Silver as an investment

Jim wrote:Quote from Shelby:

"The whole point of my new strategy, is you always sell gains, and buy consolidations, that are more than +/-1% a day."

Sounds good, but I don't want to miss the big move. When it comes I think it will be up big, in a flash. Then a lot of persons will get excited and buy at the temporary top, then they will take it down.

Tried the consolidation game with Hecla (HL). It worked a couple of times, then I missed out on the latest 100% move.

I only sell a small % on each +2% move, and rebuy that small % on each -2% down. So I will capture the big gain as well.

Shelby wrote:

Jim wrote:Quote from Shelby:

"The whole point of my new strategy, is you always sell gains, and buy consolidations, that are more than +/-1% a day."

Sounds good, but I don't want to miss the big move. When it comes I think it will be up big, in a flash. Then a lot of persons will get excited and buy at the temporary top, then they will take it down.

Tried the consolidation game with Hecla (HL). It worked a couple of times, then I missed out on the latest 100% move.

I only sell a small % on each +2% move, and rebuy that small % on each -2% down. So I will capture the big gain as well.

So far, I am averaging 0.1% gain per trading day (not compounded), or roughly 26% per year annualized.

BINGO! Silver may be the reason for peak everything

Did scarcity of silver force PTB to do peak energy?

Hommel asserted that USA annual silver consumption is 0.6 oz per capita:

http://silverstockreport.com/2009/silver-better.html

Hommel wrote:"At the end of World War II, the age of electronics began. Prior to WWII, most families in the US did not have many electrical devices. After the second great war, homes began buying things like refrigerators, washing machines and dryers, dishwashers, blenders, toaster ovens, electric can openers, TV sets, air conditioners, and much more, of course.

If you look at the "statistics" you can see that the per capita consumption of silver in the USA increased by about ten times in about a 3 year period, and it has stayed rather high at about 6 tenths of an ounce per person per year ever since."

Norway consumes 2.89Moz/4.8M = 0.6 oz per capita, and Finland consumes 2.22Moz/5.3M = 0.4 oz per capita:

http://images.library.wisc.edu/EcoNatRes/EFacs/Argentum/Argentumv02/reference/econatres.argentumv02.mukherjeeinitial.pdf

China's silver consumption nearly doubled from 35Moz to 60Moz (4% to 6.5% of world demand) from 2001 to 2005, but yet this is only 0.05oz per capita:

http://www2.goldmansachs.com/ideas/brics/book/BRICs-Chapter20.pdf (see page 5)
http://www.silverinstitute.org/supply_demand.php

While India's silver consumption has decreased for 129Moz to 91Moz (14% to 10% of world demand) from 2001 to 2005 (0.1oz per capita), this is because as it modernizes, India undergoing some shift from physical saving in precious metals to using banks, and India is 1/10th as industrialized as China per capita:

http://www2.goldmansachs.com/ideas/brics/book/BRICs-Chapter20.pdf (see page 3 and 4)

If China and India alone are allow to develop their consumer economies, and their annual silver consumption increases to 0.5oz per capita, this would add 1Boz of annual demand to existing 900Moz of demand, but the annual supply of silver is only 900Moz and there is less than 1Boz of physical silver float in the world:

http://www.coolpage.com/commentary/economic/shelby/Silver%20Up%20To%205x%20More%20Rare%20Than%20Gold.html

The world will simply not be able to move forward to a NWO with consumer credit widespread in the developing world, without driving silver price to the moon.

<<<<-----Why is "Wound Care" fastest growing use of silver by middle of next decade? WW3?

This is perhaps why China has been favored over India for near-term industrialization, with its Yuan peg keeping their population sufficiently impoverished, while the Indians are slowly financially modernized enough to decrease silver monetary consumption enough to offset China's rapid rate of (but small amount) increase in silver consumption. And this may explain the desire to curtail energy production (prices too low, carbon caps, nationalization of energy) in order to prevent a consumerism boom in developing world too soon. It seems it is necessary to first complete a destruction of wealth in the western world, in order to be prepared to bring that 16Boz of silverware heirlooms to market as scrap at high but offset by fiat inflation prices in future. This will insure that the western populace does not reap the reward of the rise in the silver price that must come eventually. This might also explain the rumor that India recently paid the IMF in silver, for some of its 200 tons of gold. The might also explain the alleged engineering of H1N1 viruses, as means to curtail the population and thus moderate an increasing consumer demand for silver:

http://goldwetrust.up-with.com/health-f5/preparing-for-coming-crisis-t41-30.htm#2339

It is clear to me that it is probable that the Bilderbergs have decided to restrain world growth while they inflate away the fiat currencies, and to limit energy supply, so that any skyrocket in the silver price due to consumer demand will be moderated and offset by rising prices of everything else.

