(Silver’s cheaper, more rare, and not nearly as dirty, or heavy!)
From Silver Stock Report by Jason Hommel
1. There is a 40-year supply of oil in the ground. There is a
14-year supply of silver in the ground. Therefore, silver is the
better investment.
If “peak oil” is true, then every peak oil nutcase out there ought to
be several times more worried about “peak silver”, since silver
reserves will run out sooner.
If oil is used in more kinds of products than any other commodity on
earth, then silver is the second most used commodity, used in
electronics of all kinds. And if silver is used up first, then we
won’t have all the electronic machines needed to go and get the oil!
But the “peak oilers” are not so worried about silver. Why not? I
can only guess, but it is an educated guess based on extensive
reading of their works over the years. I suspect it is because they
are ignorant of silver, ignorant of economics, irrationally fearful,
and worship government and “mother earth” instead of God.
2. In 1970, there was a 10-year supply of oil in the ground. We did
not run out in 1980. We explored, and found oil. Mankind has
explored for oil and produced oil only for 150 years or so, which
creates extra fear of uncertainty (unlike silver and gold’s 5000 year
history). Since we did not run out in 1980, then we will not run out
in 2050, over 40 years from now.
3. If it’s not about “running out” but rather, running out of the
“cheap stuff”, fine, I agree! If we run out of “cheap oil”, we will
run out of “cheap silver” far, far sooner, so silver is the better
investment, and will outperform oil.
4. The silver to oil ratio: In 1980, at the former peak prices for
oil and silver, oil cost $43/barrel and silver was $50/oz. An oz. of
silver was worth more than a barrel! At the bottom of the market
around 2000, oil was $10/barrel and silver was around $5/oz. This
implies a price for silver of somewhere between $55-110/oz., with oil
prices remaining stable. If oil doubles from here, then silver will
go up ten times, to $220. Therefore, silver is the better investment.
5. The public will never buy 100 barrels of oil to store on their
front lawn, at $110 each, to save $10,900 worth of wealth. The
public will buy a $15,000 bag of silver to store in the closet, or home safe.
6. The silver market is orders of magnitude smaller than the oil
market, and will move far higher with a smaller amount of money
moving into silver.
World oil supply is 85 million barrels of oil per day x $109 = $9.2
billion/day, or 31 billion barrels/year, which is $3.4 trillion per year.
World silver mine supply is 650 million ounces per year x $21 = $13.6
billion/year.
In the long run, if paper money fails, the world might have to pay
for oil with silver. (Gold would be used for everything else). In
that case, that implies that an ounce of silver would buy 47 barrels
of oil (31,000 / 650 = 47), which implies a price for silver of $109
x 47 = $5200/oz.
Interestingly, even gold is a much, much better investment than oil,
because all the gold ever mined in all of human history is about 5
billion ounces, which, at $1000/oz., is $5 trillion, which would
barely pay for the world’s annual oil consumption of $3.4
trillion. But as you all know by now, silver is much better than gold.
7. About 70% of the world’s oil is supplied by national governments
that have confiscated private oil discoveries. Therefore, oil is a
risky investment. National governments generally do not spend money
on exploration or development; they spend nationalized oil profits on
wasteful social programs to maintain the power of the government thieves.
Of the other 30% of the world’s oil, the “free world’s” oil, about 9
cents per gallon of gas goes to the oil companies as profit, and
about 51 cents per gallon goes to governments in taxes. Thus, 51 out
of 60 cents, or 85% of the “free world’s” oil has been nationalized,
too. Therefore, oil is an extremely risky investment. Not only is
the price of oil too high, but governments steal most profits that
exist in the industry, world-wide. Investors ought to worry far more
about governments stealing an oil discovery, than a silver discovery.
