why to buy "precious" metals when we lack in energy surplus?

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sosMsos's picture
sosMsos
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why to buy "precious" metals when we lack in energy surplus?

Why are we supposed to invest in gold, when we will suffer a global crash in energy supply somewhere in the near future.

Our whole wealth is build upon energy surplus as Chris analyses.

"Precious" metals derive their value from the grade of our prosperity, they have no absolut intrinsic value. They loose value  by the grade global  prosperity/ economy  comes down.

And if we assume that after peak oil economy comes down as well in correlation to the loss of energy supply, then precious metals will loose in value aswell, ( like any asset that cant produce energy!)

Imo this is a spot on article that analyses the intrinsic value of gold:

http://www.danielstrading.com/blog/2010/08/11/3-things-to-consider-when-...

When our money cant be viewed as a store of value anymore, why should gold then do the job, its only a substitute for money and its intrinsic  value is based on the believes in mankind. when this breaks the intrinsic value is purely determined by industrial needs!

 

Imo we have to invest our money in energy supply, and not try to protect our what we think is capital, cause the intrinsic value of what we call our capital directly depends on our energy surplus.

So we either have to invest our capital in alternate energy  industry or pile energy in our backyard ( though i dont know how this works) or invest in everything that makes one self autonomuos in the long term!

we need to build little autonoimuos islands, as a community or on our own to face the next decades. Storing capital or food or whatever is the compete wrong way imo!

 

Just my two cents

sosMsos's picture
sosMsos
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Re: why to buy "precious" metals when we lack in energy ...

one thing to add:

My plan looks like this atm:

1. suck out as much money out of the commodity markets as long as it is possible.

Invest the surplus in technology that make

a) me autonomic

b) my family autonomic

c) my community i live in autonomic ...  as best as possible

d) think about piling capital not needed straight out as commodites like gold or whatever..

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robie robinson
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Re: why to buy "precious" metals when we lack in energy ...

Sosmos,

 

Please keep enough gold and silver for the grains(gournd into flour or whole),vegetables,dairy products,beef,lamb,poultry,pork,cooking oil, and maybe biodiesel we'll be selling as we like many in those times will accept little else.

Please don't take this advice in any fashion other than genuine concern.

 

From one who's been prepped since birth,robie

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sosMsos
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Re: why to buy "precious" metals when we lack in energy ...

I would like to see a historical chart of gold prices in relation to other commodities during global depressions like in the 1920th/30th.

But i cant find any to manifest my claims.

 

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Re: why to buy "precious" metals when we lack in energy ...

If fiat money suffers from some collective loss of faith, people will still use money, just not pieces of paper.  But make no mistake, money will always be around, the only question is "in what form will that be?"

The hypothesis above, if I read between the lines, is that a collapse of fiat progresses straight into barter.  In this scenario having things of higher intrinsic value makes sense.  Food, alcohol, medical suplies; what have you.  And then things remain in this condition forever.  Under these conditions precious metals make no sense at all (unless they can be cast into bullets or something).

I personally give this outcome a very, very low chance of happening either on the front end or the back end.  By which I mean I think the chance of skipping from fiat to barter without intermediary forms and expressions of wealth and money as highly improbable.  Precious metals have a pretty good chance of playing some role in the transition period.  

The transition could last for decades.

And then what?  I think there's an even stronger chance that after a general collapse of fiat that humans will return to what they know best and precious metals have played monetary roles for thousands of years.  Consider it a sort of default position.

It's just playing the odds really, nothing much more fancy than that.

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sosMsos
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Re: why to buy "precious" metals when we lack in energy ...

Ya that makes sense somehow. Thanks for the reply.

One thing to add.

So our global aim must be a ressource based economy, like The Zeitgeistmovement promotes it. Am i right?

The economic order during the transistion time is vague, but can be derived from past economic crises.

What about the concept of Silvio Gesell " the natural economic order", where money is just regarded as a claim on "economic performance" (donno how to translate it better)  and less analyzed as a store of value.

Silvio Gesell " the natural economic order" dl here:

http://www.humanwirtschaftspartei.de/module/huwi/info/anlagen/18/neo-nd.pdf

If we had a ressource based currency (like gold/ silver currency), our economic cycle would be even shorter than 80 years cause of the limitations of  the ressources in conjunction with compound interest in relation to population growth.

(To say we had 200 years stable prices in the US before 1918 is pretty easy since populatiopn growth was much smaller and silver/ gold ressources were plenty)

It doesnt matter wether we take compound interest on gold or papermoney! It will have the same effect on the economy. And since gold is limited, the economy will collapse even faster.We face a lack of circulating money even though FED prints debts (money) out of air as most economist says.

We need money that does not come alive through debts, without interest rates -> free money, that only mediates labor. Silvio Gesell has shown that it works.

Only the compound interest forces economies working with fiat money to collapse. Its not the fail of the papermoney itself!

If you need to borough something from a monopoly with the condition to pay it back + some more of the same good - it doesnt matter wether it is papermoney or gold or whatever when there is only one supply to get it from. Thats the fraud.