But how is that strategy going to play out? What natural constraints can not be avoided? And what is the timing?

As long as they accelerate the fiat debasement of the westerners proportionately (per capita) faster than the developing world grows (real growth, is purchasing power measured in real consumer goods), then the rise in silver consumption and thus price should NOT cause the westerners to reap any real wealth benefits on their silver heirlooms. This works because the western population 1/5 of the developing world, thus per capita debasement rate of the west can be 5 times faster than the per capita growth rate of the developing world. Thus the price of silver and the price of everything else can move up rapidly in dollars, while the developing world per capita real wealth is growing as 1/5 as fast in absolute amounts (although growing very fast in percentage terms since their per capita wealth is very low).

The problem is that as the developing world's absolute wealth grows, the rise in consumption of silver will grow proportionately larger in absolute amount. So there is some day of reckoning where they price controllers will not have enough physical to keep silver price from rising slower than gold. Thus far, they've been able to keep this under control using ETFs, futures and masking the trend with volatility. But at some point this control will likely fail. What does the PTB do then? I say that is when it gets dangerous and chaotic. War and economic takedowns are possibilities. However, they might not prefer that outcome because they might lose a lot by going counter-trend to the developing world youth desires and dreams. They spent a lot building up a TV generation of socialists faithful youth in the developing world.

I will only conclude that silver is undervalued based on the fact that unlike gold (both of which will never come back as currency as I recently explained in detail), average global silver per capita use is going to skyrocket at a time when the world will have to repair itself from all the damage done by the manipulation of energy and fiat during this shift from 300+ million boomers entering workforce in 1970s to 3+ billion entering now.

So if you are willing and confident to holdsilver a long time, in spite of any tax and other risks, then it is in one way better leveraged than Gold long-term. But I just don't think you want to put all your capital in silver. There are many risks along the way. Volatility could be very high as well, as the PTB play with oscillating business cycles to try to keep people from gaining a firm footing in any trend. Do not forget the story of the talents (the one who buried his talents was scorned the most).

CONCLUSION: In case you didn't get my point, I am saying that as silver was de-monetized, the PTB was able to allow huge growth and inflation, but now that silver is getting scarce, they can't allow growth while they debase, because it runs the risk of reversing their gains by restoring value to silver (16Boz held by the public in silverware, if silver goes to $1000 too fast, that is $16 trillion loss). So they are determined to first destroy growth while they massively debase, by manipulating prices of commodities too low and having produces hedge forward at prices too low to sustain or increase production. This will end with a giant crash. They prefer the crash than to let growth grow unabated and send the silver value to high out-of-their-control. If they can instead debase while they crash the economy, then they can maintain their gains while silver is allowed to rise in fiat price. However, I am saying that this will get away from them, and then they will have to resort to force to maintain control. This is why precious metals could be so dangerous. They will try to do their force via taxation and non-chaotic methods, but in worst case, they can go to full scale war, but that may cost them a lot in the developing world. I think the PTB is very worried right now. They are only barely in control. They do not live forever, they want to get to the NWO in their lifetimes.

Apparently, Bernanke scored 1560 out of 1600 on his SAT. Perhaps they think they can manage the transistion to higher silver prices while debasing and locking down the west, where most of the silver may be in silverware heirlooms. Maybe they don't have to take us all the way to all out war. Maybe the developing world can grow (less so in real terms, but still growing enough to prevent full scale social disorder), just enough to be offset by huge debasement in the west, trapping the silver holders there with taxes and capital controls.

The move to digital cameras bought them some time. They've even outlawed the use of silver in washing machines in western consumer nations, even though my Samsung washing machine and refigerator both have silver ion filters here in Philippines. They did opt to go with the trend of increasing electronics, because I guess the theory was that it made the silver uneconomic to recover from landfills, and thus would not be a loss to the PTB (by not being a gain to the population), when silver eventually has to rise in price. The basic push has been to get the precious metals out of the public's hands without incurring losses. If the PTB incurs a real loss, it means they can never (repeated cycling) or more slowly (2 steps back for every n steps forward) get to 100% NWO where no one holds precious metals.

