Peak Silver
by Edgar J. Steele

October 7, 2005

Audio file of this column:  http://www.conspiracypenpal.com/audio/peak16-16.mp3   (2.3 mb, 20 min)  streaming mp3

A hot debate today centers upon whether or not we have reached "Peak Oil," that mystical point at which worldwide oil production tops out and then begins its inevitable decline as reserves dwindle, with a corresponding and immediate rise in price. 

In economic terms, oil is a commodity for which demand is price inelastic, meaning that the great bulk of demand for it continues unabated in the face of price increases.  Regardless of how much gasoline costs, you still have to drive to work.  The market value of price-inelastic commodities can rise much faster than you might imagine, once demand outstrips supply.  That it now takes a hundred-dollar bill to "tank up" so many cars fuels the argument raging over Peak Oil, of course.

Countering pro-Peak-Oil forces are numerous anecdotal accounts of vast oil fields discovered in remote reaches of the world, with wells dug that simply are capped off, awaiting the future.  And, of course, there is debate over just how much oil exists in fields already in production, as illustrated by Saudi Arabia recently announcing that it miscalculated badly in the past and now realizes that its reserves (already the biggest in the world) actually are double what they previously thought.

Oddly enough, there are reports that many depleted oil fields now are regenerating spontaneously, lending credence to the new (circa 1951) theory of Abiotic Oil, upon which Russia has transformed herself from a net user into a major oil producer and exporter, second only to Saudi Arabia.  Abiotic Oil theory suggests that oil continually is produced deep within the Earth's crust from strictly non-biological processes.

Abiotic Oil theory shatters the concept of Peak Oil altogether.  Scarcely anybody seems to recall that the conventional explanation for the source of oil as being the residue of ancient plants and animals in near-surface sedimentary strata still is just a theory, a theory which increasingly seems unlikely to many petroleum scientists and engineers.

The debate over Peak Oil is instructive for followers of other commodities, particularly silver.  While there should be even hotter debates raging over "Peak Silver," none exist.  In fact, Google up the term and you likely will find references only to this article.

Regardless, Peak Silver is a concept whose time now has come.  There really can no longer be any question as to whether we have reached the point of Peak Silver, save that suggested by silver's current market price.  As we shall see, that price is an aberration which inevitably will be swept aside by the tidal force of massive market forces.

While oil may, in fact, be a renewable resource, per Abiotic Oil theory, there can be no question but that whatever silver now exists, including the ever-more-difficult-to-extract ore still in the ground, is all the silver that ever will exist.

What's more, unlike gold, virtually all the silver ever mined has disappeared via usage, while almost all the gold ever mined still exists in usable form, not that anybody really uses gold for anything.  In fact, silver today is a much rarer precious metal than is gold. 

Go back and read that last sentence again.  I'll wait for you right here.....Good.  Now go read it again.

Silver's relative scarcity is a vitally-important concept that simply has yet to sink into the minds of almost everybody in the world today.  Else, why does silver trade for only $7 and change per ounce, versus nearly $470 per ounce of gold?  Stand by, because all that is about to change.  First, though, let's make the basic general case for precious metals as an investment.

If used solely as a money substitute, gold (like silver, platinum and palladium) finds its demand extremely sensitive to price changes.  In other words, the demand for precious metals as money is price elastic.  When the price of precious metals goes up, demand goes down.  Ergo, the demand for precious metals must have declined a lot, you might say, because their prices have soared in recent years.  Wrong.

Why are today's gold and silver prices half again as high as just a few years ago (many would say gold is almost 100% higher, but they point to a very brief time when it traded at around $260 per ounce)?  Because the international value of the dollar has fallen by a third in the same time frame, that's why.  Gold and silver haven't gotten more expensive.  They are still the same old prices, just dressed in new, inflation-adjusted dollars.

