FunnyMoney
23rd December 2010, 11:48 PM
12 months ago I predicted (GIM1) that gold would end the year at 1440 and oil would end the year at 89. But I expected silver would only go to 22.
Today we see that the mining of silver is linked much closer to oil, and ultimately cheap energy, even more than it's linked to gold. Silver and oil have outpaced my expectation while gold has lagged. This indicates to me that things are much worse in the world of natural resources than I had originally imagined.
In the year 2000, the USA which per capita is the largest energy consumer on the planet by far, had a chance to do a lot of things with the newly found budget surpluses and a humming economy. The electric grid could have been upgraded. Solar panels and wind farms could have been produced in mass to supply energy to the new grid. Electric and hybrid vehicle rebates could have been tripled and those vehicles could have been fast tracked into mass production. Natural gas could have been ramped up full bore. The mining of metals, especially rare earths, could have been made a national priority. A national focus could have been placed not only on energy production and conservation but also on SAFETY. It's not like they didn't know about the energy crisis that had been declared since the mid 1970s. It's not like they didn't know about how difficult it would be to transition to alternatives and how long it would really take (estimates for a transition are anywhere from 25 years to 40 years).
But even worse, it's not like they didn't know that such a transition would still require huge amounts of ADDITIONAL conventional, existing energy source to develop and implement the transition to alternatives. Everybody knew and still knows today that the biggest problems involved in transitioning to a new energy environment involve #1, the production of metals which must use and can only use a lot of liquid fuels, #2, technology and infrastructure improvements which must use and currently can only use fossil fuel based energy during the transition period.
However, instead of spending political capital and financial capital to embark on what most everyone said would be required probably sooner rather than later, they spent the capital on tax breaks for the super rich, regulation enforcement for everybody else - including big wars and military budgets that lost as much money as they spent, consuming even more of the precious energy, cheap energy, cheap energy running out, energy that would be and IS required to make such a transition to new energy possible.
Now that cheap energy is soon to be a thing of the past, and now that energy is soon (likely this decade) becoming scarce - how is a transition now even possible?
The economy is not much better than it was at the start of the crash when oil was trading at $30. Today oil trades above $90. The writing is on the wall. It was on the wall 10 years past. Industrial metals and oil now equals survival or at least that's what it will in 10 years future.
Today we see that the mining of silver is linked much closer to oil, and ultimately cheap energy, even more than it's linked to gold. Silver and oil have outpaced my expectation while gold has lagged. This indicates to me that things are much worse in the world of natural resources than I had originally imagined.
In the year 2000, the USA which per capita is the largest energy consumer on the planet by far, had a chance to do a lot of things with the newly found budget surpluses and a humming economy. The electric grid could have been upgraded. Solar panels and wind farms could have been produced in mass to supply energy to the new grid. Electric and hybrid vehicle rebates could have been tripled and those vehicles could have been fast tracked into mass production. Natural gas could have been ramped up full bore. The mining of metals, especially rare earths, could have been made a national priority. A national focus could have been placed not only on energy production and conservation but also on SAFETY. It's not like they didn't know about the energy crisis that had been declared since the mid 1970s. It's not like they didn't know about how difficult it would be to transition to alternatives and how long it would really take (estimates for a transition are anywhere from 25 years to 40 years).
But even worse, it's not like they didn't know that such a transition would still require huge amounts of ADDITIONAL conventional, existing energy source to develop and implement the transition to alternatives. Everybody knew and still knows today that the biggest problems involved in transitioning to a new energy environment involve #1, the production of metals which must use and can only use a lot of liquid fuels, #2, technology and infrastructure improvements which must use and currently can only use fossil fuel based energy during the transition period.
However, instead of spending political capital and financial capital to embark on what most everyone said would be required probably sooner rather than later, they spent the capital on tax breaks for the super rich, regulation enforcement for everybody else - including big wars and military budgets that lost as much money as they spent, consuming even more of the precious energy, cheap energy, cheap energy running out, energy that would be and IS required to make such a transition to new energy possible.
Now that cheap energy is soon to be a thing of the past, and now that energy is soon (likely this decade) becoming scarce - how is a transition now even possible?
The economy is not much better than it was at the start of the crash when oil was trading at $30. Today oil trades above $90. The writing is on the wall. It was on the wall 10 years past. Industrial metals and oil now equals survival or at least that's what it will in 10 years future.