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There is a 50 year supply of oil in the ground, but only a 13 year
supply of silver.
This means that if peak oil is true, then peak silver is more true, that we will run out of silver, first. If that
happens, you can forget about peak oil, because without silver, we won't have
any computers or electronics to be able to go out and explore for, or pump,
or deliver, any oil.
But wait, see, 10 years ago, when I first got into silver, the world
had a 15-16 year supply of silver in the ground. Why isn't it down to 6?
Because we explore for, and find, more silver all the time. We always have.
Also, with rising prices, previously explored and uneconomic silver deposits
suddenly can become economic and add to supply, especially as silver prices
have risen from $5 to $30/oz.
See, mankind has been exploring for, finding and mining silver, for
maybe up to 6000 years. In contrast, oil has a shorter history, only going
back 160 years to the mid 1800's. And the oil market today is so large, that
we feel we are dependent on it, and in many ways, we are, and this kind of
dependency tends to bring out irrational fears.
The general trend has been that the number of years of oil in the
ground always goes up. In 1975, we had only a 25 year supply of oil, and the
world was supposed to run out by the time I was 30. I'm 41, and now the world
has a 50 year supply. (See HSBC article: http://green.blogs.nytimes.com/2011/03/30/less-than-50-years-of-oil-left-hsbc-warns/)
See, the trend is that in the next 50 years, the world will have a 100
year supply of oil.
But going back even further, about 100 years ago, there was only a 2-3
year supply of oil in the ground.
People predicting shortages have been around forever. Lot said to
Abraham, there is not enough water for both of our flocks, so you go one way,
and I'll go another. Malthus predicted we would soon run out of food, way
back in 1798. O-kay!
So let's agree that we will run out of "cheap oil". Agreed.
But we will run out of "cheap silver" far sooner, and thus, silver
is the better investment! The world should try to squeeze $2.7 trillion in
oil revenues into the tiny $30 billion silver market and watch silver prices
explode upwards due to the economic realities of scale, size, and price!
Some people are saying that we are not exploring for oil fast enough,
despite the rising reserves. OK. There might be another rational explanation,
other than "the world is running out".
See commodities run in cycles, with low prices, and high prices. High
prices lead to exploration booms, which tend to stop during cycles of low
prices. These cycles can last 30-60 years.
Oil was $10/barrel in the year 2000--the low price time. Oil was $43/barrel
back in 1980--the last price peak. That's a 20 year cycle, for just a one way
price movement, a drop. The monetary base has increased ten times since 1980,
so the prior peak price was really $430/barrel. That's a big swing in prices
for a 20 year commodity cycle, the equivalent of going from $430 to $10.
Basic economics explains a lot. The economic incentives to go out and
explore for more oil are a lot less when oil is $10, as it was in recent
history, and oil at $85 is still "low", down 80% from the peak!
Another factor vastly reducing oil exploration incentives in our
modern world is that 80-90 percent of world oil production has been
confiscated by the dictators running the world's nations. A perfect example
is the oil found by the Hunt brothers in Lybia. Lybia stole fields worth $5 billion from the Hunts. Now,
after that happens, where is the economic incentive for anyone to explore for
oil in Lybia? And a few months ago, Venezuela
nationalized oil, again.
See, 80 to 90 percent of the best places to explore for oil in the
world are off limits to free market exploration. And yet, the world is still
managing to find an ever increasing annual number of years of oil left.
Amazing!
Imagine how much oil the world would explore for, and find, if there
were no dictators stealing oil, and if oil prices were at $430/barrel! Hint, most "peak oiler" guys cannot imagine such
circumstances. (OK, yes, but we still have dictators!) I know. I understand.
I agree with the reality of today. But how many revolts would there be
against such dictators when people can no longer afford oil or food?
Conditions of scarcity caused by dictators tend to help remove such dictators
from power. Witness Egypt.
And let's also consider the remaining 10-20 percent of the oil in the
"free" world? Well, about 9 cents per gallon of gas goes to
"oil profits" and about 50 cents goes to state and federal taxes.
So, about 80% of the world's "free" oil is being confiscated at the
pump in taxes.
Yet with all that theft of oil, the world's oil reserves are still
growing! Do you see any reason to be optimistic yet?
See, in my view, the world does not have an "oil shortage"
problem. Instead, the world has a "freedom shortage" problem. The
best way to increase freedom is to buy silver, as this takes away the power
of governments to steal by using the printing press to print paper money.
Yes, my view is supported by my ideals. There is also the issue of
prophecy, which matches exactly with the history of the last 100 years. The
Bible says that in the last days, travel and knowledge will increase.
"Daniel 12:4 But you, Daniel, roll up and seal
the words of the scroll until the time of the end. Many will go here and
there to increase knowledge.”
Is anyone worried about the impending world wide
banana shortage? No? Why not? After all, there is only a 20 day supply in the
whole world. After that, all the green bananas turn brown and are rotten.
Nobody worried? Why? Because more bananas are always growing.