The price increases seen in both gold and silver amply illustrate my book's contention that they are "particularly good means of transporting wealth from one side of an economic meltdown to the other."  (Defensive Racism, Ch 12 - Money's End Game:  Depression II)  The bad news, for those who haven't yet noticed, is that America's economy is in rapid meltdown right now, just as it has been for the past several years.  The worse news:  The modern meltdown has only just begun and now is showing signs of rapid acceleration, as America's mortgage, bond and stock bubbles, created by the Federal Reserve's (criminally) excessive easy money policies, have begun to burst. 

I call what is happening today the "modern" meltdown because today's dollar already is worth something less than 2 cents in 1914 dollars.  Prior to 1914, the dollar had been stable, with zero inflation, for well over a century.  What happened in 1914?  Why, the Federal Reserve System was created, so as to "stabilize the value of the dollar," if you can believe it!  Look, I couldn't just make something this ludicrous up.  Look it up for yourself if you don't believe me.  But, this is both a digression and a topic about which books have been written, perhaps one of the best of which is Eustace Mullins' Secrets of the Federal Reserve.  My own book talks about money, precious metals and the Federal Reserve system extensively in its latter chapters, too.

Today's dollar has only one way to go:  down.  And it is a lot further to the bottom than one might imagine, despite the perspective provided by 1914.  As I said on August 15, 2005:  "A falling dollar couldn't be a surer bet than it is right this moment, here at the very tippy-top of the fifth and most prodigious bear market rally for the dollar since it started caving three years ago (and subsequently lost 1/3 of its value through the end of 2004)."

Preserving your wealth is more than a good enough reason to convert as many of your assets as possible right now into the form of precious metals, especially the sort you personally hold, such as rare coins and bar and coin bullion.  Mining stocks are more volatile, thus possess more upside potential, but also carry significant risk in the event of a complete collapse of the economy.

Also on August 15, I said the following about buying gold and silver:  "Back up the truck, boys and girls.  Do it now."  Since then, leading American and Canadian mining stocks have risen 20%.  The spot prices of gold and silver are up about 5% in the same time period.

If my wife would let me, I would sell the ranch, buy gold and silver with the proceeds, then rent for the next two or three years.  Women.

That is the basic case for precious metals.  Now for Peak Silver.  Remember our mantra from above:  Silver today is a much rarer precious metal than is gold. 

Yes, there still is much more silver in the ground than there is gold - eight times as much.  Historically, we have pulled about eight times as much silver from the ground as we have gold, a ratio which has declined only slightly with today's production.  Called the "poor man's gold," silver typically has been the least expensive of all the precious metals because it also has been the most plentiful.  That was before industry began to use silver in significant quantities, however.

Silver has almost countless modern industrial applications, with both technology and population increases driving demand higher every day.  Silver's thermal and electrical conductivity is unparalleled, making it the metal of choice for microcircuitry.  Silver also plays a major role in the medical field, due to its natural antibiotic capability.  What's more, silver is one of the few metals that does not corrode, making it essential in modern electrical switches of every sort (including your house and your car).  And, yes, the photographic industry continues to consume about a quarter of all silver made available.  Silver demand is increasing by leaps and bounds.  What's little known is that silver demand has outstripped production for years. 

During my lifetime (that's "modern times" to you, despite how you might feel about Bogart movies) we have been using silver a great deal faster than we mine it.  Why hasn't the price of silver gone up before this (faster than necessary to counter inflation, that is)?  Because the huge, above-ground inventories of silver built up prior to my lifetime (pre Bogie) were added to production in order to meet ongoing demand, that's why.  Well, guess what?  The stored-up silver now is gone.  Just now, in fact.  That, or those stores will run out within the next few months, depending upon whose figures you believe. 

From here on out, we must live on current silver production alone, all while the non-investment demand for silver continues to grow.  We either just passed or are about to reach the point of Peak Silver.  In other words, never again will above-ground gold be more rare than silver.  That's never again...as in NEVER AGAIN. 

Nor will people be melting down their necklaces and heirloom cutlery at anything less than several times the current price of silver.  The labor component of such trinkets simply is too high when compared to something like gold, which does see a great deal of jewelry turned in for reprocessing whenever its price jumps.

