Party Likes It's 2009

Thu, Mar 22, 2012 - 10:53am

I don't know if anyone else feels this way, but I've been having a strange feeling of deja vu and I couldn't seem to place it. I was standing there this morning, making some coffee, when it hit me. This is late 2009 all over again. If you were trading and stacking back then, I'm sure you'll recall that painful period. If not, let me give you a little refresher.

Where were you in late 2009? Were you listening to this:

The Black Eyed Peas - Boom Boom Pow
Avatar Movie Trailer [HD]

I know where I was...I was making some serious cash. In July of 2009, gold was trading in the low $900s. By Thanksgiving of that year it was near $1200 and Turd was flush (no pun intended). And I will never, ever forget where I was when gold peaked. I was reading ZH and watching Fox Business when I saw gold trade at 1225 and read a headline on ZH that the Bundesbank was going to be announcing a huge gold purchase in the morning. My personal sentiment indicator went to 10+. Unfortunately, that didn't work out so well. Beginning the next day, gold began to roll over, instead, and by the first Friday of December, I was doomed. The BLSBS report came out and was spun into good news. Dreams of "green shoots" and a "recovery summer" soon took over. The POSX shot higher and, over the next 3 months, rallied nearly 10% from 74 to 81.

The resulting decline in gold was brutal. First, it had peaked at $1226 and Santa had promised an "angel" at $1225 for years. The fact that I'd let greed overcome me and consequently didn't sell at $1225 was crushing and when gold rolled back down through $1100 in January, I was seriously depressed. All of the same old AGAs were claiming that $1225 was a blow-off top and that gold was soon going to be trading back below $1000 and was probably headed back toward $800. I was sick, Mister Hyde was furious and it seemed like all was lost.

But we didn't quit, we didn't give up. I knew that the whole "recovery summer" thing was a joke. The U.S. economy wasn't going to recover, the best it could do was stagnate and limp. The MOPE and the SPIN were so thick, I could barely breathe and when gold bottomed at $1052 in February of 2010, there was hardly anyone around who noticed or even cared. And that's the funny thing about bottoms, you rarely, if ever, notice them in the present as they are only visible in hindsight. With hindsight, we now know that the "green shoots" of 2009 became the dead weeds of 2010. All of the breathless proclamations by LIESman et al not withstanding, the facts, the math and reality took hold again by mid-2010 and gold finally surged back to the $1225 level in May and through $1225 in September.


My point is simple: We are currently in an identical situation. Gold surged to $1925 last September and, on 9/6/11, gold was ready to rocket higher on news that the SNB was going to devalue the Swissie by 10%. Again, sentiment was at the 10+ level and, again, we were within a few dollars of a Santa "angel" at $1936. Well, we all know what happened next and now, after six months of this brutal "correction" where gold has again fallen 15% while the POSX has rallied 10%, we are once again staring into the Pit of Despair. LIESman et all are screaming from the rooftops that the economy is improving and The Bernank is desperately implying that QE is over. Well, I call "bullshit" and I'm standing tall against them. Will you join me?

As I type, gold is at $1632 and silver is at $31.43. I've been maintaining all month that gold would likely bottom between 1600 and 1650 and that silver was headed to 31, maybe even 30. Why would anyone panic now when we are so close to the bottom. Always remember and never forget: THE ONLY WAY YOU WILL CONSISTENTLY MAKE MONEY TRADING GOLD AND SILVER IS TO BUY WHEN EVERYONE ELSE IS SELLING AND SELL WHEN EVERYONE ELSE IS BUYING. Period. Why is this true? Because this strategy essentially puts you on the same side of the trade as The Cartels, which as you know post-MFG, are exerting an increasing level of influence on the paper metal markets. It is clear to me that now --right now-- The Cartels are buying and covering not selling and adding. I discussed this yesterday in two, separate comments to the previous thread and they are reprinted below:

Submitted by Turd Ferguson on March 21, 2012 - 11:59am.

