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October 12, 2009



gold in this context (nonindustrial) is money. ie, people's recognition of value/status.

money is the negative of wealth -- you can't eat it, drive in it, sleep in it. if i sell my car, i have cash but am poor: i can no longer drive to the beach -- i am poorer in life terms. money is a wealth transfer mechanism, a temporary (and fungible and effortlessly transportable/exchangeable) storage of value rather than value itself. think of it like potential energy. the stone doesn't actually express that energy until it actually rolls down the hill.

but speaking just to gold's monetary equivalence (price): be aware that though peak oil is a myth (proven reserves explode as the price rises and just the new finds off Brazil add almost as much as Saudi has even at $30/bl, and it can be indefinitely manufactured using only water, marble (an extraordinarily common stone, if you don't demand sculpture-purity), and heat), we do appear to have passed peak gold. despite very very motivated efforts, world gold production is declining.

medium to long term: in the absence of amazing new finds, gold price will only increase.

Earl Mardle

I love the idea that it money is the negative of wealth, exactly, in fact, the less useful it is the more ability it has to become money because otherwise we would use it for something else (imagine a turnip money, OK, pineapples then)

I'm betting that gold will rise in price alright, but a lot of that will only be against the devaluing other forms of money (so its a hegde) but even then, only up to a point. China and India are con\rnering the gold market at the moment and at some point most of the gold will be "owned" by the usual few suspects.

But money is only good, as you say, when the rock rolls down the hill. Unless it is moving its worthless. But while we see it as a long term 'store" of value, we will hoard it and cripple the economy anyway.

The issue is how to make sure that the gold, or whatever, flows and right now almost nothing is flowing.

Speaking of which, we disagree on PO, the cheap/easy/plentiful stuff is gone. This stuff is making its way into the mainstream now and I think its because they can no longer keep it under wraps.

While its true the proven reserves did grow for years, that has stopped because it ain't there any more and in some cases never was, the growth was an attempt to game the system, but when you reach the critical point you either put up or shut up and the liars poker game is over.

This was the turning point.

"But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago."

While Brazil is turning up large quantities of oil, 33 billion barrels possibly in the Carioca field, another 12-30 billion in Guara's patch, of the latter only about 8 billion are recoverable meaning about 2 years of US total use and its gone and in any case it will produce at only 120,000 barrels a day which is a spit in the ocean.

According to Birol we need another 4 Saudis (plentiful, clean, cheap oil) in the next 10 years just to stay even and that isn't happening.

As for being able to make it from water, marble and heat, sure, I'll accept the science. But it just moves the problem.

How much heat (and to what temperature) do you need to make a barrel of oil from water and marble and where do you get it from? Really, where does that heat come from? What do you burn to make it hot enough to do the conversion and what would be the energy cost of building the plants?

And what is the EROEI?

Even at 50% efficiency you would need twice the energy in a barrel of oil to create a barrel of oil. What percentage of the world's consumption can you replace with that kind of calculation?

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