Thursday, October 23, 2008

MCR wrote:


I've seen a few postings the lead me to think that panic and fear are creeping into people's thinking. Perhaps I haven't been clear enough. And let me say that everyone should take a breath. This is going to be a long process and there's too much urgency creeping in to people's thinking. If you cave in now you won't stand a chance against what's yet to come.


For the longer term (maybe 30-50 years) I do agree that gold by itself may not be a permanent answer to anything. It may prove to be but my vision doesn't reach that far. From 2004 through the present day, however, I have recognized something that many don't seem to grasp and I have said it clearly in my lectures and writings.

Too many people see that the end of the petroleum-industrial age is here and are planning and preparing to live in a post-petroleum world. That is a big mistake. It's great to start repairing your soil, plant a vegetable garden, reduce debt etc. But what lies before us is what I have called the "Transition Period" -- a period of turbulence, uncertainty, possibly violence, and massive social and economic dislocation. However money will be defined in the future, it will most certainly have to have one quality. It must be tied and limited bysomething tangible that is also finite -- like energy is. Historically, over maybe six thousand years, gold has been that accepted refuge and it still is. The thing with gold is that it is known, recognized and accepted already. Consider the advantage of gold as opposed to say, trying to get people to accept something new as money. That work is already done with gold. Of all the options available, I have chosen gold as a PART of my plan to survive the"Transition Period" because if one doesn't get through that phase,whatever follows is moot. This is not for just the "rich and famous" as someone said. Anyone can start buying small amounts of gold for a few hundred dollars. No, one cannot eat gold. But one can carry it. One can measure it. One can trust that it is what it is; an unreactive metal that is always the same weight and same measure. One can trade gold for other things. It doesn't require someone to go and look up in tables or other material to find out what it is. It is simple and it is universally recognized as a store of value. Gold is part of a recommended mix of many survival needs, not the only thing I recommend. During the transition period it will offer choices that few other commodities, with similar characteristics will. It is by far not the only tool in my tool kit, nor should it be in yours.


I guess I am a little disappointed that so many folks don't seem to understand what's happening with oil prices. It's been on the map for a long time. TPTB are losing their control as must happen as the paradigm shifts. The $147 price seen this summer broke the backs of over-extended consumers. Demand destruction was too successful. Everything that has happened since was triggered by that, and I repeat that I believe the July price spike was intentionally induced.The collapse hasn't even begun to hit home. Millions more are going to be unemployed and the business shut downs have only just begun. The trickle-down effect hasn't fully hit home. The economy has crashed so far, so fast, that even plummeting oil prices aren't reigniting consumption. Unemployed people don't drive as much no matter what the gas price is and they won't until they have a job again. The problem is that most of them won't have jobs again. All the economic predictions are saying that waves of shutdowns, layoffs and firings are still coming. Airlines are almost giving away seats because flights are getting empty. I just talked to someone at the dog park who flew round trip to NY for $349 two weeks ago. Then I spoke to someone who had just bought a roundtrip to Chicago for only $179. As all the Peak Oil experts have been saying for years, a collapse in oil prices is a very bad thing that makes the so-called Bumpy Plateau look like the Rocky Mountains. Why? It de-inecentivizes investment in alternative energies and delays any efforts to wean ourselves from oil. Oil below a certain price makes it no longer economical to invest in wind, solar, tar sands, deepwater or any of the more expensive alternatives and the things that can tide us over. Those regimes are already showing signs of shutting down. A couple of years ago Matt Simmons suggested to me that setting a floor of $100 for oil was a good thing. I agreed completely. We must have some stability to prepare. It is clear now that falling oil prices are not going to stabilize the economy, so we shouldn't look there. They are only going to make the future less safe for all of us. That being said, the recents hints that OPEC may cut production are a good thing. They will help conserve a resource for which we still haven't got an alternative.


soprano13 said...


I've been lurking on FTW for about a year now, reading your maps and researching. Glad you're healthy and happier.

For those of us with enough money to buy gold in smaller quantities but without enough money to pay off a mortgage, do you recommend mortgage insurance, or will insurance companies be useless in the crash to come?


F.Kamilov said...