Back at the last highs of 2/28, total gold OI was 479,044. As of Monday's close, it had fallen to 434,226 for a drop of 9.35%. The last time gold total OI was at this level was 2/14/12 when price closed at $1718. Additionally, even back in January, we find higher total OI numbers. The week of 1/16 averaged total OI of about 439,000. Gold began 2012 with a price near $1600 and a total OI of 420,000.

Back at the price highs of 2/28, total silver OI was 115,866. Total OI was actually higher on 2/24 at 118,204. As of Monday's close, it had fallen back to 108,268 but actually bottomed back on 3/15 at 106,723 or a drop of 9.71%. The last time total silver OI was below 107,000 was 2/17/12 when price was $33.28. Total silver OI averaged about 103,000 in January after beginning the year at almost exactly this level, near 106,000.

Clearly, any "excess" open interest brought about by the early year rallies from 1600 to 1800 and 28 to 37 has now been wrung out. Again, this is just another signal that we are very near a bottom.

Submitted by Turd Ferguson on March 21, 2012 - 3:48pm.

Crazy silver OI report basis yesterday.

Yesterday, gold was down $20.20 and total OI was down 3,200 contracts. Perfectly normal.

Silver, however, was down $1.12 yet total OI expanded by 3,154 contracts. ​ The July12 alone went from 12,404 to 14,018. The only deduction that can be made is that a significant amount of new shorts entered the silver pit yesterday. What we don't know is whether it was Cartel or spec shorts. The CoT on Friday will provide some clues but it is highly likely that these are spec shorts. Why? Because The Cartel typically only adds shorts to:

  1. Cap price OR
  2. Attempt to start a waterfall/cascade selling event.

If only now we are seeing a huge run-up in spec shorts then we truly are very close to a bottom as the late-coming spec shorts will soon be fleeced just like the late-coming spec longs were fleeced on 2/29.

Total silver OI is now back to where it was two weeks ago, when silver was almost exactly $1 higher.

Ahead of the CoT on Friday, here is what we know:

Gold for the week 3/13--3/20 saw the total OI fall from 442,319 to 431,039 while price fell by $47 (2.77%).

Silver for the week 3/13--3/20 saw the total OI only fall from 111,730 to 111,422 while price fell $1.75 (5.2%).

Likely Conclusion: This week's CoT will be slightly bullish for gold but will show a significant improvement in the CoT picture for silver.

Anyway, the point is that is is always darkest before dawn and we are very deep into the wee hours. The global economies have not and will not improve to the point where we can "grow our way out from under the debt". No way, no how. In 2010, it took 6-8 months before logic, math and facts finally prevailed over hope, MOPE and SPIN. The truth will win again in 2012, you just have to be patient.

One more thing, I received some communication from "Winston" this morning and he provided some very helpful information. He is of the belief that the down move that began Tuesday evening and continues this morning is almost entirely related to April gold option expiration. Again, the Comex is now almost completely controlled by The Cartel as the only participants left are Cartel monkeys and HFT-WOPR momentum chasers. This allows The Cartel, which has full knowledge of the order books for both futures and options, the ability to swing price at their leisure and position price in such a way as to maximize pain for option holders upon expiration. Winston believes that the current target of their malice are not only the call buyers but also the out-of-the-money put sellers for April. Remember, gold was near $1800 just 4 weeks before expiration of the April options. A lot of traders believed that there was easy money to be made by selling out-of-the-money puts, the April 1650s and the April 1600s. Those that did are getting seriously squeezed right now and they are being forced to short actual gold contracts to hedge themselves. Winston thinks that the 22,000+ contracts between 1600 and 1650 are the true target of The Cartel here and that their ultimate intent may be to drop gold as close to 1600 as possible before expiration at the close of business next Tuesday.

