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Submitted by Cameron-Hanover
Poor Jimmy Pup had some perma-gloomer "Peak Oilers" on his show over the weekend.
It is pretty much a guaranteed lock that when one of these guys comes on FSO, within days, crude oil and gasoline get slammed in the worst decline in 3 months.
And forget about natural gas, we are awash in it for probably 300 more years.
Probably the most ill-timed interview of the year.
Not much different than the old days. When Eric King was interviewed by FSO, gold would immediately enter a 30% - 40% correction.
I've been hearing Peak Oil all my life and its a bunch of crap. There are new finds everywhere in the world and we just corked a well in the Gulf which was producing. At certain price points, old wells reopen. Plus, other forms of energy begin to be economically available at higher prices which begins to ease demand. It's not just about oil, but all energy sources. It is also about subsidies and government regulation but that's another issue.
Gold and silver are excellent long term bets still because of the crushing amounts of debt worldwide and the concurrent currency debasements. If you're a short term trader, then pullbacks and spikes are important, but if you're hedging macroeconomic stuff then pullbacks are just opportunities to try and time the bottom for another buy. You could even try to dollar cost average your metals if you're a regular buyer.
I don't think the long term trends have really changed with competitive currecy debasement, potential protectionism and heavy borrowing across the Western world.
It seems as though you're misunderstanding the definition of peak oil. It is the point at which global oil production peaks and begins to decline. What it is not is the point at which we run out of oil completely. The problem we face is rising oil prices as supply can no longer meet growing demand.
And for the record, oil production has been flat since mid 2004. Peak oil is no longer a threat off in the future but a reality we currently face. Jeff Rubin ties things together quite nicely: http://aspo-usa.com/
Sorry Robo, you are missing the big picture.
What sets prices of anything is output which produces a return. At high input prices there is no return leaving nothing to support the high prices.
The high real price of crude kills profits which in turn kills demand. We just experienced a 'mini- spike'. The world is a lot poorer than it was in 2008; $84 is the new $147. The reason the real price (price measured by output) is so high is because all of the cheap oil has been depleted. By availability measures Peak Oil took place in 1998!
After the spike or bubble, if you prefer, comes the decline as the goods on the markets seek buyers WITH MONEY.
My brother used to say over and over, "They aren't making any more land," meaning land prices should always go up. I would tell him, "they aren't making any more people with money."
In 2009 I had crude @ $65 by the end of the year, with deflation fetching a grip it looks like a good call.
The other side of that is if they didn't make any more money everything would go down in nominal prices. If we didn't make any more people, land values might not go up either.
Markets respond to pricing. Manhattan did make more land by using landfill from other buildings and sources to make more acreage. A tall building is essentially making more land by going vertically. Oil is the same. At a certain price or value we will go find more, synthesize more or convert to other energy sources. We could afford to clean up coal which is plentiful. Electric cars might become more common reducing demand. Supply and demand are not static. Therefore nothing, including gold is guaranteed to go up forever...even if inflation makes it feel like it.
Commodities and general consumption may crash from this shadow banking black hole but who will pay the debt that backs up all this fiat.
Central banks will be forced to buy Gold and not debt and indeed subsequently base metals and fuel will crash when China and the rest of the world cannot afford to engage in GDP dreams but who will pay this monstrous debt when consumption crashes.
If banks want to preserve debt money they will have no choice but to buy the barbarous relic to sterilize the debt.
now we're talkin'.
+1 DofC. Who is going to buy MBS and even if they do, that market is dead or at best flopping like a hooked catfish.
Oct 19, 2010 3:01 AM ET
Silver exports from China, the world’s largest, may drop about 40 percent this year as domestic demand from industry and investors climbs, according to Beijing Antaike Information Development Co.
Shipments may decline from about 3,500 metric tons in 2009, said Feng Juncong, chief analyst at the state-owned Antaike, without providing a specific forecast. Customs data show exports plunged almost 60 percent to 970 tons in the first eight months. Cancellation of an export rebate in 2008 is also hurting shipments, she said.