I think a temporary peak (as happened in 1980) energy is not a permanent effect of geology, but rather caused by decisions of the PTB in terms of price fixing (too low), nationalization (mismanagement, waste), global warming nonsense carbon credits (scaring away investment in carbon energy), etc.. Buffet knows what is going on. That is why he first tried to buy silver. Then he probably negotiated for better seat in the house, getting priority shares of govt bank bailouts, and buying $44 billion railroad to leverage against the disaster coming in energy.

Bix Weir has some interesting comments:

http://news.goldseek.com/GoldSeek/1258527840.php

Heard Dines speak today. He said silver is going to $50, then to $100.

Jim wrote:Heard Dines speak today. He said silver is going to $50, then to $100.

Jim could you email a link to this post to Dines? (right click the Title above and choose "Copy Link" then paste into your email). I think Dines would be interested to read this, given his uranium energy focus in past...

Also someone may want to email this post to Jason Hommel. I do not think he reads my emails.

Shelby wrote:...The world will simply not be able to move forward to a NWO with consumer credit widespread in the developing world, without driving silver price to the moon.

<<<<-----Why is "Wound Care" fastest growing use of silver by middle of next decade? WW3?...

https://www.kitcomm.com/showthread.php?t=5356

"Overall, our new solar cells increase power generated by 30 per cent," said Dr Kylie Catchpole, co-author of the study.

As part of the process, UNSW researchers, led by Phd student Supriya Pillai, place a thin film (about 100 nanometres thick) of silver onto a solar cell and heat it to 200C.

The film breaks into tiny 100-nanometre "islands" of silver and raises its light-trapping efficiency...

http://news.cnet.com/8301-10784_3-9715673-7.html

...Currently, thin silicon films are less than 10 percent efficient at energy absorption. The islands of silver film are about 100 nanometers thick and can boost efficiency of the film to 13 to 15 percent...

Thus, I calculate that will only consume 0.33Moz of silver for every 1.3GW of thin-film solar power: 1000 W/sq.m x 13% = 130W per sq.m. 10 million of 100 nanometers in a meter. There are 1 million cu.cm in 1 cu.m. There are 1/3 oz of silver per cu.cm.

http://forums.silverseek.com/showthread.php?t=2898

Silver demand for use in the manufacture of photovoltaic (PV) or solar cells could increase to as much as 1 270 t/y by 2012, Virtual Metals estimates in its latest Silver Book, published in collaboration with Fortis Bank.

Silver is used as the 'metal of choice' for grids placed on the front and back contacts of the silicone-coated cells, thanks to its exceptional conductivity relative to other materials...

[.......8<......]

...“The conservative outlook of PV growth to 2012 is 13 GW, which brings our estimate for that year down to 1 111t, but the most aggressive industry forecast is 52 GW, which would imply 4 446 t of silver,” Firman adds...

So they are estimating that by 2012, 36 Moz to 144 Moz of silver per year consumed (for 13 GW to 52 GW), which seems to jive with the chart above.

So for non-thin-film solar panels, silver consumption is about 1oz of silver per 364 Watts for the top electrode and interconnections between cells. Whereas my prior calculation above, showed that for thin-films, the consumption might be 1oz per 3939 Watts for method of increasing the efficiency by 30%. However, thin-films that use a glass back substrate (e.g. #1 is First Solar with 1 GW of annual production) still need to use a front electrode with highest conductivity (so as to not obstruct too much light), whereas, NanoSolar has a back electrode and substrate aluminum method (see page 12 on the link) which avoids the need for any silver (but they could still maybe benefit from the silver nano-islands). So if thin-film becomes more popular, then estimates for silver consumption could be cut by 1/10 or even 0. However, thin-films cut the cost per Watt of the solar cells by 40+%, and this silver islands treatment cuts the cost per Watt by another 24% (10 to 13% efficiency increase), so instead of a 10 year return on capital, we maybe bring it down to 3 years and thus we could see an explosion in the use of solar panels given that the global electricity usage is expected to increase from 10,000 GW to 30,000 GW by 2030. Note that 10,000 GW / 3939 W per oz = 2.5Boz of silver. If most still use silver on the front electrode, then 10,000 GW / 364 W per oz = 30 Boz of silver. Given that both First Solar and NanoSolar are back ordered years into the future, we can safely assume that silver use due to solar will be increasing for years. Perhaps the flattening of the use of silver for solar in the chart above, is because of the expectation of new technologies such as NanoSolar, but I doubt that flattening will be achieved.