What's interesting about this is how it fits right in line with all of the other "bottom signals" we've been discussing here as of late. A low near $1600 tomorrow or early next week would:

  1. Complete the drop to stout support at 1600
  2. Complete the right shoulder of a massive reverse head-and-shoulder bottom
  3. Bring silver down to 30-31, just like we'd envisioned
  4. Drop gold open interest levels all the back to early January levels
  5. Put the RSI and MACD indicators into deeply oversold territory
  6. Drive sentiment and our new TITS indicator to record low levels. Even Mister Hyde is once again suicidal and ready to simply cash out his IRA before it goes to zero. He'd like to take it in cash and go to Vegas where he can blow the rest on blackjack, Jack Daniel's and hookers.

And don't forget that lease rates have clearly bottomed and have significantly reversed. In September and December of last year, lease rates reversed about two weeks before price.

So, in the end, hang in there. I know it's tough and painful to watch everything go down when you know you are on the right side long-term. But let me assure you: This, too, shall pass. Soon...very soon...the metals will bottom and resume their inexorible march higher. Of this, you can be certain.


About the Author

turd [at] tfmetalsreport [dot] com ()


Magpie · Mar 22, 2012 - 6:40pm

For instance,

in 2008 the $143 spike did not bring a significant additional amount of oil to the market.

When the oil was released on to the market from our reserves last time, the price of oil went down for roughly two weeks. I don't understand why any oil producer would want to sell their product at a lower price by increasing supply. What am I missing here?

Number 47 · Mar 22, 2012 - 6:45pm


Money in one country - That is bad advice IMO, no citizenship, no residency + SHTF = no money. I keep 30% in Switzerland, 30% in Poland, the rest is divided between my citizenship state and my resident state.

Citizenship in a different country - check

Body in a different country - check

All eggs in one basket ends up with an omelette on the pavement, full of grit and dirt and completely inedible. 

Number 47 · Mar 22, 2012 - 6:49pm

@ dr jerome

It is for me, I also got captchad coming here earlier, said I was a botnet, any other site has opened fine for me.

I checked zerohedge on is it down for everyone? And it said it's not but I still can't access it.

ClinkinKY · Mar 22, 2012 - 6:49pm

More "Change", less "Hope"

New counterterrorism guidelines permit data on U.S. citizens to be held longer

By Sari Horwitz and Ellen Nakashima, Updated: Thursday, March 22, 5:04 PM

The Justice Department has approved guidelines that allow counterterrorism officials to lengthen the period of time they retain information about U.S. residents, even if they have no known connection to terrorism.

Read more:

Bugzy · Mar 22, 2012 - 6:50pm



"Are we causing the problem by stacking - maybe we should spend". No.... spending caused the problem - as bush said spend spend spend. Savings make an economy grow, not spending. Capitalism as all about delayed gratification. 

And you think our precious is causing the governments around the world to borrow tens of trillions per year. And the Greeks brought it on through stacking I suppose and the Irish and the Spanish and the.......

Errrmmmm errr NO!

Yes this survival stuff is very time consuming. Should we just blow our lot and party. Then you are just poor and a future debt slave. The whole point of this website is how to maintain your freedom in the future.

as ORWELL wrote in his 1984: you will learn to love big brother. Just that some learn quicker than others. In your case you have nothing left to learn. I cannot speak for everyone here but I am (in this respect) retarded. And proud of it. Or just call me stubborn.

It is not the man in the fight that counts but the fight in the man. I will live as a free man in this country or I will be free in another. Please send me a card from your 10 second zero gravity experience. (if they let you). I will probably be on some warm beach drinking inexpensive beer after consuming some inexpensive organic food.

Yes the pressure is immense. Some want to return to the Matrix and eat a juicy stake. Problem is - that guy had his memory wiped. Once you take the red pill there is no going back. There is only denial and cognitive dissonance in your plans.

But tell me - once you have blown your stack - what then? 

I might need to look up to see if my current understanding of troll is correct.

