture wasn’t yet tapped out (except the Dust Bowl I guess), the environment wasn’t yet a cesspool like it is now, overpopulation wasn’t as bad. And people were apparently more polite, like even the bums said “yes mam”, ” have a nice day”, not like the demented shit we see today.

    Where’s the EROI argument for their screwup?

  11. Great article. I think it is helpful to understand a little about the difference between producing from shale and conventional reservoirs. Oil reservoirs are located in rocks, like sandstone, limestone, shale, etc. Two important rock properties with respect to oil production are porosity and permeability. Porosity is the void space between the rock matrix grains and it is where the oil resides. Permeability is the conductvity between the pore spaces. Shale reservoirs have minute permeability compared with conventional reservoirs. Permeability is a determining factor for an oil well flow rate .

    Horizontal drilling and hydraulic fracturing made shale production economically possible by increasing the well bore surface area exposed for production. A vertical well in a 100 foot section will have 2% of the exposed surface to production as a 5,000 foot lateral through the same reservoir. Hydraulic fracturing literally splits the formation opening a fracture that may be about a quarter inch wide and have several thousand cubic feet of volume. Propant is mixed with the fractuing liquid to hold the fracture open following the treatment. It is not hard to imagine the increase in surface area exposed to production following a fracture treatment.

    While the above two technologies in combination make it possible for economic oil shale production, they do not change the fundemental rock properties, extremely low permeability being an important factor. One can think of low permeability as very high resistance to flow. Once the near well and fracture face pressure declines from production, oil must flow a greater distance in the highly flow resistant matrix rock to get to the well bore and that is where the increasing resistance to flow developes over the production life of a well

  12. @Dave. Very interesting bit of information. Thanks for sharing.

    @ Webbster. I think we all know we are headed to a place far darker and far more uncomfortable than the great depression. It’s a matter of situating YOURSELF and YOUR LOVED ONES away from it to the best of your ability. That’s all we can do.

  13. Energy is certainly a factor but I look at the short term driver of gold pricing differently.

    China has been buying massive amounts of gold. Their net imports via Hong Kong august ytd amount to 1154 tons or about 1700 tons annualized. China imports gold through other ports. China also is the world’s biggest gold miner with annual production approximating 450 tons. The global supply of gold in 2013 is around 3600 tons – so China is consuming about 70% of global supply.

    China fx reserves are $3.6 trillion about 3.5 times the fx reserves of the USA and Eurozone combined. At any time, China can take over the gold market. 3% of their fx reserves equal 100% of miners 2013 annual revenues. China wants to accumulate as much gold as possible at fire sale prices but they will maintain a floor price of $1200 oz. to encourage domestic ownership. China’s objective is eventually to become the reserve currency to support their consumption based economy.

    Western Central bankers have about 23000 tons of gold on their balance sheets. A significant % of this reserve has been leased out to the bullion bankers. Estimates range anywhere from 8000 to 16000 tons. This has been going on for many decades. The bullion bankers have been selling the leased gold and buying sovereign debt. The leased gold has been included or “masked” in the recycled gold data put out by the world gold council. The gold leases by the New York Fed are called evergreen leases – one year leases with 15 years of renewal. They are alleging operating leases so they’re off balance sheet.

    Does not take a genius to figure out what would happen if western central banks were pressured into terminating gold leases. The bullion bankers would be dead on arrival.

    The bullion bankers are fighting for their existence. If China backs the yuan fractionally with gold, it’s going to force the hand of the western central banks and throw a huge money wrench into the global economy.

    The bullion bankers are losing the price battle to the Chinese. They have liquidated 468 tons or 35% of the gold from the gld and the Chinese and Indians have easily soaked it up. The comex warehouse stocks are exhausted and the risk of default is high. Gofo was negative for about 1 month, then swung positive for several weeks when gold pricing rallied some but has now reverted back into negative territory with gold dropping sub $1300. All the negative press put out by the bullion bankers is simply not working and they know it.

    At some point the bullion bankers will give up and be forced to work out some plan with the western central banks. If it becomes political, there is a remedy – the western central banks will execute the living wills of some of the bullion banks.

    Above is my opinion.

  14. Hi Steve any idea when you’ll be ready to premiere your first financial analysis of mining companies to own long term in the coming future

    • Adam,

      I appreciate the interest in the mining report. Part of the delay is getting all the data I want in the report as well as a good structural outline. Also, I am waiting for the third quarter results to come out.

      My biggest hurdle is making sure I have the best quality data and information. I have received replies from many individuals who were unhappy with their subscription services and many got burned by organizations who told them to keep buying stocks on the dip and now they are seriously showing losses.

      My Report will try to give investors and also those who are interested in the data a good understanding from a different perspective. Some analysts go through a large formula for NPV – Net Present Value, and that can all change when prices drop the levels they are today. So, then you have to redo the whole damn calculation.

      The best miners will be those who make the most profits per ounce and have plans to grow production. Sure, some juniors might make some a great deal of money if you find the right one and get in and out at the right time, but this is more like gambling.

      Anyhow… please keep a watch out as the Reports will becoming out soon and I am sorry for the delay.

      Besides the Silver Miners Report, I will be putting out a smaller one on the U.S. Gold & Silver Import-Export data that shows some big changes that investors would probably be interested in.

      steve

      • Thank you steve for your response.. I’ve been stacking for a long time now and I want to have a stock portfolio so my eggs aren’t all in one basket.. I’m long trains because all the data I’ve looked at tells me they’ll become very important to our transportation system in future.. Now I want to add miners the real wealth producers.. I’ll be waiting on the reports and thank you for everything you do

  15. Seeing AGQ’s move in less than 6 months from $20-178 during the last run up in 2011, I cashed in my physical silver for AGQ on the logic that there appears to be another run up in the making. If it is
    extreme as suggested here AGQ could go parabolic.

    Given we are at production cost,I really doubt that silver, with its multiple and essential uses, will be range bound for very long.

    What do others think of a time frame this strategy?

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