Also, there are a wild card, that could completely alter the world we live in. Solar nanoantenna or nanowires (not to be confused with the silver nano-islands above which only raise efficiency from 10 to 13 percent) apparently increase the efficiency of solar panels 5x to 80% by exploiting 3D resonance (imagine nano-meter size tuning forks), which would achieve or exceed grid parity (and yield return of capital in range of a year or less), and 1000s of GW of solar cells could become a reality with billions of oz of silver consumed. Note this technology was apparently discovered in 1986 (after reading top of page, press Ctrl+F and search for "Joe at April 3") and may have been suppressed by the big corporations. Although gold has been used where infrared light (666nm) is the desired focus, in fact as chart below shows, the visible spectrum (500nm) is where to get the most energy from sunlight, and silver excels at that spectrum (see page 7 for "Conclusion") [1]:

<<<---click and see page 5

Note that wind power is not a viable alternative for individual installations.

As for energy storage for individual solar installations, the most efficient is to simply feed your excess power in day to the grid (during times that grid load is peak and grid electric cost is highest) and your meter runs backwards, then consume from the grid at night, so you don't need any local batteries.

Perhaps the reason we can't buy FirstSolar or NanoSolar cells at the manufacturing cost of < $1, is I deduce because that is their cost, not the cost when distributed retail after their and supply chain profit, also because that is for cells only not including the cost to build into a panel (which apparently sell for $2.50 per Watt, before recent rebates), and lastly because both those companies are back-ordered due to govt subsidies generated huge demand for solar cells. Also the price of silicon had been very high, so the prices on the non-thin-film cells (a more widely manufactured technology) that we could buy, had been about $4 - $6 per cell, but recently fallen to perhaps below $2 and also reported by Reuters. So now might be a good time to buy the non-thin-films if you can find panels for about $3 per Watt, until the thin-films can ramp up production to hopefully giving us < $2 per Watt panels at retail, and eventually some years from now maybe the nanowire ones coming at perhaps 1/5 the cell cost and maybe < $1 panel cost retail. I see First Solar panels will be available to residential customers in 2009. As of today, I see 20 x 205 Watt panels for $11,000, so that is $2.68 per Watt, with a complete grid tie system quote (not installed, no shipping including) for as low as $4 per Watt, not including some generous tax and rebate incentives from some govts.

Assuming that grid power costs roughly 20 cents per KWH, then $2 per Watt panel, means from 2.5 to 10 years payback of capital, depending on the sunlight intensity+daily duration and temperature in your location, and that is not including total system cost and installation. That means unless you have an opportunity cost investment which can double in 2.5 to 10 years, then buying the panels is wise. However, consider that the panels may be less expensive in future, so maybe your comparative investment only needs to gain 50% in 2.5 to 10 years in order to be a better choice than buying the panels. Assuming one could buy solar panels at $1 per Watt total system cost in late 2010 or early 2011 (bottom in price), and achieve a 1.5 payback on capital in your locale sunlight (1000 W/sq.m is what panels are quoted based on) and temperature, then it might be wiser choice than buying gold, especially if you expect electricity rates to rise in your locale. From that linked map, looks like middle Canada, Andes mountains, New Zealand mountains, and southern Siberia, are the best combinations of sun and low temperature. Leasing may be attractive way to lower your monthly electric bill with only $1000 up front capital cost.


[1] Journal of Computational and Theoretical Nanoscience Vol. 6, 2024–2030, 2009, Gold, Copper, Silver and Aluminum Nanoantennas to
Enhance Spontaneous Emission, A. Mohammadi1, V. Sandoghdar2, and M. Agio2



===============
ADD: Solar panels are projected to increase consumption of silver by 50 - 100 Moz per annum on current wafer technology, and nano technology has the potential of driving that into the multi-Boz consumed in next decade with 80% efficiency.

I can see heavy funding from Google for NanoSolar apparently in attempt to remove silver from the solar threat, but waiting in the wings are 5x more efficient silver nanowires. And why has First Solar's production growth stagnated in 2009 - 2010? Is it because of the financial crisis? And also due to increasing competition from traditional non-thin-films and Chinese low-cost producers.

