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85 Posts |
 Posted - 03/15/2008 : 20:45:13
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Why Silver is better than Oil as an Investment
(Silver's cheaper, more rare, and not nearly as dirty, or heavy!)
Silver Stock Report
by Jason Hommel, March 15, 2008
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.
Helpful links:
To answer my frequently asked questions from beginning investors:
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Finally, if you know enough math to rationally evaluate stocks, you might want to consider where I've invested my money.
Add deleted
It's very simple. Very revealing. Very useful. It's not trading advice. It's not a model portfolio. It's my portfolio.
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Sincerely,
Jason Hommel
silverstockreport.com
miningpedia.com
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"The key to building wealth is to not lose money." - Warren Buffet |
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wheeler_dealer
Penny Collector Member
USA
402 Posts |
Posted - 03/16/2008 : 08:20:00
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Copper bar, I agree with many of the facts you placed here. One word of caution. The United States government can and if necessary will confiscate your silver. Although unlikely because of the logistics (too many citizens holding small amounts) never put anything past the Government in the national interest. It is my understanding that the Patriot Act has clauses in it which allow this to occur if necessary.
However as an inflation/deflation protection my understanding also is that silver is a great investment when purchased right. Paid in full and held in physical possession.
Thanks for the above post. Well presented information. |
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NotABigDeal
1000+ Penny Miser Member
USA
3890 Posts |
Posted - 03/16/2008 : 09:51:25
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Good luck getting ANY of my metals....I have a lot of lead to protect them....
Deal |
Live free or die.
Plain and simple.
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams |
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Nickelless
Administrator
USA
5580 Posts |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 03/17/2008 : 09:50:01
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| Nobody from the government is coming for your silver. It's just not going to happen. |
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n/a
deleted
85 Posts |
Posted - 03/17/2008 : 18:39:17
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quote:
Originally posted by starwarsgeek171
Nobody from the government is coming for your silver. It's just not going to happen.
Not average Joe at least. I can see them going after the mining companies though. |
"The key to building wealth is to not lose money." - Warren Buffet |
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deleted
86 Posts |
 Posted - 04/15/2008 : 09:51:28
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I don't get it. The dollar is showing such weakness and PMs should be soaring off the charts right now. The dollar, from all the foreclosures and the Feds bailing them out, one would think that inflation would be more like hyperflation.
It seems like the Fed Reserve can keep printing trillions of dollars every month bailing out certain organizations, yet not giving much of it to taxpayers other than $600 we're "suppose" to get and no real signs of inflation or PM's increase. If so much money printed is given to these corrupt banking financial corporations, I think a much higher sum should also go to taxpayers than $600 to accommodate fairness. It just baffles me that printed money is only given mostly to the government's specific interest and not to the people.
If this isn't a prime example of counterfietcy, then I don't know what is.
I'm sure some of you seen this film, but if you haven't, watch this:
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We wise as we age which gives us a better understanding that we're not wise. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 04/15/2008 : 10:16:12
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quote:
I don't get it. The dollar is showing such weakness and PMs should be soaring off the charts right now. The dollar, from all the foreclosures and the Feds bailing them out, one would think that inflation would be more like hyperflation.
When gold finally tops, it will most likely be a blow-off top. The chart will be almost straight up and then followed quickly by almost straight down. I like to think of it as somebody flipping you the bird.
After the recent fall in PMs, every day that we are flat or slightly up or slightly down is a good day because everyday like that decreases the chances that we have topped and decreases the chances that gold is going to complete the FU chart pattern at this juncture (to complete the pattern we are talking about gold back in the 650s in fairly short order).
So hopefully gold is forming a base here for the next run-up, but I must admit at this point some of the charts, especially the longer term ones, look a bit ugly and I don't consider us out of the woods yet.
The bottom line is that we had one heck of a steep climb from 650 to 1000 in 8 short months and the climb far exceeded the rate of inflation. So we got spanked and probably deserved it... |
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n/a
deleted
86 Posts |
Posted - 04/15/2008 : 10:47:46
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quote:
Originally posted by horgad
quote:
I don't get it. The dollar is showing such weakness and PMs should be soaring off the charts right now. The dollar, from all the foreclosures and the Feds bailing them out, one would think that inflation would be more like hyperflation.