As far as we know, oil comes up from the earth and re-fills old oil
fields, over time. This is the abiotic theory of oil, that
oil bubbles up from the earth's magma. If that's the case, we essentially
have an unlimited supply of oil.
I would tend to be more likely to believe peak oil proponants
if they understood basic economic laws.
As oil prices go up, people will naturally use less gas, if the
economic pain is high enough. As far as I can see, the rise in oil from $10
to $100 has hardly caused a reduction in gas use, and gas prices only rose
from about $1.50 to $4.50, only 3 times.
But this just goes to show that oil, at $10, was ridiculously cheap,
and thus, recently extremely abundant! (Hint, not scarce, not running out.)
Again, with oil now at $85, oil is still down more than 80% from it's inflation adjusted high of $430/barrel from 1980.
As oil prices rise, not only are there are higher economic incentives
to explore for more oil, but also, vastly larger oil fields with lower grade
oils suddenly become more economic to produce from.
There's that word again, "economic", which trips up the peak oil
crowd.
The peak oilers warn about this lower grade oil, warning about the
lower "energy returned on energy invested" (EREI), warning that if
the energy return heads to zero, we run out. I get that.
But lower grade deposits have two interesting points about them.
First, today, many are economic even with oil 80% lower than prices that the
world can tolerate! Second, the good point about lower grade oil deposits, is that like almost all lower grade mining
projects, the size of the deposit tends to grow exponentially larger, thus
aiding exponential growth rates of oil usage.
The other factor not often considered about "energy returned on
energy invested" (EREI) arguments is that the proponants
count all costs in terms of energy, and this is not true. Energy is only
about 4% of the world economy, only about $2 trillion out of about $50
trillion or so. Costs are usually in dollars, and could also be counted in
terms of gold.
The EREI proponants say that when energy is
spent, it is destroyed. And they also correctly warn that dollars could be
destroyed. True, and true. And thus, they worry, and warn that we could
"run out of money" to spend on oil. NOT TRUE. Why?
They forgot about gold. Gold is not destroyed when it is spent, but
rather, it just changes hands. In fact, when gold goes into the hands of
people who have successfully explored for, and managed, and produced oil for
the world to solve our oil needs, it goes into the best possible hands in the
world, because those people will likely continue to try to produce oil for
the world! Furthermore, as gold goes up in price, there is MORE MONEY for all
the holders of all the gold in the world.
Here's a comparison to show why there will be a lot more money if
paper money goes away completely. If we could not spent
paper money on oil, we would have to spend gold and/or silver. What would
that look like?
Let's start by looking at how much paper money is out there, and the annual
value of the oil and gold production.
Currently, there is always seemly a dire shortage of money, and yet,
there is only about $50-60 trillion worth of paper currency. Despite the fact
that they are always printing it, the problem is that the value keeps going
down, resulting in a weirdly stable $50-60 billion for the world economy over
the last ten years.
The world produces about $3 trillion of oil per year. The math is 88
million barrels per day, x 365 days, x $85/barrel = $2.7 trillion.
The world mines about $130 billion, or $0.13 trillion, of gold per
year.
2.7/.13 = 21 Thus, the world's oil production is worth about 21 times
as much as the world's gold production.
But what if the entire world used gold for money? And what if the
world still spent only 5% of the world's gold production on oil production,
because the world has other things to buy with the gold, too.
Well, what if the world's gold production was worth 20 times as much
as the world's oil production? It could happen. After all, the detractors of
gold say that "you can't eat gold". But that's a benefit. See, if
gold prices go up, nobody starves, and mining simply increases!
So, to measure value in terms of "stable dollars", because
that's how our minds value things today, what would gold values be if gold
production were worth 20 times oil production, and if there were no paper
money on earth, and if only 5% of gold production were spent on all world oil
production?
Math: $2.7 trillion worth of annual oil production x 20 = $54
trillion, divided by 75 million oz. of gold annual production, = $720,000
dollars per ounce. wow. It could happen! And there
would be no shortage of money to spend to go out and explore for oil! Again,
that implies a value for gold, if there is no paper money, and if 5% of gold
production were able to buy 100% of world oil production, because the rest of
gold production would be spent on other things, just like in today's world.
If gold were worth so much, then the world's 5 billion oz. of gold
would be worth $3,600,000 billion. See, that's a lot more money than $50,000
billion in world cash. So, the world does not ever have to worry about
running out of money (poking a major hole in the Energy Returned on Energy
Invested argument), as long as it simply values gold higher. This also means
that gold does not cause a restriction on economic activity, like the bashers
of the gold standard falsely claim. Gold causes a restriction on govenrment intervention, and helps to create an explosion
of freedom that the world so desperatly needs, to
solve world problems like shortages of oil!
Also, as the dollar continues to fail, very very
few people will try to buy 100 barrels of oil to put on their front lawns to
store the equivalent of $8500 worth of wealth. But millions of people will
try to buy $10,000 worth of silver and gold, or far more, and put that in
their vaults at home!
And that information might just be better than silver!
You can buy silver from us at www.jhmint.com
We have much lower prices, or premiums over
spot, right now. Everyone wants to buy on a dip. Now's your chance!
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