We simply can not move to a NWO without consumption of silver into the multi-Boz per annum. Something has to give way...and I don't think the pandemic will work...group immunity is much better now due to wide scale world travel...

The CFR is losing its grip on technology centers as more and more research is moving out of the academia that they control. There is an explosion of new technology due to the information spread of the internet, yet we can not achieve one-world harmonization of culture and society without the internet.

Silver has always been the Achilles head of masters in Old Europe. Can they addict the whole world to opium this time? Then pandemic thing is showing they are really desperate. Could that be because they are running out of silver?

You have to look over the trees, to see the extent of the forest:

http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-75.htm#2367 (click to see charts and read the proof)

The essence of Martin Armstrong's long-winded articles, is that those who sow injustice will always be blown away by some very small overlooked detail:

http://www.martinarmstrong.org/files/Objective-vs-Subjective-Analysis-11-1-09.pdf
http://www.martinarmstrong.org/files/Conspiracy-Theories-Cloaking-Reality-10-5-09.pdf
http://www.martinarmstrong.org/economic_projections.htm

Btw, what Martin apparently doesn't understand (or articulate) is that there is an overall global trend of society towards socialism and centralization (NWO), even there can be pockets of local exponential disorder along the way (e.g. capitalism increasing in China). Of course the exponential global order eventually (30 - 70 more years? maybe much longer) fails entirely too (Revelation). It is happening even without some master coordination, because it is a function of human nature and the natural law of 1 Samuel 8, fulfilled as truth in 1 Samuel 15. This is the predicament of nature and mice and men. Note one thing that can not be denied is the Iron Law of Politics, which we can see now with the various international factions of the "Club" (as Martin calls it) try to buy influence over every government in world (because it is profitable for them).

It is very important to understand that we can not outlaw usury, but the Bible clearly states that those who participate in usury (and politics and protecting riches), will reap what they sow. And it is easier to push a camel through the eye of a needle than for a rich man to enter the narrow gate of heaven. It is all about what is in our heart. If our heart is in a Biblical place, there is no harm that can come to us in the Biblical domain (which is not the material domain, Bible makes no promises about the randomness of material world).

Many people do not understand that a gold standard is just as socialistic as a fiat standard, because on a gold standard people still demand credit, so this forces the govt to debase the legal tender:

http://www.martinarmstrong.org/files/GOLD-5000-11-11-09.pdf
http://goldwetrust.up-with.com/economics-f4/changing-world-order-t32-45.htm#2352

In a Biblical world, we would all refuse to do usury, and we would invest our capital instead of lend (aka save) it at fixed interest rates. We try to invest in the most risky places where the true needy needed it the most (this would also yield the highest rates of return for us and society). And we would refuse any form of governance and all obey the natural laws as stated in Bible (e.g. 10 Commandments, 1 Samuel 8, etc). But alas, the Bible says we are born sinners, so the Biblical world ain't gonna happen here on earth (until if you believe Jesus will return after Revelation). But that isn't an excuse to throw our hands up in disgust and do sin, because we still individually reap what we sow. Usury will enslave and destroy the lender also. Read Martin's account of history above and all the bankers who were destroyed throughout history. Even now, the big bankers are destroying and eating the little ones. And those big ones have their day of reckoning coming too...

Remember usury is a parasite, because it extracts a fixed rate of compounded (exponential) growth from the growth of society. It cares not about individual performance (doing good, measuring success of investment), it only cares that the whole grows on the aggregate. Thus usury is like an illusion, because the fiat is debased at same rate that the lender is accruing interest, thus the only way for the lender to actually make gains is to rig the markets and capture the wave energy.

As I had predicted earlier in the year, the Cumulative Yearly Average price (Kitco.com Historical prices) for silver for 2009 ($14.68) will be lower than the prior year ($14.99 in 2008) for the first time since secular bottom in 2001.

