Predictions on the economy

[sambaguy]

Isn't demand from manufacturers a lot greater than demand from speculators?

[Crappiewy]

Nope. The speculators buy it at time of manufacturer or mining. Then they sit on it and control the price. When I was doing copper mining it was the same 2 or 3 companies who would show up wanting to buy the entire production. After 2008 when the price dropped to $1600 per ton for copper they were out in force buying it all up on 5 and 10 year contracts. They are selling it today for $7300 per ton. Still buying it for the $1600 per ton.

[Dodd]

Interesting thread! Gerald Celente predicts austerity measures here after the new year. He calls it economic martial law. Watch for that. It means that 401ks and stuff will be confiscated and folks will be forced to buy bonds.

IMO silver will go back to $45 oz. early 1st quarter 2012.

The market should have fallen years ago but has been artificially propped up. Why? According to Gerald Celente it is to sucker folks into the market to lose whatever they have left. According to some oil execs it is to get the world into as massive a debt as possible so there is no hope of recovery and the banker oligarchs can then rent to us the real estate that our forefathers conquered. It's about getting us dependent.

Along those lines when you start to see banks making loans again, watch for a false recovery. It is the last there will be to sucker all the rubes into false security. It's downhill quickly from there. QE 1 and 2 was about printing trillions of dollars to give to the banks in order to keep the ponzi scheme afloat. There will be an estimated 25% inflation in 2012 as a result. It will seem that everything is getting more expensive. Watch silver. It's a rigged game but they enemy can't keep it down forever.

When the Euro falls we have 2-3 weeks max before the dollar goes. 2012 my friends will be pretty f*d up. Even if this is somehow postponed longer, the U.S. municipal defaults can not be. When cities go bankrupt the feds can put them in receivership and help them (isn't it exciting to imagine what it's like when your local government is in the Feds' pocket?). Well when a hundred municipal defaults cascade down all at once then the Feds can't help. It's over.

Sometime between March and October 2012 there will be a severe enough incident with Iran that they will destroy their own ships in the Strait of Hormuz to block it, causing oil to go to $150 to $200 a barrel. China is preparing for war with us over this btw, as is Russia. Our fuel prices will be double what we pay now, by election time 2012 (which I don't think we'll get because we will be fighting a massive mid-east regional, possibly world, war).

The high fuel prices will put many companies out of business. Don't count on ordering anything online that will need to be shipped. Forget about Kiwis from New Zealand and Bananas from South American. Daniel Estulin ( Club Bilderberg) says if you want that stuff you better grow it yourself. Expect food shortages. Can you feel the fear building? That is the point of orchestrating all of this. Expect the solution posed to be global governance and a bank of the world.

Well, my brilliant train of thought just left the station because this crap keeps me awake and sleep deprivation is like being drunk. I do expect that this time next year silver will be worth double what it is now. Gold $3000? I don't know. All fortunes based on the lie that the U.S. dollar exists will be lost in 2012.

Food stamps and welfare checks will be the last to go because the cities will burn. Hand outs will last a few years so that the plantation masters don't lose all control. People will be most mad about how long it took the gov to save them and how racist it is that it took weeks. Just like Hurricane Katrina.

[sambaguy]

I don't think it is reasonable to call those speculators.  I might call those middlemen, and the distinction matters.  When I think of speculators, I think of Hedge Fund types, often in the relatively retail (individual and small) side of investing.  I consider the middlemen to be part of industry.  Their speculation isn't like the speculation of Joe Smith in Smalltown, USA who is buying commodities b/c Big Jim in Singapore says so.  Joe Smith is certainly going to have to liquidate, and my guess is that Joe Middleman is going to have to also.  After all, the liquidity crunch will be unprecedented.  Liquidity crunches cause drops in prices of widgets.  Isn't that proof?

[Dodd]

Well I don't know what you mean by that, but my plan is the same no matter what happens. I'm just in California temporarily as a capitalist extracting wealth while it makes sense do so.

[sambaguy]

I was responding to C------Wy. 

[Crappiewy]

Crappie is a fish by the way. No need to censor.

No these guys are speculators. They will hold the metals as long as is necessary to maintain their profit.

Trust me. Metal prices wont come down. Demand right now is at its lowest in 20 years. Most of the mines I mentioned are Idle. They cannot aford to operate at the contract price so the speculators grant them reprieve from sales. But not the price.

[sambaguy]

Fish ->

OK, call them speculators.  Of course they will hold as long as they want.  In a liquidity crunch, though, they won't have a choice, b/c demand for base metals, excepting for ammo and maybe a bit of other, unknown types of items, will surely plummet.  I believe there will be mass death in a liquidity crunch.  Mass death implies that demand will fall off a cliff.  Er, right?

Or take hyperinflation.  Industrial demand will plummet.  No one will be able to afford cars, newly built houses, etc.  Investor demand will not skyrocket b/c base metals do not serve as money well.  Consult the Austrian School for that, I don't remember the specific thinker. 

Hedge Fund Joe will never sell to any manufacturing company during ordinary times, and his economic vote, I would guess, counts big time. 

If I were in Wyoming, I could have these discussions much more quickly.  I'm staying in NoDak in hopes of making better money.  I don't think the jobs in WY right now would be as good b/c I don't really think I can do a rotating shift.  Ergh.