Do we want to live in a world of mad max? Well buying that sports car might just tip us all over the edge. Look - oil has so much concentrated energy in it that it will be consumed into extinction. All this environment stuff is crap, if 10% of the population of the U.S. decided to stop burning today it would achieve nothing. All you do is push the price down. There are 1 Billion Chinese wanting to drive cars. Folks around the world will just say gee, thanks for all that cheap oil - their economy will grow faster and then they will consume more oil until you are walking around and the oil usage has gone to todays usage. A 20 year old has been alive to witness half of the oil burnt than has been burnt by humans in the last 200,000 years. It took billion of sunlight hours to create all that vegetation which then formed oil. Yes we will run out. Yes it will get rationed to the peeps as military will always have first dabs.

On the other hand - you only live once (ok lets not go there) so get those credit cards and max them out buying stuff you do not need or really want and just have some fun. Oh hang on a bit - isnt that what got us into this mess in the first place? (public and private debt).


¤ · Mar 22, 2012 - 6:52pm

Eraserhead [full movie]

Video unavailable
· Mar 22, 2012 - 7:00pm

Silver premium and beatdowns

Correct me if my memory is making up fantasies, but it sure seems that when the premiums on silver drop, a beatdown has followed. 

Somehow, might an overstock at the dealers portend a drop in metals price? Provident is about .50 over spot for junk. SDstacker says rounds are only .99 over spot. that seems low... Perhaps I'll sit on my dry powder another day.

Number 47 · Mar 22, 2012 - 7:06pm


Wish I could hat tip you more for that post. Well said sir.

dropout TF · Mar 22, 2012 - 7:07pm

The Legendary Mr. Schultz

In his last newsletter to his subscribers before he retired he wrote;

"Roughly speaking, the mess we are in is the worst since the 17th century financial collapse. Comparisons with the 1930's are ludicrous. We've gone far beyond that. And, alas, the courage and political will to recognize the mess and act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched and where the rot is by far the deepest." 

A very wise man. When he speaks, I for one pay attention. You would be wise to also!

S Roche · Mar 22, 2012 - 7:23pm

Another Indicator

I'd been waiting for it...Nouriel Roubini has just been tweeting his disdain for gold and goldbugs again. 

zilverreiger · Mar 22, 2012 - 7:36pm
Doc1800 GoldMania3000 · Mar 22, 2012 - 7:38pm


If we were to chart buying power of gold, a statistical relevant time horizon would have to be in place in order for the data and ultimate conclusion based on that data could be reached.

R man J · Mar 22, 2012 - 7:40pm

5 tons of nickels

Interesting bit of trivia from Mike Maloney's latest blog piece. Kyle Bass bought $1 million worth of nickels , that is 20,000,000 nickels, by my calculations this weighs 5 TONS!!! but he has an immediate 33% return because nickels have a 75% copper, 25% zinc content and contain materials worth $0.0675 each.

Baikalic Magpie · Mar 22, 2012 - 7:44pm


My point is that oil supply has become inflexible to price increase/demand increase. This is counter to normal supply/demand behavior. If an oil supplier sees a price increase from 100 to 145 USD in 2008, it would want to take advantage of that increase by providing more oil. AFAIK that's how markets work, an increase in price is an incentive for suppliers to increase supply by increasing the profit incentive. An increase in supply will lower prices if demand is constant but this is not true of oil since an increased supply typically increases the ability of an economy to grow and demand more oil for more uses.

This is where it may be pertinent to bring up the Jevons paradox/Khazzoom-Brookes postulate. Any efficiency gain that leads to an increase in supply of energy will lead to a total net increase in use of energy, not less, because of the economic growth factor.

Santa's Elf · Mar 22, 2012 - 7:49pm

Re: Santa....Another country?

Let me first say that I, for one, am a big fan of Santa--I didn't pick my name in reference to the North Pole guy. I also want to preface my comments by saying that I'm not trying to be critical of those who think differently than I do. However, Santa's latest is something I easily dismiss. I am an average middle-class Joe with a family and 101 ties to this country--I'm not going anywhere. Talk of passports, foreign bank accounts, etc. is all just noise to me. In fact, I think it's even debatable that the grass might be greener somewhere else, but that's another topic.