2001	$ 4.37	-12%	******
2002	$ 4.60	+ 5%	______***
2003	$ 4.88	+ 6%	______***
2004	$ 6.67	+37%	______*******************
2005	$ 7.32	+10%	______*****
2006	$11.55	+58%	______*****************************
2007	$13.38	+16%	______********
2008	$14.99	+ 3%	______**
2009	$14.68	- 2%	_____*

Note that is only an 14% per year rise in the price. People like to use the $21.37 peak value in 2008 and start from $4.88 in 2003, to boast of a 28% per year gain for silver, but that peak was only available for selling into for a few minutes. It is very disingenuous for promoters to say that silver has been rising by more than 28% per year! Even if we use $21.37 in 2008 and $6.42 in 2005, that is 27% per year. For gold, the return has been 15% per annum ($271 in 2001 and $971 in 2009). Even if we use $278 value in 2002 and $1225 in 2009, that is 20% per year. If we use $418 in 2005 and $1225 in 2009, that is 24% per year. If we use $643 in 2007 and $1225 in 2009, that is 24% per year. Here is the math:

$14.68 ÷ $4.37 = 3.36
3.36 (invert key on calculator) (x^y key) 9 = 1.144 (14% returns compounded for 9 years, I used the 9th root)

$21.37 ÷ $4.88 = 3.38
3.38 (invert key on calculator) (x^y key) 6 = 1.279 (28% returns compounded for 6 years, I used the 6th root)

I had originally quoted this as one possible support for Pretcher's theory of massive liquidity crisis pulling all markets down again (he calls for silver and gold to make lower lows than 2008 before we should buy them). I am not making that argument, but I am pointing out that silver is acting strange (although I am eventually expecting a breakout to the upside blowoff for this current cycle of reflation):

http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-90.htm#2470

Again my expectations is that the silver spring is compressing for a massive uncoil reaction blowoff to the upside eventually. Note the Cumulative average for this year will be within -2% of 2008. And even at current prices, next year would be a big up move. But if so, then why has price volatility (an indicator of level of speculation) in silver declined in 2009 relative to the degree that volatility has increased in Gold? Is that the nature of the spring having very little room for movement as it is in the compressed coil position?

Perhaps my thoughts about the form of this Great Depression and the method being used to re-balance the developed and developing nations may also provoke some thoughts on the matter of how precious metals play into this depression (Asians have little incentive to buy them, and are not buying them, except as jewelry [taken from this article ]):

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-285.htm#2474
http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-285.htm#2475

*Note it was $14.63 as of Dec. 23, so I can accurately estimate the final value for the year at $14.68.

US TREASURY DEFAULT will SKYROCKET GOLD and SILVER

Yes Shelby, 2009 average year price of silver will be below 2008. We are talking peanuts. Manipulation of LEVERAGE can indeed do significant damage to those with LONG TERM OBJECTIVES. The US TREASURY MARKET is the biggest PONZI SCHEME in history. If you would like to check out ERIC SPROTT's newest article...here it is;

Sprott Calls The Fed "A Ponzi Scheme" As Half A Trillion In Treasury Purchasers Are Unaccounted For

http://www.zerohedge.com/article/sprott-calls-fed-ponzi-scheme-half-trillion-treasury-purchasers-are-unaccounted

Bob Prechter will be so wrong about DEFLATION it won't be funny. Matter a fact, most VANILLA ANAL-LISTS will have to EAT CROW when the US DOLLAR-US TREASURY DEFAULT hits. They will have their CASH turn into TRASH.

Things are about to get a LOT UGLIER for the US and UK. If people want to time trades in and out of GOLD-SILVER and TRASH CASH....good luck. But when the time runs out.....and you got TRASH CASH.....all I can say is....SORRY CHARLIE.

MERRY CHRISTMAS


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Shelby replies:

Shelby wrote:Steve merry xmas and congrats on your correct prediction earlier in the year for much higher precious metal prices before end of 2009.

I will insert my reply into your post, so that it is not obscured too quickly on the home page of this forum.

Btw, I may have made a mistake of getting scared out of my prior stated plan to buy from $1090, and $16.90 down.

I do not expect a default in Treasuries until 2011 or 2012 at least. We have a lot of stages to go through before we get there. The Fed could monetize the Treasuries for a long time before there is hyper-inflation, even if everyone else stops buying them. Essentially the Fed has been printing all the money to buy them this year (via hidden methods such as currency swaps), and GLOBAL physical demand for precious metals has declined this year. The thing that creates a hyper-inflation is will (fear) on the part of the masses. So as long as the govt keeps monetizing and keeping the masses in the dark as to how bankrupt they are (going to be), then the masses keep coping and carrying along with their daily life (you know eating $20 pizzas and lattes, and buying crap they do not need, even if -30% less crap than before).

