J-curve

The End of Capitalism? – Fascism 2.0?

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To many, Capitalism, is what makes the world go round. But many others don’t really know what that is.

Population growth - From Jesus Christ until 2050. Where will all the food come from to feed these extra mouths?

So what is Capitalism?

Capitalism the word, derives from the word Capital – and Capital is…. “Savings”.

Of course savings, are generally stored in Banks, and that “capital” should generate interest. Of course interest is what the Banks give to the owners of Capital, and traditionally, the Bankers loaned out that capital to business people who would use that injected capital to increase profits, and those increased profits, would pay back the loan, and add value so that the expenditure of the capital is justified.

If we have a population explosion, such as happened after the second world war – the baby-boomers – we have a situation where fast approaching retirement the ‘boomers’ are now saving like crazy in their pension accounts, insurance or assurance policies, bank accounts and stock market brokerage accounts. Of course those who retire inevitably need income from their savings (some of which went into buy-to-let property which led to the boom, between 2002-2007) And yet interest rates have been lowered to zero per-cent or close to it, in Europe, the UK. and the U.S.

So as these savers are looking for yield from their savings, this has driven down Bond yields (A bond is a loan, to a country – such as aTreasury Bill, or Gilt – or a corporation, which generates interest to the holder.).And we know that to produce that interest, we need to generate growth – in the economy, and in the corporation.

BUT, all that growth relies on energy, and despite recent price falls in oil and gas, longer term, much of what happens in the sphere of energy is reliant on oil and gas production, which because of something economists are famiIiar with – EROI – Energy Return, On Energy Invested – we know that we are close to or past the Peak, and the energy cost of producing more energy, will lead ultimately to a collapse in the economy.

But few in the mainstream media, or among our politicians are willing to discuss this or how we might resolve this issue. Fracking is the U.S’s attempts, but as energy prices have fallen, the financial cost of Fracking is now placing undue strain on oil and energy suppliers, and upto 100,000 workers have been laid off in the U.S., and numerous oil companies are either in, or facing bankruptcy.

In the UK, the government has given corporations the power to search for oil and gas under homes, without the normal permissions processes, that the local community normally have, through the licensing process, and through local council control and planning laws.

This therefore begs the question, what should we be told, and if we should what we need to do about it.

This video over an hour long explains how we have been duped.

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At almost two and a half hours long this video below gives a full picture of how those in power, are still duping us.

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As these videos suggest, the rise of the corporation and its influence of the political process, suggests we are well on the way to neo-fascism along the lines of Hitler’s Germany. And the energy revolution I spoke of in a previous post can’t come soon enough.

And Michael Ruppert who you saw in the first film, was a man on the inside, who having been threatened and shot at by CIA operatives, left the police force to investigate how the world really works. Here he discusses his findings, shortly before his untimely death at his own hand.

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According to one recent Reuters article, China has now decided to update the world with its Gold holdings on a monthly basis, and has informed us, that they have added another 19 tonnes to their holdings. Not a huge figure given what we have learned of imports and production in recent years, but perhaps it is an attempt to ratchet up pressure on those pesky western bankers in the IMF that have refused entry to the SDR currency basket?

Time you made some changes in your life?

Time to get some Gold? Or Silver? Or Crypto-currency?

W.

A New Russian Winter, or the Calm before the Storm?

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Some weeks ago, before Xmas, I floated the proposition that “The West” might be about to shoot itself in the head, heart, AND foot, just to make sure.

My reasoning was that Russia, might be about to demand payment in Rubles for their gas and oil and other things, which would effectively shoot the west in the aforementioned organs, as they sought to ratchet up pressure on President Vladimir Putin.

The U.S. through its monetary influences and power in International Organisations – the World Bank, the IMF, BIS, Federal Reserve, and of course the ECB, Bank of England, U.N. and Bank of Japan etc, is waging a war against Russia, in a vain attempt at defending and extending its influence in the middle-eastern region, and throughout the near east, ostensibly to protect itself from the rise of China and a resurgent Russia. (more of which later)

The beginnings of this madness began with the end of the Soviet Union. The west in NATO, and through European organisations made agreements with the Soviets, to not encroach into former soviet countries, yet many of those countries, in order to avoid the risk of re-colonisation, chose to join the North Atlantic Treaty Organisation (NATO) and/or the European Union. (E.U.). This was also of course to strengthen the U.S’s Federal Reserve backed monetary system, which as I’ve mentioned numerous times is now no longer backed by physical precious metals.