I'll continue to take measures to protect myself, but these things won't change: I was born in this country, I love this country (with all of its flaws), and I will go down fighting for this country, my family and the freedoms that are slowing being taken away from us. Just like any other problem, I see no merit in running away from it.

apex101 · Mar 22, 2012 - 7:53pm

@Santas Elf

I agree 1000%. Its pretty bad here. But look at the other countries. Where do like minded people like us go? I think its better to stay and fight. No matter where you go in the world countries are running the printing press and created all types of diasters. I think the usa is the last place.

cpnscarlet Baikalic · Mar 22, 2012 - 8:01pm

@Baikalic - All salient

@Baikalic - All salient points. For me, it's first and foremost a matter of energy that is there. The earth is a seething cauldron not too far down into the crust, so the energy to convert one thing to another is there - abiotic oil is plausible, and I believe probable. And I don't think anyone has an exact theory of exactly where in the crust (or even mantle) this may occur.

But something basic - alluding to #3 - Since I was 12, I've been bombarded by media and gov't about "oil running out" and that's why we've had crisis after crisis. But I know it's been more about monetary policy and the petrodollar system that has caused these spikes in price. Now you say -#1 - higher prices should have brought more oil and line and didn't. OK, but has the price ever been sufficiently high for a long enough period for that too happen? The spikes in crude prices have been impressive, but they were just that - spikes. The slow trends, IMHO, can always be attributed to lousy US monetary policy after 1971. So, simply, my belief in abiotic oil (or at least a lack of belief in peak oil) is that it goes against the tripe the gov't and MSM tries to feed us. I guess this may be one area in my life where my paranoia reinforces my analysis instead of the other way around.

Broke · Mar 22, 2012 - 8:12pm

Not waiting any more

Just bought 500 once silver ,hope the floor will hold !!!!!!

pourty · Mar 22, 2012 - 8:17pm

@Santa's advice

I can see how seperating body, citizenship, and money would make sense... if you had the money to make it work.

But I think most of us middle-class stiffs would have a difficult time at best. Getting citizenship elsewhere might be doable, but you've got to have a rather large nest-egg before it makes sense to move your money off-shore, and I bargain to say most of us are not there. The gentleman who posted he's considering buying an airplane is case in point. Most of us could ill afford a private plane capable of easily reaching another country (not to mention the pilot's training necessary to make this happen).

Once we've reached a certain level, it's probably not a bad idea to diversify assets out of country (and now that I've been stacking for a while, I'm seriously considering vault storage in Canada or somewhere). But in reality, my assets are meager to the point that I'm still living in the 'burbs rather than in a bunker on a few acres out in the wilderness. I'm a good 20 miles from the nearest "large city", so hopefully any future social unrest to come will be comparatively muted where we're at.

So I'll sit tight and hope for the best, prepare as much as possible, but I think most of us are already where we're at for the duration, come hell or high-water, and we may end up with both. 

If silver shoots past $1K per ounce (without several hundred percent inflation to go with it), then I'll starting talking like you rich folk, until then, I'm making practical plans for a lean budget.

Number 47 · Mar 22, 2012 - 8:18pm

@santas elf

I applaud your defiance, fighting a cause is admirable, please consider though that you might not want your family there while you do so. Keep your options open, it costs nothing more than having a plan. Freedoms are worth fighting for but they can be removed at the toss of a die. It costs nothing to plan to remove those most vulnerable from danger.

If I'm honest, Americans already have less freedoms than I do here in Europe, they seem to get less by the day. The right to bear arms is the only one I don't have but it is not one I require. I'll never bear enough arms to defeat a nation state and that is your enemy right now so what is the point?

Perhaps I perceive freedom differently than most. I see it this way. I have the freedom to do ANYTHING I want, as long as I am prepared to deal with the consequences.

Freedom is dictated by morality, not statements of men long dead, nor statements from men living.

Those that grant them, those that take them away. True freedom is doing what you want regardless. Morality is deciding where to draw the line.