Owing to the huge industrial demand for silver, which simply does not exist for gold except in fashioning bathroom faucets for Arab oil sheiks, Peak Silver will reflect the price-inelastic demand generated by industrial applications.

The gold-to-silver price ratio also has risen well above the historic mean of 40:1 in recent years, suggesting that either gold will decrease in value or silver will increase.  By many traditional measures ("bundle of stocks," "suit of clothes," etc.), gold already is grossly undervalued, due to government rigging of the price via the orchestrated sale and purchase of financial derivatives (again, see my book for a discussion of how gold derivatives temporarily can convert even gold into a fiat currency).  In Defensive Racism, I go through a lengthy analysis in explaining how I think gold will spike well above $2,000 per ounce (in terms of today's dollars, not tomorrow's Greenspanbacks), then settle into a trading range three to four times higher than today's price.

Before silver is done, however, not only should/will/must it revert to the historic gold/silver mean ratio, suggesting a commensurate price for silver of $62.50 per ounce once gold becomes fairly priced.  However, silver's scarcity should cause it to surpass even gold's price.  Even if I am dead wrong about any upcoming increase in the price of gold, today's gold price alone, when divided by 40, suggests a "mean-ratio value" for silver of $11.75, which is a tidy 60% rise over today's actual silver price!

I mentioned government rigging, which takes place in both the gold and silver commodity markets through massive (and illegal, I might add) buying and selling of futures contracts through straw-man brokerage houses.  Stock market rigging is even more massive, by the way.  Consistent with government's refusal to allow us a free market for anything, least of all money and precious metals, the danger of gold confiscation by the US government, as FDR once ordered, is likely before the inevitable massive revaluation of the dollar which must occur following America's impending economic collapse.  The estimable Lawrence Patterson, an expert on investing in precious metals by anybody's standard, makes a compelling argument for likely gold confiscation in the August 2005 issue of his excellent monthly magazine, Criminal Politics. 

Why does our government rig financial markets?  For the money, of course.  Your money.  Maintaining monetary stability is a lie, because we had perfectly stable money before the Federal Reserve System was handed control of our money supply.  The mark of perfectly stable money is zero inflation, as in no inflation whatsoever.  People have forgotten that such is possible and now accept 3% inflation as normal, and seem to view what is about to happen as a temporary inconvenience.  People have forgotten the lesson of Depression I. 

Yes, what is about to happen is so significant that it will cause us to start numbering our economic depressions, just as we do our world wars.  Speaking of which, if you think WWII following Depression I was just coincidence, then you probably don't realize that we already have seen the beginnings of WWIII, which truly is a story for another day.

Unlike gold, silver will not be confiscated.  There simply is too little of it around and the dentists couldn't handle the workload.  Remember that the Hunt brothers very nearly cornered the world silver market a generation ago.  Today, the amount of silver available not only is less, due to the massive reserve depletion that has taken place, but the price is lower than before, even in inflation-adjusted terms (government rigging, don't forget).  How low is the price of silver?  Well, it is well within the power of a great many individuals (each of them, not all together) to purchase every last ounce of silver that exists above ground today.

This point bears repetition:  Silver today is a much rarer precious metal than is gold.  Recall our discussion above concerning the price inelasticity of the demand for oil.  That goes several times over for silver.  Per production unit of consumer and industrial goods and equipment, the consumption of silver is exceedingly small, so that industrial-demand-driven prices are very inelastic.  In other words, the price of silver could triple and add but, perhaps, a penny (that's a dollar in future Greenspanbacks) to the cost of your next TV set.  Even a hundred-fold increase in the price of silver would not affect the purchase price of most industrial and consumer goods by much.  Or a thousand-fold increase, for that matter.

"To the Moon, Alice."  That's where the price of silver is headed, now that we have hit Peak Silver.  To the Moon.

As I said, back up the truck.

New America, an idea whose time has come.