Of course, when the U.S., under its attempt to extend its influence in the region, encouraged the western larger part of Ukraine to throw off its recently elected leader as it were, to rub Putin’s nose in it, and incurred the wrath of the Crimean Russians, and the Russian speaking ethnic Russians east of the Dneiper River, it essentially wandered into Russia’s back-yard, and that was the straw that broke the camel’s back.

The Crimeans, who are predominately ethnically Russian, were backed into a corner, as the new western backed government in Kiev, made the Russian language illegal.

Imagine if you were a Welsh speaking Welsh person, and the incoming British government, made your language illegal? Or Irish? or Highland Scottish and they tried to make Gaelic illegal?

You’d be pretty PO’d too…

The Crimeans, who felt Russian, spoke Russian, and historically WERE Russian – If we remember our history – Balaclava, near to Sevastopol, on the western coast of Crimea, is where the British Light Brigade, charged the Russian guns, to such detrimental effect, in 1854, and it is remembered in the rousing poem by Alfred, Lord Tennyson. So, a hundred and fifty years ago, this part of the world, was as Russian as it surely is today.

The President, of Russia, kept a low profile recently, and even disappeared from view for ten days, prompting mass media speculation by western media about his health. Of course, when he reappeared, the President issued a wry smile, and joked about “gossip”.

But behind the scenes, the Russian bear is fighting back against the Dollar hegemony. Of course the war of words is being ratcheted up as American military conduct war games in Estonia, this week-end, a former Soviet satellite nation, and right next to the Russian mainland.

Guyane Chichakyan a journalist for RT, posed an interesting question to one of the U.S. government’s PR spokespersons today (Saturday) when she asked Jeff Rathke of the U.S. State Department: Why was it that when Russia conducted military exercises on their own soil, it was supposedly raising tensions, but when Americans conducted military exercises several thousand miles away from home on Russia’s borders, it was in the guise of international peace and security.

The PR guy nearly choked on his reply, denying that they had ever said such a thing, to which, RT showed a clip of Jen Psaki of the U.S. State Department, on August 14th, 2014, doing just that, when referring to events in Ukraine and close to the Ukrainian border. As I mentioned some months ago, the next world war has already begun as a war of words, and for people’s hearts and minds. Every channel, both public and private will be used. It will in all inevitability end in a military war, though perhaps not on such a full-scale as the last one in 1939.

But perhaps also the anti-U.S. state of mind is gathering steam… As I mentioned some weeks ago, Britain applied to become a founding member of the AIIB (Asian Infrastructure Investment Bank) the alternative to the U.S. dominated World Bank and IMF, and we hear from the New York Times, that now Germany, France and Italy wish to join in defiance of U.S.’s (cough) “requests”.

Perhaps the dollar’s end as a major world currency is finally coming to an end, as a result of the mass Q.E. exercise of recent years.

It is time we all engaged our brains.

And then last week, I read this… http://russia-insider.com/en/2015/03/19/4696 which discusses just that.

If a shooting war does begin in earnest, money – hold in your hands money – will allow you to survive the inevitable inflation that will ensue, and the grey market will offer up far more than the government enforced, and controlled ones. If you value your freedoms, liberties, and the health and well-being of your family and friends, I strongly suggest you begin preparing – if you haven’t already.

Gold and Silver coins and widely accepted silver and gold ingots of widely known mints will prove to be good ways to secure your own future “essentials”. And Bitcoin, and other [Alt-coins] will enable international transactions. You can begin your own FREE collection of these precious [Alt-coins], when you set up an account by merely supplying an e-mail address.

Are you part of the 1%?