Reduced exports may bolster prices that are trading near a 30-year high on speculation that governments worldwide will take further steps to stimulate their economies, weakening currencies and increasing demand for assets that are a store of value. China, the third-largest producer after Peru and Mexico, revoked export rebates in August 2008 to curb use of natural resources.
“There is huge demand in China this year and that has affected exports, which were already hurt after the tax rebate was abolished,” said Ng Cheng Thye, head of bullion at Standard Bank Asia. “The demand is coming from all areas, including jewelry, investment and fabrication and this has resulted in a physical market shortage in the Far East.”
The metal for immediate delivery touched $24.92 an ounce on Oct. 14, the highest price since September 1980, and traded at $24.2750 at 2:28 p.m. in Singapore. Industrial applications for silver, including electrical conductors and batteries, represent about half global demand.
“China may sharply reduce its silver exports this year following the scrapping of the rebate and as domestic demand picked up amid expectations for higher inflation,” Feng said. This year’s 5,100-ton quota is unlikely to be fully used, she said.
Silver has rallied 44 percent this year, outperforming gold and copper. In the short term, prices will be between $20.50 and $25.50, GFMS Chairman Philip Klapwijk said on Oct. 16. “Silver is likely nearing a top now, and that it has more downside in the short term than upside,” he said. “But we remain bullish in the long term.”
China’s silver production, including mined, by-product output and recycled material, grew by an average 14.9 percent every year in the 20 years since 1990 to 10,348 tons in 2009, Feng said. Growth was mainly because of the fast-growing production of lead, zinc and copper, which generates silver as a by-product, Feng said.
The country’s silver output dropped 1.9 percent in the first eight months to 7,445 tons, she said. About 60 percent of China’s silver mined output is in the form of by-product of base metals, according to Antaike estimates.
An expected drop in lead and zinc concentrate supplies will affect domestic smelter production, weighing on China’s silver output growth, she added.
“There are Chinese investors now hoarding silver, along with other resources, amid anticipation of higher inflation,” Feng said. “China is short of resources so these investors believe the metals will be more valuable in the future.”
Tons of body bags out there from those who stayed too long at the GLD and XAU party:
Jim Willie CB
too many others to list....
From Harvey Organ:
When you read the headlines you get the wrong impression as to what is going on.
Sorry, but those bags are filled with freshly printed US Federal Reserve notes. Bank of America is about to demonstrate what "velocity of money" means.
It's hilarious when goofs like Johnny Bravo and Robo come out of the woodwork when gold has a pullback. How uneducated can you be when this has happened many times since the early 1990's. Do something better with your time.
Wow, we are back to where we were last Friday!
And by the end of this month, we will be back at the highs.
Those guys listed trade in & out although they do not encourage their followers to do so. Most people don't like to, want to or know how to trade.
Robot trader you are using the oldest trick in the traders book - fear , even more powerful then greed.
Fear may indeed crash gold.
But how do they sterilize the debt ?
All that fiat with nowhere to go , poor fiat.
ONE more down draft at most; then the PM correction is over. A lot of guys got in at the end.
NO thing has changed the fundamentals today.
The PRC's .25 raise doesn't do it; nor does the bank news.
The USD was terribly oversold and Geithner and Bernanke had to get in there and run their lips to jawbone it up. The USD was nearing the event horizon. Anyone could see a bounce coming.
Wow, I sound like Jim Sinclair! But I happen to agree with him...
My favorite Silver dealer Monarch was cleaned out today by the dip. They are a smaller bullion dealer with a hand poured old mine look. Not much to pick from after this afternoon. Kind of tells you something.
Really? I just checked them. "Available" on every line I checked. So...what is your bag?
Hog, are you out of the the Utah Area? I find Rust Coin to be helpful in product and any Questions. Always lookin for good coin folks...they are like family.
I do not think you folks yet understand Peak Oil.
The New Normal has no price discovery in a world where China secures future oil production transit with no published price.
Futures based on a dipstick in Cushing, Oklahoma no longer have any relevance.