______________________________________________

A few of your recent Emails:

Re:  Never Trust a Jew ---

    Jack writes to Henry Makow (whose Etherzone article "Edgar Steele's Racism - Why Jewish Bankers Love anti-Semites" prompted my response, "Never Trust a Jew"):  "Through your recent essay concerning anti semitism driving Jews into the arms of zionists , I learned of Edgar Steele.  I located his site and I have to admit I was uncomfortable with his message at first since I was state educated here in the peoples' republic of Canada.  I have since read his book and ordered several copies of it to pass along to friends and associates.  The fact that Rense [Jeff Rense, of www.Rense.com]  did not run his counter essay to yours has proved his thesis.  Thank you for introducing me to his work.  I have many friends who are equally grateful as well."
    Thanks, Jack.  That made my day!  I am pleased to report having received a flurry of emails similar in sentiment to yours.  I also visited Makow's site and saw that he has deleted the link to my site that he originally had in his article.  Fortunately, Google still exists for the curious.

    C.M. writes:  "In case you haven't seen this - Mr. Farrell of Honest Media Today posted your article 'Never Trust a Jew,' which was posted at http://www.honestmediatoday.com/RecentNews.htm, prefaced by the following editorial remark:  'Since it appears that the Etherzone refuses to allow Steele's response to Makow's writing, I feel it necessary for me to help share Steele's rebuttal.'"
    Thanks, C.M. and Mark Farrell.

    Charles writes:  "I've read your book and always enjoy reading your columns, but your insistence that absolutely all jews are no good doesn't really serve you.  ("never trust a jew")  I just read an article by Henry Makow on propagandamatrix.com.  I believe this guy is sincere and right on target.   ps, if all jews are bad news - does that include Jesus and his mom too?"
    Many share your general sentiment, but most do recognize that I do not insist "that absolutely all Jews are no good."  However, until the average Jew stops giving cover to the Zionist bad guys, I will continue to rail against Jews in general.  Besides, it is genetic, you know - even the good ones will have bad kids.  Obviously, I do not believe that "Jesus and his mom" were "bad news."

    J.C. writes:  "Edgar Steele wrote an article titled 'Never Trust a Jew.'  The article was posted to Liberty Forum...Moments after the article was posted the overseer of the site appeared and gave Edgar until noon Monday to defend his material or be forever banned from Liberty Forum. That is today.  The reason given for this 'Don't Let the Sun Set On You' attitude was 'less we be labeled a hate site.'"
    My supporters at Liberty Forum (where, incidentally, I never had posted) gave a spirited defense of my work, which I generally let speak for itself.  Better that the forum moderator, who demonstrated a classic fear of Jewish reprisal, should question who the real haters are around here.  Even better:  Just what does he think "Liberty" means?  However, unlike Etherzone, which refused to allow me even to respond to Makow's attack, Liberty Forum thus far has allowed my article to stand as posted, despite the unanswered threat.

    Terry writes to Henry Makow:  "I read your article attacking Edgar Steele on Rense.com.  I like what Edgar has to say, the white race is under attack and it is coming from the zionist neocons that want to rule the world.  I'm 56 years old and I remember the 50's and 60's and how much better America was when white people were in control.  I grew up in a small town in Ohio, (and still live there) there was no crime that I remember, I felt very safe. That all started to change when JFK was assassinated...I think you mainly do damage control to divert attention away from the 'Jewish Agenda.'  America can only be strong when European Americans are in control of America."

    Steve writes:  "Sorry Edgar, I like ya both..... but I gotta go with Henry on this one.  I think he is right on."

    Curtis writes:  "Makow has always irked me in that he can say many things (because he is Jewish - as you correctly noted) that others can't say and for that reason has developed more credibility than he deserves.  He then exploits that asset by exposing half truths and/or relatively benign info that Gentiles can't say, and then seeks to divert our attention away from organized Jewry and onto freemasonry, the Jesuits, etc...  If one reads Makow, one can conclude that it's all the fault of nebulous bankers, many of whom, according to Makow, aren't Jewish.  So Makow really does nothing to "enlighten" his readers, but instead acts as a disinformation agent provacateur."