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I was reading my usual News sites, and some blogs, trying to keep up to date with the goings on in the money markets, and the world of finance, economics, politics and the precious metals markets, and someone mentioned something that made me stop and think…

The Occupy Wall Street movement, frequently talk about the 1%. That narrow class of Bankers and others of the financial elite who seem to control the planet through their manipulation of the money markets, and who use their financial and economic power to control governments and get the people to bail them out when they make a bad bet, and who threaten governments with economic and political mayhem, if they don’t get what they want.

Close Guantanamo? No problem… Well maybe next year…We need this war on terrorism, it’s good for jobs – in government.
Allow Saddam Hussein to sell oil in Euros? – Sure…(Er No. that would crash the dollar.)
Allow Iran’s Ahmedinajad to buy oil with Gold? No problem… Actually that would hurt the dollar too.
Allow Libya’s Ghadaffi to form a Gold Arabian Dinar currency union to sell oil? – Yeah Why not? Are you kiddin’?
Allow Syria’s Bashar Assad to build a pipeline from Iran through Shi-ite controlled Southern Iraq, and Syria, to the Mediterranean Coast, to allow Iranian gas to world markets and especially Europe? – Hey wouldn’t that be great! Not if you’re a western oil-major.

However, I digress.

In an article they quoted, that a web-site – “Zero-Hedge.com” regularly had 100,000 readers, but one article in particular had had 300,000 views.

Given that the population of the U.S. is a little over 300 million, and that the web-site is visited by overseas viewers – myself included, that means that less than 0.01% of the U.S. population have even a mild interest in precious metals – in particular Gold and Silver, or the state of the dollar.

That means that if you are one of the few… That VERY few, who hold even just a little Gold and/or Silver, you are part of that rare breed of humans – that 0.01%, who will benefit when the currency that now dominates world affairs, that has been the reason for much of the unrest we see around the world – in the middle east, in South American countries, with questionable political systems, with rulers who were supported merely because they satisfied the economic success of their currency Lords back home in the U.S.

When the world currency system that we currently have, implodes, as it inevitably must, then you will be glad you had the foresight to buy even a little insurance in the form of Gold and/or Silver or even Platinum or Palladium.

According to Agora Finance’s Editor in Chief, and co-author of several books on the subject of money and finance  – every un-backed currency that has ever existed has gone to zero.

You can count them throughout history – The U.S. Continental, the European currencies of yesteryear – the German Mark, the Austrian Schilling, the Yugoslavian Dinar and the Zimbabwean Dollar.

On average the lifespan of an un-backed currency is 30 years, and given that the dollar became un-backed by Gold, on August 15th 1971, when President Nixon closed the gold window, as a result of France and Britain asking for several billion dollars worth of Gold for its dollar reserves, as the Vietnam war saw the explosion of U.S. currency leaking out around the world, the dollar has had more than its fair share.

The rise of dictators in the middle-east happened largely because of rising populations in those countries, with political systems, that were and are still trapped in the hereditary system of government. Kings, and Royal families make those countries what they are.

Colonel Muammar Ghadaffi, Hafez Al-Assad and Saddam Hussein all seized power because their rulers looked to the West, and were corrupted with huge payments by western oil majors and their sponsors – the Fed – who ensured that gas prices in the U.S. didn’t cause economic misery and dislocation in the economy. Especially given that the war in Vietnam was costing the U.S. so much in Agent Orange, and bombs as their hundreds of B52s were carpet bombing Laos, Cambodia, and of course North-Vietnam, ushering in Pol Pot.

These last 40years have seen one Royal or dictatorial household after another supported, so that cheap oil can be had back home in the good ol’ U.S. of A.

And now that the instability in the middle-east has driven oil prices up to such a level that recovering the shale oil and gas, is cost effective, and that it is likely to last more than 100 years, and make the U.S., energy independent by 2017 or even sooner, has prompted a fall-out between the Royal Saudi-kingdom and the American political class, as Saudi oil, once so necessary is not needed nearly so much cutting the income of the Saudis. And of course the Saudi’s whose mortal enemies are the Shi-ite Iranians, are now selling oil in dollars once again, as they negotiate over Nuclear reactors, and the fuel that they need.