Manipulation only works because not enough people are buying physical precious metals in order to break the backs of the manipulators. And it looks like the masses who have any net worth remaining, might end up heading into stocks (as in Zimbabwe) next, to the extent they "diversify" from Treasuries. The exact form of this depression will not be the same as the prior one. Looks like the manipulators are succeeding in keeping the return on capital low enough in precious metals, that they are not very enticing option for people with booming businesses due to the liquidity from the re-flation. Besides the main driver of demand for gold are the developing nations appetite for jewelry, which seems to decline when gold gets ahead of the increase in their incomes. When and why will investment demand eventually displace jewelry as the main driver? I say it won't happen until mass media creates some mania and thus tells them to do so.

The greater point is what good does it do if your precious metals are up 15 - 30% per year, when the export of monetary inflation is feeding return on capital in excess of 50% in the developing world. That means by being in precious metals, you lose 76 - 97% of your relative net worth compared to Asian small businessmen (who thus have no real incentive to buy precious metals). Does there come a time when precious metals are rising 100+% per year for several years, and you catch up with the Asian businessman, who then loses everything because he has no precious metals? So if the Asian economies are completely destroyed by the collapse of the US Treasury scam (in spite of indications otherwise that the US current account deficit is shrinking as % of global GDP), what does that mean for your (in my opinion erroneous) theory of catastrophe driven by Peak Energy (no one will be consuming much energy if everything has imploded due to Treasuries default) and what does that mean in terms of world war? I do note that although I see Asia growing and pulling away, I do note that Asia is very messed up in the sense that all of the manufacturing is done in China at artificially lowered standard of living for the Chinese people due to Yuan peg. When that is allowed to re-balance if it is done abruptly it might cause dislocation (implosion) in Asia, but at the same time it will drive massive growth in the other Asian countries as manufacturing diversifies and optimizes demographically and geographically. Looks like China is following a policy of gradually weaning itself of exporting exclusively to USA, but letting inflation reduce the US current account deficit as a % of global GDP. Of course this inflation and centrally managed economics is going to reduce the potential of Asia, but there is so much potential, that I think it can not be completely wiped out.

I do concur that 2010 is the time to get positioned in physical as fireworks are coming as early as Q3 2010 in developed world economies, or maybe not until 2011. But I also think one should continue productive business in developing world (or if you have a booming business in developed world that will continue to boom with continuing reflation efforts) and just keep dumping 10 - 20% of net worth (profits) into precious metals.

TIME TO GET REAL

Shelby....you can reply in your own window.....I don't mind losing the FRONT SPOT. But...I do appreciate the gesture. I would like to CLARIFY the PEAK OIL DEAL. I never said there wouldn't be some advanced source of energy that we are too STUPID to find presently. What I am saying....PEAK OIL is the end of this ECONOMY based on CHEAP OIL. When the whole system comes crashing down due to a falling EROI....then cars, boats, suburbs and whatever comes crashing down as well. Basically the whole system.

Humans if they get in touch with the better part of their BRAIN and SPIRIT might be able to pull themselves out of this mess and start over. But for any HAIL MARY TECHNICAL SAVIOR to do it....is pure FOLLY in my book.

Regardless....you and I can debate that one forever. What I would like to put forth is the notion that REAL STUFF will take precedent over PAPER. If people who own CONTRACTS on FOOD FUTURES that allows them to get food in the future, get wiped out....they will have nothing. Those who decided to grow their own food, or be by a farmer who will provide them food for trade....then they have used their BRAIN STEM wisely. I don't know exactly what will happen in the future. But I do know PHYSICAL STUFF will be KING and PAPER will be TRASH.

Trying to figure out RATES OF RETURN compared to some SMALL ASIAN BUSINESSMEN is trying to figure out where FUTURE SNOW FLAKES are going to fall. Who the HELL KNOWS. What is known....is the US is screwed beyond repair.

We will have DEFLATION in assets that were BUBBLES in the first place:

REAL ESTATE
AUTOMOBILES
BOATS
BONDS
US TREASURIES
PENSION PLANS
etc and etc

But we will have INFLATION in things we USE and CONSUME:

FOOD
CLOTHING
GOLD-SILVER
COMMODITIES
ENERGY
etc and etc

People say...that when the economy collapses.....then people will be able to afford less. Sure they will, but when two-thirds of the ENERGY we use gets taken away from us.....that makes for SHORTAGES. The USA is so screwed....its not even funny. John Williams from SHADOWSTATS.COM saids we will have HYPERINFLATION.....I believe he is DEAD ON. We must remember the RICH OLIGARCHS don't give a RATS AZZ about INFLATION. They could care less about $5-10 a gallon Gasoline. But they do care about their INVESTMENTS. They don't want these to DEFLATE. The US GOVT and FED has been and will continue to BEND OVER for the OLIGARCHS and INFLATE ad infinitum. Add a bottle of VASOLINE and the HURT might be less.