We need a monetary system that works independent, that cant be viewed as a store of something, only as a mediator of labour.

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Re: why to buy "precious" metals when we lack in energy ...

When I look at the energy use spike in the last 150 years and then consider how trade was conducted previous to that I come back to PM's. They have been used a long time.  They're low tech.  The mining of them will be more difficult without as much energy, so their relative value will likely hold or rise.  People will want money.  The more independent money is of complex government/banking collusion the more honest our basic trade foundation will be.  For more info please read this treatment of this http://mises.org/store/Ethics-of-Money-Production-P536.aspx. 

I also agree that it is wise to have some basic barter items on hand that are also somethings you would use in the long run. Ammo, liquor, etc. 

Let's not forget, that many of the things we have  now will probably not be made in the future or be very expensive, or be useless.  Your average aluminum/ high tensile bicycle takes a lot of energy to make.  Bicycles may well be the cars of your daily commute but in their current form may be more valuable for the raw material.  We might be riding one of these http://www.bamboobikestudio.com/kit.html.  My point is that yes, we will need energy, but in the big picture, it will not necessarily be used to power things that are built on our very complex industrialized manufacturing system. It is a baloon of cheap energy itself.  Having the price of energy rise is equivalent to have a value added tax added at each step of production of goods.  The relative value of most of our daily use items will change dramatically. Energy will be for heat, food, hopefully medicines, and very importantly communication.

Last time we had a two day electrical outage due to a summer storm, my wife asked me to at least turn on a fan since the A/C wouldn't work.  Value of fan without electricty zilch,  Shade tree and mint julep priceless.  http://www.drinksmixer.com/drink5382.html

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SteveW
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Re: why to buy "precious" metals when we lack in energy ...
sosMsos wrote:

"Precious" metals derive their value from the grade of our prosperity, they have no absolut intrinsic value. They loose value  by the grade global  prosperity/ economy  comes down.

While I agree that precious metals have no intrinsic value they do represent a store of wealth and could be used as monetary metal when the paper fails.

I believe it is erroneous to value them as a measure of our global prosperity. I believe they derive their value since they represent, in essence, a stored form of energy. An oz of gold represents the energy required to mine, grind and maybe leach a few tons of rock and a fraction of the capital and labor to build the mine. Although this "stored energy" is not available it is a representation of the energy necessary to replace the item.

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sosMsos
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Re: why to buy "precious" metals when we lack in energy ...

Ok, thanks for all the replies to post #1, any opinions about post #5?

I m pretty curious!

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Re: why to buy "precious" metals when we lack in energy ...

Chris and aggrivated are quite accurate in their statements. In my view, yes we do need to build communities and lifestyles that can essentially function autonomously, but there will still be need of transition and trade. In particular, storing food and barter is important because for some of us there is little hope of building an autonomous lifestyle and community in the timeframe that we are likely going to have to address our own survival while we still have such resources readily available. There is a very strong likelihood that the transition is going to be extremely difficult in many places, and that there will be acute hardship for anything from a year to a decade in some places. One cannot store enough food for a decade but one can certainly buy oneself time to find other ways of feeding oneself by having enough food to carry one (and one's immediate family) through at least some period of transition time. As for precious metals? As Chris pointed out, they become a default money, widely acknowledged and accepted, that can be used for trade and can also be carried fairly easily if one is forced to leave behind one's food stores for some reason.

I have to differ with SteveW, for as an amateur metal worker I can assure you that all metals have intrinsic value, and it is not in the energy used to obtain them. Metal can be shaped. Metal can be reshaped. Metal can be melted (even if you only have wood for heat) and cast, beaten, shaped. Some like to say that gold has no use because it is soft and heavy, yet lead is soft and heavy and has many uses. I save all sorts of metals for this reason, as metal is a wonderful material for making tools. Therein lies the ultimate practical intrinsic value of all metals.

 

sosMsos:

I apologize that I do not have time to read the link that you provided before attempting to address the question, but the idea behind it appears to be a bit of a statist solution, insofar as it appears that a government would be responsible for the issuing and regulating of the money in question. The paper was written during a time of rising energy expectations so a grand statist solution may have made sense at the time, but currently what we are facing is a future of declining energy and with it declining social complexity. In light of this it seems to me far better to have a self regulating exchange than a managed one, hence metals as exchange as has been done for millennia. We wouldn't actually have to mint new coins if we didn't care to expend the energy, as existing coins and other already shaped pieces of metal could work for exchange in a metals system. Such a way of doing things seems messy to us because we have become accustomed to the regulated and standardized moneys that governments have been issuing of late, but there is plenty of historical precedent and in a time of declining energy the likelihood that the various systems of our civilization that we are accustomed to will collapse is very great. For at least some time we are likely to need to improvise systems to continue society at least on a micro scale in order to survive long enough for a new equilibrium to develop amongst human societies. Money that mediates labor is meaningless without a social structure that defines that relationship and regulates it, a needlessly complex way of solving an artificial problem, that is, inequitable wealth and structural fraud within a social artifact (the monetary system).