But that’s just detail, right?

Those who heeded the portents of what was to come, in the early 1970s, bought Gold at just $35.00 per ounce. In the run up to the oil crisis of 1973, the price of Gold would rise to $200, giving those early adopters a substantial profit. BUt then as now, the price halved over the next two years falling to $100.

Those who bought at the top and sold on the way down must have smarted, but the wise ones, know that Gold is not a metal to be traded, but an insurance policy you take out when Governments do stupid things like debauch the currency.

The wise ones, the clever ones (or just the stubborn ones) held onto their Gold and collected on their insurance, and sold out 5years later.

By then the price of oil had risen four-fold, Ayatollah Rouhollah Mousav Khomeini had become the religious and political leader in Iran, and Gold had risen to over $800 per ounce, even spiking to $850 per ounce, as all the above ground Gold (as it always does) rose to the price to absorb all the Dollars in the world.

When the next J curve in the price of gold and silver comes, those who are smarting now, and those who take advantage of the current low price of Gold at circa $1200/oz for Gold and $20/oz for silver, will be the ones with smiles from ear to ear.

Will you be one of the 0.01% or even the 1% who makes their purchases and sales with knowledge and wisdom, or the 99% who watches this from the sidelines.

There’s an old saying…

There are three kinds of people.

Those who make things happen,
those who watch things happen, and
those who say – “What happened?”

Which one are you?

Until next time.

W.

 

‘J’ Curve Conundrum.

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Thomas Malthus, was a Reverend at the dawn of the Industrial Revolution in England. In 1798, he wrote an essay, “Essay on the Principle of Population”, which was concerned with the rising population, and theorised that improvements in subsistence would lead to higher growth in population, which in turn would mean competition for resources, wars etc, which would lower standards of living back to subsistence level.

Of course back then he couldn’t have envisioned the dramatic changes in technology, and the inventiveness of we humans, nor of the advances in food production, and at how much land has been turned over to agricultural use.

We see examples of this in countries where historically the people had large areas of un-developed land: For example, in areas such as Argentina, which has large tracts of savannah – open grassland – and Brazil which has huge jungle and forest areas.

This led Argentina to grow Beef cattle, which was ideally suited to their environment and during the early 1900s, Argentina was one of the richest six or so countries on the planet.

In the last few decades, we have seen how forests and jungles have been cleared in increasing proportions, particularly in Papua New-Guinea, and Brazil with their rising populations, and need for more cultivated land, but also the loss of habitat for native species, and a rapid fall-off in biological diversity. Brazil of course became famous for its coffee crop, and more recently sugar cane, which it uses ( after processing into ethanol, ) in its efforts to minimize its oil costs by using it in its Taxi fleets, and other vehicles.

But was Malthus that far wrong? Back when Thomas Malthus was alive, there were just one billion people. By 1927, there were 2 billion. In 1960, that became 3 billion, and by 1974,  4 billion.  As of 1987, the population of the planet was about 5 billion inhabitants, and by 1999, that was 6 billion, in 2010, we passed the 7 billion mark, and those who make these predictions think we will surpass 9 billion by 2030-35, which means at current rates, we are adding 1 billion every 10-12 years on average.

With China announcing it will amend its one child policy so that those people who satisfy certain conditions, may have another child – this may drive growth faster. However, cultural norms which favour boys over girls, is precisely the policy which may lead to more men who do not have a partner when they reach sexual maturity, and this we know leads to higher sex crimes. But may also add to instability, and a political drive to find use for these men in the military.

But  if this means more unemployment, and higher demand for food at a time of maximum worldwide output, is this a recipe for wars over resources? And as China increases its economic muscle, so  it will increase its military muscle, and already there are rising tensions in the South-China seas, as Vietnam, Indonesia, Japan, and Philippines have rising demand for energy, and other resources which may be buried beneath this contested stretch of water, at a time that Chinese Naval vessels are patrolling and harrassing other ships in the area. Vietnam even mentioned its concerns in a broadcast on Vietnam’s Overseas broadcasts, which it is known that America monitors. Was this an open request for America to intervene?