When the FOREIGN GOVTS get out of US DOLLARS and US PONZI TREASURIES, then the US GOVT and FED will have to HYPERINFLATE the COW EXCREMENT of the US DOLLAR right out in the open where AMERICANS can get a NICE WIFF. This will be the HYPERINFLATIONARY COLLAPSE. After that.....place ya bets and grab your popcorn and ankles.

HAPPY NEW YEAR my good friend.

==================
Shelby replied:

Shelby wrote:Steve I will reply again in your post, just so people can correlate it well, and I will be more brief.

100% agreed that CHEAP OIL has peaked, will likely decline precipitously (ditto cheap resources of all kinds), and for that reason and others (e.g. peaking demographics), the debt economy (including all the points you made in other forums/articles about farming and distribution) built on it is going to die catastrophically, and it is wise to locate near to sustainable production of what one consumes. Note that collapse of developed world excesses (suburbs, driving SUV to buy lattes, fertilized & mechanized farming, truck distribution to be replaced by trains, etc), will free up energy for the developing world, which will be able to pay the much higher prices to lock out the excesses (wasteful uses) and to encourage the new replacement energies to be produced 10-30 years later (China already on massive nuclear build out, but insufficient to supply all their energy needs).

I also agree that for the average person, who will not globally compete against the top 10% of businessmen, their next best option is to save in PHYSICAL precious metals (in their own possession) to protect their purchasing power. Agreed that those who invest in paper, will get wiped out. For sustainence level of future sales, I suspect someone will not be targeted by massive tax increases. However, for someone with very large capital to protect, I don't think storing it in PHYSICAL precious metals within the USA is going work out well, due to an aggressive tax policy coming and due to a dead economy locked down by capital controls for decade or more, but I could be wrong about that. I am keeping 5% of my net worth stored in USA in silver.

The foreigners are already not buying the Treasuries. The US populace will not wake up until the prices of things they consume start to starve them, then they will finally get scared. I am expecting that 2011/2012, but certainly not later than 2014. I think 2010 will the transistion year between the "feel good" initial stage of inflation towards the "oh crap" stage. 2011 we have a lot of mortgage resets and another test of political will (probably with a republican congress). However, I do not think the result will be a quick defaults and resolution. I think once the boomers get serious about fixing the problems by 2014 or so, they will make the wrong political choices (i.e. like another New Deal) opting for socialistic solution fully of over regulation and bigger govt. I don't think it ends until the socialistic majority has either died or suffered enough to lose the socialist teaching they learned since kindergarten. Even people like Denninger are socialists, even they don't realize it.

You too enjoy watching the oblivious relatives gluttons in their last year or two of eating too much during holidays. I prepared early this year by eating crackers for my Christmas meal (its Xmas morning here already and celebrate here on the eve, not 25).

In my opinion (subject to change),

If silver drops to $16.00, back up the truck.

If silver drops to $14.00, back up the truck AND load the boat.

http://www.ebullionguide.com/price-chart-silver-last-10-years.aspx

Up, up and away:

http://stockcharts.com/charts/gallery.html?$CCI

http://stockcharts.com/charts/gallery.html?$CRB

Thanks for attempting to alert Peter Schiff:

http://silverstockreport.com/2010/Phoenix-Report.html

Although I suspect he already knows, but you never know, maybe he didn't know! In that case, you may have helped to accelerate a shift from paper to physical which is already in motion.

I also wrote about silver a lot in the gold thread recently:

http://goldwetrust.up-with.com/precious-metals-f6/gold-as-an-investment-t60-135.htm#2645

P.S. Hommel is trying to pitch that physical silver is getting in tight supply again:

http://silverstockreport.com/2010/Phoenix-Speech.html

Currently, our wholesale supplier is out of Silver Eagles, which just broke record sales for 2009, and even greater sales for the first month of 2010. We are rationing our remaining silver Eagles with higher than normal costs over spot prices.) Currently, our sales at www.jhmint.com are at all time highs.