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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Follies who wrote (95342)	10/8/2012 11:06:30 PM
From: Maurice Winn	4 Recommendations Read Replies (2) \| Respond to of 218106

Note how already TJ is carefully considering the distance of economic haul for rocks to their mill or to competing mills. Trucks are expensive, especially when they are hauling tons of rocks to get grams of gold. When oil is really expensive, it's too costly to haul rocks far at all, let alone get the rocks out of the ground. Even the energy required to pulverize them is significant, as are the lubricants and replacement pieces of steel to keep the show going. In the good old days, when gold was $35 an ounce, oil was $2 a barrel. The pressure was on gold already, with the golden goose of money printing temptingly close and inflation burgeoning. I recall fears of inflation "getting out of hand" and reaching 5% as though it was a magical thing that sneaks in from nowhere and destroys the economic systems. To enable exactly that, the price of gold was detached from the production of US$ so any amount of $ could be produced without having to have any gold backing it. "In God We Trust" seemed like a pretty good thing to a fairly religious population. In a way, it was even better than "In Gold We Trust" which was the previous idea. "In God We Trust" became actually just "In The Fed and Politicians We Trust". Or, more precisely, "We are going to put our hope and spare change in the hands of the electorates and their self-dealing political charlatans". So, it's not surprising that oil went from $2 a barrel to 20x as much = $40 a barrel over the next decade to 1980 and gold went ballistic from $35 an ounce to 20x as much in the same time. Gold and oil both then slid for a couple of decades to $10 and $280, retaining a constant ratio [near enough for government work and to allow for a bit of volatility]. So, when pricing gold, the dominant factor is the long run marginal cost of another gram of gold hiding in a truckload of rocks. There are the all-out panic times when anything but money is a wise choice, and especially something portable with which to flee, or which has already been stashed in a safe place far away to where the fleeing can go. Those times are so few and far between that even having gold hiding in a sock is no protection as any number of people found when Germans loaded them into rail wagons to go to Auschwitz. It's probably better than nothing - a few nausages might buy a bit of grace. My experience of such pixelation processes is that governments will print their way out of trouble, then do a bit of a reset, missing out the all-out panic stage, by robbing savers [who are always a sensible and peaceable lot] to keep the show stable enough to get back in control. It's very disappointing for savers, but in a decade or two, nobody remembers them, or cares, though some people do remember what happened and keep a wary eye out for a reenactment, and hover close to an exit. What's the price of oil? There's an awful lot of the stuff around and Peak People is looming, with everyone doing what they can to minimize how much money they hand over for fuel and there is a lot they can do. $100 a barrel is too much. Production is surging [of oil and all sorts of other forms of energy, even photovoltaics being economic in many circumstances, especially with the Made in China price collapse]. Mqurice