If free money is a needlessly complex statist solution, then the idea promoted by the Zeitgeist movement is a horror. What they propose under the name of a 'resource based economy' is a complete centralization of control over society across the entire planet. The claimed benefits are that, under the management of a god-like all knowing central computer all resources would be managed equitably and sustainably so that everyone's needs and wants could be met to the best discretion of said central computer. Machines would do all work, supposedly rendering everyone free of all drudgery and want. What it amounts to however is a removal of all meaning to life and the destruction of all cultures in the name of a 'scientifically perfected' centrally controlled monoculture. While claiming to be imitating nature to devise a sustainable and equitable system, it is in fact a proposal to remove the entire human species of animal completely from our actual nature. It is in fact an increase in systemic complexity (within its own system) at the cost of the social complexity that has given us many cultures and makes us interesting as a species. Furthermore it is not a very robust system, for while our variety of cultures has allowed us to adapt to virtually all climates and lands of the earth using only the materials available on site to live, the proposed monoculture would be the same everywhere and further, with all needs provided for and decisions made by machines it would render us completely at the mercy of the system, unable to survive should it fail.

Rather than attempting to solve our problems by making more complex solutions, it makes far more sense to me that we simplify by returning to our pre-fossil fuel (and possibly pre-civilizational) roots and decentralize. That will reduce the absolute complexity of any one society, but increase the overall complexity of humanity as a species (more cultures) and allow us to be more robust as a species (cultural diversity can be viewed in that light much like genetic or species diversity within an ecosystem). Also if we stop trying to all live the same way regardless of our geographical location we can re-learn how to live on the land we inhabit, whatever that land may be.From the outlook of historical events unfolding in our time, a simplification seems to be inevitable whether we like it or not, and it will not be entirely enjoyable or pleasant regardless of what we do. It can however lead to good things in the long term, and from the point of view of our species we owe it to our future generations to do our best to make it a good future as best we can. Since the changes will not unfold all at once, and there will be a very challenging transitional period, it is required of us to be clever and account for how our actions will serve us not only during the transition period but also in the future, even after those now speaking are no longer alive.

Therefore, if we have a global aim at all, it must be to equip others with the tools to solve their own problems in sustainable ways adapted to their own lands. The details are to be sorted out locally. My aim is to learn to live in my land, and I neither wish to tell another in another land how to live there nor be told by another how to live here.

Which brings us back to the original post. Yes, developing an autonomous lifestyle and an autonomous local community is the single most important factor in preparing for our future. If we want to live long enough to see that future, storing food and supplies as well as exchange and barter is a very good idea (and in any case, storing food was 'normal' before people became accustomed to getting everything as-needed from supermarkets). Food, energy, etc. are critical in the transitional period because we cannot instantly learn how to live on the land without the things that we are accustomed to. Learning how to live on the land is a key part of creating the autonomous lifestyles and communities that will see us through in the long term. Precious metals are a widely recognized and accepted form of exchange that can help to see us through transitional periods; if not during an acute crisis phase then at least after things have settled down some. Metals of all types make an excellent exchange because they all have the intrinsic value of being malleable into tools and other items, and are virtually endlessly re-formable. After some chaos from the break down of energy starved social institutions we will eventually begin to develop our own local cultures, and in time things will return to some kind of equilibrium. Gold, silver, and copper have historically proven particularly well suited to the purpose of making cultural artifacts (jewelry, for example), lending to them a rather natural reason for being valued above their purely practical uses.

 

-wvcaveman

 

 

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SteveW
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Re: why to buy "precious" metals when we lack in energy ...
wvcaveman wrote:

I have to differ with SteveW, for as an amateur metal worker I can assure you that all metals have intrinsic value, and it is not in the energy used to obtain them.

I agreed with sosMsos' first post that precious metals have no intrinsic value, by which I meant that I cannot determine how much paper money one should pay to obtain them. Also since the post contrasted energy and PM's I suggested that one way to determine the value of PMs might be to evaluate the energy used to produce them.

I did not say metals had no utillity, which is what your comment addresses. PMs have been used for millenia to make pretty things and as you point out base metals can be used to make useful stuff, like swords and shields. Laughing

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sosMsos
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Re: why to buy "precious" metals when we lack in energy ...

@ caveman:

Wow really insightful post. It really opened my eyes about what Zeitgeist is all about. The idea of an ressource based economy is great and an inevitable requiremnt for future mankind.

BUT:

The thing is that it promotes global centralized power (new world order, agenda 21...) and destroys diversification, nearly evey aspect of what most system critics  take warning!

 

Thank you very much for the post caveman and have a great thanks giving holiday!

 

hopefully history repeats like this for all those betting on PMs (well hopefully not and we are able to install another money system before a collaps):

This chart shows the Wholesale Price Index in Weimar Germany during hyperinflation. While prices shot up 1 trillion times higher in terms of Marks, prices remained stable in terms of gold:

weimar priceindex Mark/ gold

 

The price increases for both silver and gold in terms of Marks during hyperinflation in Weimar Germany:

weimar gold silver/ Mark index

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