When gold finally tops, it will most likely be a blow-off top. The chart will be almost straight up and then followed quickly by almost straight down. I like to think of it as somebody flipping you the bird.
After the recent fall in PMs, every day that we are flat or slightly up or slightly down is a good day because everyday like that decreases the chances that we have topped and decreases the chances that gold is going to complete the FU chart pattern at this juncture (to complete the pattern we are talking about gold back in the 650s in fairly short order).
So hopefully gold is forming a base here for the next run-up, but I must admit at this point some of the charts, especially the longer term ones, look a bit ugly and I don't consider us out of the woods yet.
The bottom line is that we had one heck of a steep climb from 650 to 1000 in 8 short months and the climb far exceeded the rate of inflation. So we got spanked and probably deserved it...
It seems that you have some valid points but remember that gold has been hovering in the 650s for the last year and a half now, so it was due for a correction. It is possible to go that low again, but I'd say one would have a better chance to get struck by lightning than gold to settle back to 650. I hope a base price is now being established but the way how you hear economic turmoil happening on any of the newschannels you observe and other sources, I see no reason that gold should start increasing like a cliffhanger. Just being modest.
We wise as we age which gives us a better understanding that we're not wise. |
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misteroman
Administrator
USA
2565 Posts |
Posted - 04/15/2008 : 11:08:00
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| Was watching the video,just realized that it is close to 2 hrs long.Have to come back to that one but seemed like a good one |
Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 04/15/2008 : 14:49:07
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quote:
Originally posted by misteroman
Was watching the video,just realized that it is close to 2 hrs long.Have to come back to that one but seemed like a good one
Yeah it is a full length movie/documentary, but well worth the time. I watched it a while back and I should take a look at it again. Only problem is that it is a punch in the gut reality check and I prefer comedies.  |
Edited by - horgad on 04/15/2008 14:49:57 |
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wolvesdad
1000+ Penny Miser Member
USA
2164 Posts |
Posted - 04/15/2008 : 19:08:42
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quote:
Originally posted by starwarsgeek171
Nobody from the government is coming for your silver. It's just not going to happen.
Funny that you are always on the FAR opposite end from Silver bugs....
To say it WILL NEVER HAPPEN(a paraphrase of "it's just not going to happen") is a bit much.
IF(I don't pretend to see the future), but if the silver bugs are right and silver IS more rare than gold and one day the coin flips and silver is on top.... And the government is in a tight spot, then I wouldn't put it past them.
How many people said in 1895 that the government WOULD NEVER come and take your money(ie confiscate gold), but they did!!! (granted, they paid for it, got it, then doubled it's market value....very smooth!) Never Say Never. |
"May your percentages ever increase!" |
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n/a
deleted
6 Posts |
 Posted - 04/17/2008 : 02:49:01
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[quote]Originally posted by CopperBar
You must be logged in to see this link.
Why Silver is better than Oil as an Investment
(Silver's cheaper, more rare, and not nearly as dirty, or heavy!)
Since we did not run out in 1980, then we will not run out in 2050, over 40 years from now.
Why Silver is better than Oil as an Investment
(Silver's cheaper, more rare, and not nearly as dirty, or heavy!)
Since we did not run out in 1980, then we will not run out in 2050, over 40 years from now.
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).
[quote]
This is funny stuff. Came for info and got some laughs, too.
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Nickelless
Administrator
USA
5580 Posts |
Posted - 04/17/2008 : 03:08:42
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quote:
Originally posted by wolvesdad
quote:
Originally posted by starwarsgeek171
Nobody from the government is coming for your silver. It's just not going to happen.
Funny that you are always on the FAR opposite end from Silver bugs....
To say it WILL NEVER HAPPEN(a paraphrase of "it's just not going to happen") is a bit much.
IF(I don't pretend to see the future), but if the silver bugs are right and silver IS more rare than gold and one day the coin flips and silver is on top.... And the government is in a tight spot, then I wouldn't put it past them.
How many people said in 1895 that the government WOULD NEVER come and take your money(ie confiscate gold), but they did!!! (granted, they paid for it, got it, then doubled it's market value....very smooth!) Never Say Never.
Famous last words: "I'm from the government and I'm here to help you!"  |
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Why silver is better than oil as an investment
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