Of course, back when Reverend Malthus was postulating, he studied rabbits, and of course mixamotosis cured that particular problem for decades when it first appeared in the 1900s. By the same token, wars such as WW1, and WW2 reduced the numbers of humans at a time of rising populations and lower economic activity, and have no doubt lowered the total populations that we see today. So, is therefore ,WW 3.0 almost inevitable?

If we study almost all “bubbles” from the South-Sea bubble of the 1780s, to the Dot-Com mania of the late 90s and early noughties, we realise that – as the old saying goes – “What goes up, must come down”.  Does this apply therefore to populations?  And if not, how do we cope with 10 billion plus people on the planet by 2050, given that the amount of land is finite, oil, gas, and other mineral resources particularly, take increasing amounts of energy and finance to find, but the biggest hurdles will be potable water, and food.

The unrest in the middle-east will be as nought if we do not as a species collectively address these hurdles. Many African countries have shared the vast river resources of the Blue and White Nile rivers, but what if one country through which the rivers pass takes more and more water for agriculture, and thus leaves less for those countries downstream?

In 2008, food riots broke out in 40 countries.  Aquifers are currently being depleted at phenomenol rates, and many will be empty by 2025. What is less well known is that these take 6,000 years to fill, and it takes 1,000 tonnes of water, to grow 1 tonne of Wheat.

And just since the year 2000, water demand has surged 58% worldwide.

So, everything is about to get VERY expensive

Precious Metals too suffer from this, and one of the few ways to protect yourself from what is to come, will be to hoard those resources that do not diminish over time. – Which brings us back to money – Not currency – A piece of paper, is a piece of paper, even if it does have $100 printed on it.  JP Morgan used to say “Gold is money, everything else is credit”, but Gold or Silver are also things of beauty, and when times are tough as we may be heading for, then possession is nine-tenths of the law, and the value of that money will  be preserved during inflationary times. Silver too, is a fungicide, a bactericide, and virucide. Kings and Queens, would in years past only drink from Silver vessels – a way to make potable water?

As Central Banks and particularly the Fed, manipulate the precious metals markets, we see Art prices rising inexorably – just as happened in the mid 1970s. Those seeking a return on their capital or who wish to move their capital to an overseas market to limit their tax position, may pay for an art-work, and ship it overseas where some years later they sell at a profit, and pay less in taxes.

Pop art icon, Andy Warhol, had a piece recently sold at auction, at over $100million. The Art market is telling us a subtle truth – the dollar is losing purchasing power, relative to things – Art in particular. The time will come for precious metals too.

Speaking of which, I’ve been reading more bullish sentiment of late regarding Silver Prices…

A couple of PM specialists feel that the bottom has already been and gone, and that we might see a new yearly high this year, and an all time high next year.

Having commented already on where I think Gold will go elsewhere, I suspect (But hope I’m wrong) that silver will remain in the doldrums for another 2 years or so, before we see a new all time high.

As things stand, Silver prices are not just based on investment demand. Supply is variable based on other commodity production – it is a by-product of several other mineral production… Zinc/Lead/Nickel/Copper/Gold mining in many mines, which with increases in growth in other markets will stimulate production of these other commodities (and thus silver).

As the price at the moment is still just above where mines can be profitable, then there’s not much reason to cut back production. (New mines are a different matter)

That said, there’s lots of new technology, which should keep demand up – with 10,000 uses, and the most widely used substance after oil – and if investors still keep buying silver coins and rounds/bars at unprecedented levels, at these low low prices, then once prices start to turn up, this will suck in the wider investment community, and we will see the blow off phase. (the J curve where the price goes vertical)

Of course, when that happens, that might be the end of the Dollar, though the U.S.’s rising oil production may overturn that as fewer dollars head overseas to pay for oil, and thus as some of those dollars return home for software, and other high-tech products, then this may strengthen the currency.

That said, hopefully, we’re at the turning point for precious metals. Anyone interested in buying Silver at V.A.T. free prices might want to learn where and how they can do this – Here