While oil prices moved up over ten times from $10/barrel to
$110/barrel since 2000, Exxon Mobile stock barely doubled from $40 to
$85. This shows that the “big oil” companies are not “getting rich”
off of high oil prices, due to excessive government
taxation. (Chevron has also gone from $40 to $85 since 2000, and BP
has done much worse, going from $60 to $64 since 2000!)
If only 1% of gross world oil profits were spent on silver, instead
of being stolen by governments, that would be: 31,000 million barrels
x $110 x .01 = $34 billion. Since total annual investment demand for
silver is about $1 billion, then I estimate that much money would
move the silver price up to well over $200/oz.
Yes, 1% of gross world oil costs would probably drive up silver
prices over ten times!
8. I believe “Peak Oil” is a fraud. If the world does hit a “Peak
Oil” temporary mini trend sometime in the next 50 years, it will be
due to worsening government theft, nationalizations, confiscations,
taxes, and wars, not lack of oil in the ground in the world, and all
of those things would be very bad for investors in oil.
9. I have never seen a peak oil proponent advocate free market
solutions; nor do they invest their own money into alternatives (some
of them are broke!); they always call for more government power, and
more government controls, and more government
“solutions”. Therefore, their entire argument is as fraudulent as
government itself.
10. I believe “Manmade Global Warming” is a fraud, designed to
increase government control, or even “justify” the “global solution”
of world government. We may be in a mini warming cycle, but 30 years
ago the world was in a cooling cycle and the fear of the day was of
an impending Ice Age. If “manmade global warming” is true (and it is
not), there should be more of it; we would save on heating bills; and
be able to plant more crops, and enjoy a wider variety of good wines
from all the vineyards that could be planted farther north, like
several hundred years ago.
11. Silver is not a fraud, and is the antidote to the fraud of the
dollar, and the antidote to excess government power, and government
theft, which is the real problem in the world, not “peak oil” or
“global warming”.
12. Silver is not confiscable. This is why silver is money; it is
private ownership of wealth, it is true wealth, it is owned
annonnymously, and is the antidote to theft through inflation or
confiscation. There is not enough silver to confiscate, because the
silver market is too small. All the silver in the world is worth
perhaps $20 billion, which is infinitesimally small compared to the
budget of the U.S. government. If the government confiscated silver,
because it was “worth it” for them, it would imply that silver was
worth about $10,000 per ounce.
13. There is no “oil problem“. It is an energy problem. If oil
prices get too high, the free market will provide energy through
other means; wind, or solar, or nuclear, or coal liquefaction, or
geothermal, or further oil exploration. I suspect the U.S. hit peak
oil in 1970 because we abandoned silver coinage in 1964, and
abandoned gold in 1971, driving up all domestic prices and severely
distoring world econimcs. And with paper money, it became cheaper to
buy foreign oil with fraudulent paper, rather than explore and
produce it at home.
14. There is a 300+ year supply of coal. Coal liquefaction
technology can make liquid fuel from coal. This is old, reliable
technology, and dates from before World War II, both in Japan and Germany.
15. Most solar energy that comes to the earth is wasted. Look at
the amount of solar space available in the deserts of the world. The
Sahara is a very big place. All of the world’s energy needs could
probably be satisfied with a solar panel that covered 1/4 of the Sahara.
16. Yes, I know about the Hunt brothers. Do you know the full
story? They tried to protect their oil profits in silver. Their oil
was stolen by Libya. I believe that the mistake of Nelson Bunker
Hunt, who is alive today, is that he tried to borrow money to buy
more silver than they could afford, so they lost money when it went
down from $50/oz. Don’t make the same mistake. Don’t buy silver on
leverage, and don’t let other people hold your silver for you.
* * *
Thanks for reading,
Chuck Madere
Silver Snowball
P.S. If you agree that starting a “growing silver business” and
getting and earning pure one ounce silver coins would be a smart, fun
and prudent way to begin to acquire real money instead of shrinking
paper currency, and you haven’t yet joined Silver Snowball, click on
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and start your silver snowball rolling.
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