Of course, Peak Oil related conditions will differ all over the world. And I am not writing-off modern industrial civilisation, as that would be a return to the stone age and an end to humanity's real progress. Such a return would be all too easy! Many countries like Russia, although otherwise superpowers, have never had the levels of industrialisation, consumerism, stock markets or "living standards" that the US and Western European populations do (that is why Reader's Digest always poked fun at us "deficients"). So the West and its flunky third world regimes like Pakistan's will be most severely affected by Peak Oil. As I said once previously, the Central Asian countryside even now isn't much different from what it was 800 years ago when Genghis Khan paid us his visit... I believe the present Russian government is faithful to the traditional authoritarian/state- controlled Russian paradigm, and is taking gradual steps to restore it after the criminal chaos of the 1990s. And the rate of doing so will depend upon the nature of the West's crises and its war moves regarding us. If the West gets another punch tomorrow as it has now during the present financial crisis, the Russian leadership may well take revolutionary strides to restore state control in Russia and its allies.

agape wins said...

Mike, you do not need to post this unless you desire.

I have no objection to Gold, we know how the markets work and what value
is, most people can't balance a
check book, can't comprehend long
I had a friend that carried 2 double eagles for 20 Yr.s, one day a jeweler friend saw them, weighed them, determining they had lost
25% of their value, he stopped packing them!
There are three pawn shops here with signs out "we are buying Gold", they also sell Gold, are
doing both. the prices have no
relationship to real value.
When a waitress or oilfield worker
has some extra, they buy what is handy, if they are out of gas, or beer, they return to the local friendly pawn broker (who they Trust), they store it in a shoe box, or cookie jar & invite strangers (who they trust), in for a party!
Most of them know something bad
is coming, they are spinning their
wheels, because, to them Gold is just another 50 cent piece.
They are being robbed by the system, & lack of education!

Rice Farmer said...

As MCR points out, having a high floor under oil prices is necessary to finance the oil industry itself, which is facing ever-rising costs, and also development of renewables.

There is a whole slew of articles out there now about how low oil prices and the credit crunch are weighing down heavily on the oil and renewables industries. And now this.

Suncor Energy CEO Predicts Failure of Some U.S. Oil Refiners

businessman said...

Mike's advice has always been sound, and in this most recent post he's showing us the soundness of his reasoning once again. There has been huge manipulation of the price of gold downward in recent months. Someone who participates in this Blog gave us an article a few months ago proving that major banks have been selling gold short in massive quantities to drive the price of gold and silver down. In addition, talk with a gold or silver dealer and try to buy the metals at today's quoted market prices. They'll tell you that the wait can be long, and that the price will be much higher than the quoted market price. It's simply hard to find people in the real world who are willing to sell at what's being quoted as today's market prices.

Years ago, when the price of gold was around $400.00 an ounce, Mike told everyone to invest in gold. And you'd be hard pressed to find an investment that's done better than gold since then.

unknown said...

Mike I know you don't want links, but i thought you may find this interesting. It is related to the dollar price.

(is ok to delete afterwards)

F.Kamilov said...

Also, I might add the following to what I have said above: while Peak Oil may be a survivable catastrophe, additional geopolitcal factors might largely negate any such attempts - the likelihood of nuclear conflict is suddenly again rearing its head, this time much more unpredictably than when the MAD doctrine stabilised the old Cold War landscape, because American-NATO recklessness is again on the increase; this should be factored into any formulation regarding the picture of the coming years.

Brian said...

Can you share with us what's in your tool kit? Doesn't have to be specific, just the essentials. You may have shared your map with us, but we still don't think and analyze like you do. It's not easy trying to cram decades of research into a few years. After all, the more we can comprehend, the more we can share with our friends & family. Thank you again for everything.

Donald S. said...

Mr. Rupert,

I just wanted to give you a quick show of my appreciation. Thank you for Crossing the Rubicon. I originally heard about it on NPR and bought it shortly afterword. Because of the depth and volume of material in its pages, I was intimidated, so it sat packed away in a box for the last 2 years. Not until the recent debacle in the financial markets did I finally crack the pages. Nothing I can say about it at this moment will be original, so I will put it simply:

Thank You. Thank you for all your work!

Thank you Very Much!


Donald S.
Cypress, TX