ScottJ · Mar 22, 2012 - 8:19pm

Re Santa; Running from the Problem

I am not a fan of Santa's advice,

I think he is getting old and paranoid... forgetting the human factor in all of this...

He is a product of an elder generations; different times and different mindsets...

My generation and those younger than me are stuck in this nonsense... What about us?

And how about the people doing everything they can,trying to get by, victimized by the system? So long to them as well I suppose?

There is no "escaping" it for those unable to do so...

What we must have is a remolding of our entire society that ever single human being deserves. There is always a way if there is a common focus to get there... it is only us who holds ourselves back from changing the world at any given moment.

We are in a ridiculous but opportunistic time period to be alive in the greater human history...

How will these days be remembered... for we are the characters of history that will usher in the future....


Scott J

¤ · Mar 22, 2012 - 8:21pm
· Mar 22, 2012 - 8:53pm

I beg you again

Please take the time to read this. Print it off and read it over and over if you have to. It is extremely important that you have a working understanding of this material. I admit that it is very challenging to get your arms around it. Even I had to read parts of it several times before I "got it".

With both gold and silver currently in backwardation, you must understand the implications. This current backwardation may not be "it" in terms of the final dollar meltdown...but...the backwardation must be "fixed" and like late 2010, it will be fixed by a rapidly rising dollar price for both metals.

Diamond · Mar 22, 2012 - 9:01pm


I found this comment on today's I feel as if I am getting ready for capitulation point, as well:

"I have been forced to capitulate. I have watched silver get smashed down from $37. Its fell every day since its now $31 asnd I have had it. Cashed in 630 Kilos at a loss of £60,000. Yea it might come back but will get smashed down again like it did in Feb and sept, so whats the point.

Silver is not going anywhere for 30 years.
I have done nothing but lose money.
Look out for the december lows of $26.
Sell in May and go away they say, it wont be worth selling but I bet it does, it could be even worse and be back to $15. remember 2008 @ $8"

$15 silver wouldn't surprise me, either.

Wizard · Mar 22, 2012 - 9:03pm

@ Dr Jerome, Why Not Do Both

 As a matter of fact it was coin collecting that led me to this site and to stacking in general. I have been a collector off and on my entire life. And four years ago changed from collecting Morgan and Peace Dollar VAM's (Van Allen-Mallis Varieties) to the Eisenhower Dollar Series. As I have learned in my short four years of studying and collecting them. They are the most un-studied coin series in all of numismatics and new discoveries are being made all of the time. One thing we are working on at the moment is the gathering of evidence of and photographing a small figure directly North East of the designers initials on the reverse of only the 1971 and 1972 Eisenhower's that that was recently discovered on Very Early Die State Coins turn out to be a Little Guy Golfing On The Moon, Representing when Allen Shepard smuggled a modified Golf Club head that would screw onto a sample gathering arm and two Golf Balls onto the The Moon Shot Mission and just before boarding the ship to leave the moon, took the opportunity to make a couple of drives on the moon. That is just one of the most recent discoveries in the Eisenhower Dollar series. There have been many more in the past few years.

I love being on the leading edge of these discoveries in coin collecting, And I am a Stacker Toowink

JimmyTheHand · Mar 22, 2012 - 9:04pm


I'm not sure about the rest of you, but I have become desensitized to the actions of the cartels and the EE. In this latest price action I am not phased at all and have continued stacking. So I guess I could say I'm standing their with you man. I'll stand where I am regardless of what gets thrown at me. A man has got to stand for something and dammit if my Grandad can fight against an invading army over in Europe you can bet your ass I can stand up to some bankers and politicians.

tread_w_care · Mar 22, 2012 - 9:09pm

FOFOA Backwardation article

Struggled through it several times, and read it long ago, still not sure I get it.

For those of you who DO get it, would love to hear more attempts to break it down for us lowly laymen.

Mucho garcias for helping us dummies understand it.