[Paul Bonneau]

I think Dodd's predictions above are pretty accurate, except war with China and Russia. Think of it from the point of the ruling class in those countries. What possible reason is there for the Chinese ruling class to invade the US? To grab our factories? They already have them! To grab our farmland to feed their people? No, it's much less expensive to let Americans farm their own farms and just buy the food, paying with goods they produce in their factories.

It's not to say wars won't happen, because war is often in the interests of the ruling classes. But I expect them to be more localized, except special cases like where there is oil (yeah we and Europeans will continue to occupy the Middle East). Maybe America will invade Mexico. But Chinese are not coming here, other than to purchase an occasional property here and there, which is not a problem. Our problem will never be invasion. Our problem is and always will be the occupation of America by the lizard people running Washington D.C.

As to ammo, what is "enough"? For example with .308, I think you need enough .308 for 100 to 200 rounds per bolt gun (2 or 3 times that much for a semi-auto)  for actual fighting. Why? If you are fighting, by the time you have used up 200 rounds and killed 50 people, you will be dead. Maybe a lot sooner! At any rate, your chances of going beyond 200 rounds fired in anger from a bolt gun seem slim indeed (we will not be following "get a lot of lead in the air" doctrine). For practice, you need some more, but I don't think rifle skills are that perishable (pistol skills are probably more so). You may be able to reload and use cast bullets for this small amount of practice, so a couple hundred rounds total with reloading supplies should be plenty.

Why 200 rounds per rifle? Because you will be loaning out your guns to people who didn't think ahead, to help provide security needs. Any gun you have without ammo is just a club, so you have to think about it on a per-rifle basis.

Finally you need ammo for trade, however much you are comfortable getting. I think ammo is an excellent trade good.

The above may well be total BS, so don't take it too seriously.   

[sambaguy]

The only reason to trade ammo is if one assumes 1) base metal will increase in price relative to PMs or 2) ammo would be limited, which can only happen due to mad max or to new gov't taxes or restrictions.

China wouldn't invade us.  That would play to our strengths.  They would invade Saudi Arabia.  That would certainly play to our weakness.  At least, that might be my strategy, if I were the Reds. 

[adambomb]

China wouldn't invade us.  That would play to our strengths.  They would invade Saudi Arabia.  That would certainly play to our weakness.  At least, that might be my strategy, if I were the Reds. 

That is a darned good point.  Much how there was actually fighting during the cold war, but it all took place in Afghanistan.  And if it weren't for the fact that everybody had nukes pointed at each other, we probably wouldn't have been as secretive about it.

It also does play well into Sun Tzu's Art of War, in that protracted war in a distant country will ruin a country.  And we're already quite famous for doing that with relatively little provocation anyway.

[sambaguy]

And I still hold that demand for base metals will plummet within about twelve months!

[Paul Bonneau]

I'm assuming a government restriction on supply of cartridges. To me that seems the most likely path of gun control these days. Or very high taxes, as with cigarettes. Either can still happen even if ammo production costs go down. That's why I still think they would make good trade goods. However if the depression comes and demand for metal drops BEFORE the gun control legislation, there might be a period where ammo cost is pretty reasonable. That would be a good time to stock up.

If Ron Paul gets elected (BIG if!) then I expect ammo cost to go way down because all the troops are coming home, and military consumption would be very low.

[sambaguy]

I think the pro-gun lobby in this country is still relatively strong, and the only thing worsening that would be mass immigration (oops) or mass starvation from the catastrophe (possible).  Increasing crime, however, should strengthen the (pro)-gun lobby.  I could easily see taxes on ammo rising a lot.  In Australia, a round of .308 costs $4 b/c the left disarmed Australians. 

As to crappie's argument that the price of base metals will increase, they certainly did during the 70s, and Jim Rogers made fortunes, but there wasn't mass starvation then.  If only 3% starves this time, consumption of base metal will drop.  Just consider the price swings from late 2008.

[EHBIV]

I am not sure what the prices of ammunition or base metals will do in the future but I know what ammunition prices have done over the last few years.

Over the weekend I bought some additional ammunition. When I put it away next to identical ammunition I purchased 3-4 years ago I was shocked to notice that the price I paid this weekend was about 50% more than prices I paid for the same ammunition I bought previously.

Sadly, I don't think it was due to taxes (like those you see on gasoline at both the Federal and Local levels). I do think that inflation, in and of itself, is starting to really accelerate regardless of what the official figures are. I have noticed similar price shock with my grocery bill.

Perhaps I am experiencing this sticker shock because I was in Iraq for a year and didn't need to purchase much while I was over there but can anyone tell me if my observations are localized or of a more general nature? I remember the "official" inflation figures under Carter being around 21% and, supposedly, things now aren't nearly that bad but my money DEFINITELY doesn't purchase what it did a few years ago and ammunition, fuel, groceries, etc., seem to be only the tip of the iceberg.

On the other hand, there are PLENTY of folks selling their unneeded toys to pay the bills so, if you're able to pay cash, there are a lot of deals out there but, as has been said, the demand for NEW big-ticket items such as houses, automobiles, even major appliances, seems to be much less locally than it used to be.