Only one thing matters. What comes out of the ground at what rate. There is no other measure of supply, and there is no flowmeter on parameters considered state secrets, as Saudi production is. The measurement inadequacy is such that many quotes are from a pair of binoculars that try to judge the depth of a tanker in the water.
Forget price as an indicator. It likely will not provide you any warning at all. You will simply wake up one day and hear on the news that trucks aren't making deliveries. That will be your only indicator that they don't have fuel. Just 36 hours ago the French were saying they have plenty of fuel and no gas stations were dry.
There will be no warning. None.
Yes; and don't forget National Guardsmen at each pump.
Thought this was about oil? More importantly "the divergence between oil and natural gas" yes, yes? No one asks the simple question "how is it possible for oil to be so expensive when nat gas is being sold at a massive loss"? The answer i think must be technology. Nat gas is the "oil of the 90's" as below market prices are the norm in order to "ante up" in the game of "nat gas tech." Oil? Who gives a rat's ass about it.
Who? Everyone who eats food delivered by truck.
You are right...who gives a rat's ass...as your post is incomprehensible.
Try again...and try to make sense this time.
And "nat gas tech" are you freakin' kidding?
What are you smoking? Crack? Weed? What?
Did you think up this theory on your own? And was it out of desperation or out of necessity? The difference between the two is important.
Virtually every bus, garbage truck, transit hauler, and public vehicle here in Los Angeles is now running on natural gas. Except for cop cars.
It's pretty much over for oil.
Natural gas will be the new fuel of the future.
Virtually every car sold in the country runs on oil products. Even in wonderful LA. You're out to lunch on this one.
....and largely made out of an oil byproduct called plastic.
I do not think you have very much knowledge about this matter. I encourage you to locate all the trucks that travel interstate and are fueled by natural gas. I encourage you to count them.
I assure you . . . it won't take any of your time at all.
Nat gas garbage trucks do not carry food from Iowa to NYC, nor does any other sort of nat gas truck. Oil and gasoline became, and are, what they are for a reason. They are not simply the best way to fuel and feed civilization.
They're the only way.
Factoid: Per unit volume, oil has what % more energy in it than CH4 (natural gas, methane)? Answer: No, not 5X. No, not 10X.
1000X. Oil's energy density per unit volume at room temp is 1000X more than nat gas.
Methane is not butane or propane. It is not liquid at room temp. If you spend the money, energy and time to get methane down to liquid temps, and then do the volume comparison, it is still just more than half as energy dense. Good luck finding cryo cooling facilities for LNG at every 7-11 across the country.
Oil is just incredible stuff. Civilization was built on it. As it departs, so will civilization. And you.
education is futile for the can't eater equivalents...
Peeps mention fuel prices and they immediately thing of the pump price of gas.
It's not the gas, it's the cars, the highways the cars run on, the stores, offices, malls, hotels, resorts and houses the highways connect and what is necessary to keep it all together and running. Oil is in every bit, not just the gas pumps.
High prices for fuel cost businesses profits which results in lower wages and higher unemployment. The consequence is less funds for all the other stuff besides gas. People can afford the gas, they cannot afford the house or the jet ski or the vacation. This ricochets back through the economy as more business- and job losses.
The constraints on fuel are bankrupting the world economy from the bottom up. This is why credit infusions have had no effect on output. What is needed is cheap fuel not cheap money. The Fed cannot print oil wells.
At the same time there are cost of surplus issues. The massive 'car infrastructure' has associated higher management costs. Building/spending more has diminished returns. Our economy does not return much if any on consumption which also adds to cost.
With the cause of economic malaise being fuel constraints the only solution is conservation. Otherwise fuel constraints will bankrupt the entire world economy and conservation by other means will be imposed by circumstances.
If America wants to drastically reduce its fuel consumption I would suggest a consumer goods rail network be constructed to transport goods to state light truck nodal points rather then the trucking goods across your vast country.
Its not as sexy as high speed rail but I imagine the efficiencys would be very large by comparsion.
Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. cheap vps
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