Bugzy · Mar 22, 2012 - 9:14pm

The oil thing

Have you watched the crash course by Chris Martenson?

All growth has been the result of "oil slaves" . (call them petro work persons if it make you feel better) Put one gallon of gasoline in a car - drive until you run out. Then get out and push it back to were you started from. Probably take you about two weeks of very hard labour - ergo 1 gallon of gasoline = 14 slaves working for 1 day. If you use say 3 gallons for a trip in your car then you have used 42 slave days of work. these work slaves cost you about $12 or so. (maybe $15). Now that is very cheap work output.

Everything we do we use this very cheap energy to do it. Even building windmills and hydro dams.

Graph the use of oil with the increase in world population. The food we eat, we no longer live on farms, gasoline does the work for us. The cars we drive, steel is mined for the ore (gasoline). Ground down, separated transported to the steel work - gasoline gasoline gasoline. All that plastic in the car comes form oil. Butadiene rubber for car tyres (clue to my home country there) comes from oil too

Yet all the low hanging fruit of ALL these resources are now gone. More and more oil is needed to get less and less return. Copper, Iron Ore, fish etc - you name it it is getting harder to get.

No longer can you just stick a straw into the desert or wherever those hillbillies used to live and have oil gushing out @ a cost of $2 a barrel. The oil sands in Alberta have a cost of $50 a barrel. Those rigs that drill miles in to the ocean and then still miles further. This is very costly. They would not have to go to such lengths if there was lower hanging fruit. Oil is therefore unable to drop below $50 barrel or Canada goes offline. Not going to happen.

Maybe, maybe there is a plan to keep production low to deliberately cause a financial meltdown to trash the currencies to have us sheeple bleating about them putting it all right and hence accepting a new world/currency order etc. I don't think so. As the price goes up, more explorers enter the market place (assuming barriers to entry are not great) (actually they are, they are huge) - cancel that one.

One would have to assume that the current players have a political agenda to keep prices high and hence limit supply. Yet the economies are at breaking point and cheaper oil would save them, for a small can kicking while.

However if it is harder and more expensive to get, then prices would need to go higher to make development worthwhile. This is how it works in a free market. As more oil is found, more demand comes to play and the price settles at a higher equilibrium. We appear to be productively capped.

My concern is the chaos going forward. If the current population level is the effect of current oil supply (and the correlation is near 1) then if we are at or even past peak then the effects of lower supply on the population will make drought Africa looks like a tea party.

Say we have been around for 200,000 years. Well the human population of the world hardly changed in 199,900 years. 100 or so years ago we started burning oil in machines. We increased our capacity for life on this planet because of this. It went exponential. Especially since the end of WW2.

What if........this last 100 years that we have got used to is not the real norm but an aberration. Maybe we will be reverting to the mean. What if, the economies of the world are just now starting to feel the start of this reversion. Maybe they are trying to hold it all together. 

I suspect a spiritual revolution is close at hand. Meaning will cease to be defined by ones ability for excessive retail therapy. Things that we held sacred since the dawn of time will again become sacred. In one way will be coming home to ourselves.

Oh well, on a brighter note.....we are almost back to 1650 ....


apex101 · Mar 22, 2012 - 9:17pm

Rolling through the gold

Rolling through the gold futures now i dont see any backwardation?

JimmyTheHand · Mar 22, 2012 - 9:23pm


You gotta be made of tougher stuff than that. Where else will you put your money besides? In a savings account so that it can shrink eight or ten percent a year? No thanks....

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11/28 8:30 ET Q3 GDP 2nd guess
11/28 10:00 ET New home sales
11/29 8:30 ET Personal Income and Spending
11/29 10:00 ET Pending home sales
11/29 2:00 ET November FOMC minutes

Key Economic Events week of 11/19

11/20 8:30 ET Housing Starts
11/21 8:30 ET Durable Goods
11/21 10:00 ET UMich Sentiment
11/21 10:00 ET LEIII
11/21 10:00 ET Existing Home Sales