    Roger writes:  "I feel like I'm growing old at an accelerated rate.  I feel numb about our national situation, the corrupt politics and the mercenary Jews who have a stranglehold on us.  I am so dismayed at the stubborn closed-mindedness of our people that I feel like a whipped prize-fighter, sitting on the floor,  against the ropes, puzzled that I don't have the strength to move any more.  Remember that scene in Braveheart where Wallace has an enemy subdued and at his mercy, only to discover the man under the visor is his own Scotland king.  Wallace just went limp because his mind couldn't handle the contradiction.  That's the way I feel.  I have close relatives with whom I can't communicate about anything meaningful because they just don't want to hear about that kind of stuff.  Our destroyers are unhampered.  I think of New Orleans, and the picture that comes to my mind is that a black plague has just been spread across our nation with effects somewhat akin to biological warfare.  While our people open their arms to welcome their own destruction!  The word "bizarre" is inadequate to describe the mind-boggling insanity of our society today.  I live back in the hills of Appalachia, where I milk my cow twice each day and gather eggs from a few chickens.  Social Security doesn't go very far, but I like to think I am content.  Ironically, while I am not forced to inure myself to the daily hell of modern America, this also permits me to see more objectively the catastrophe being enacted against us.  And it is so terribly depressing!"

    Morley writes:  "How is it possible that Henry Makow PhD, a Jew, can say things like this, apparently with impunity, while people like you have to be more careful (and are marginalized) and people like Ernst Zundel go to jail when they say the same things?  It's ironic, n'est pas?"
    No, it is just the way it is in a world now run largely by Jews.  Jews threatened the lives of my wife, my children and myself,  far more than once, simply because I represented somebody they didn't like in a lawsuit (Richard Butler, in the days before I began speaking out) and nobody cared.  However, let someone complain about the mess they have made of America and the rest of Western civilization and you would think we had begun feeding Jews into gas ovens here in North Idaho.  In his article, Henry Makow makes the same tired, old accusation that Jews have flung at those whom they do not like for literally thousands of years when he calls me a racist and an anti-Semite.  Makow reportedly said of my responding article:  "Steele just doesn't get it."  No, Mr. Makow, it is you who does not get it.  You and your fellow travellers, who like to paint anti-Semitism as a disease.  As I said to Mark Wiles, the Jewish Defense League thug whose voice can be heard threatening me in the WAV file noted above:  Yes, anti-Semitism is a disease - you catch it from Jews.

Re: Ducks, Morons and George Bush ---

Lokey writes:  "Your buddy Al could have put it this way: 'If California fell into the ocean, would it be worth telling anybody?'"

Re: The Big Uneasy ---

    Jean writes:  "No wonder America is the laughingstock of the world and has no respect from anyone.  We can't even take care of own, so how can we even begin to expect anyone else to listen to us when  we try to tell them how to run their business?  We learned nothing from 9-11.  Never mind the terrorists, the real enemies are already here anyway, and we are the ones that let them in!"

Re:  Escape from New Orleans, Part 5 ---

    Joe writes:  "Hello, This Katrina thing as well as your "Escape from New Orleans" is played out.  I enjoy your articles and love the audio section.  I think from your past articles you are capable of much much better then story telling."

    Hazel writes:  "Loved it, keep 'em coming."

    John writes:  "They won't be using 'Nukes.'  They will be using 'Nutes' or neutron devices that only kill without damaging fixtures or leaving radioactive residue.  There are only 48 missing from the commie arsenal."

    Snakzrat writes:  "Awesome!!"

    Ron writes:  "You know if you were not such an ass you might be funny.  But definitely not informed."

    Conrad writes:  "Some of what you write is funny and even has an element of truth, but you know it is sorta 'racist!'"
    Well, yes, you could say that.  But - there is "racist" and then there is "racist."  Please read my book and then tell me what you think.

Re:  Defensive Racism ---

    David writes:  "Hi, Edgar.  I just read your book, and it's great!  I'm going to tell all my friends to buy it..."

    Joe writes:  "...BTW, I've read Defensive Racism (and passed it on).  This should be required reading for the masses.  Keep it up!"

Re:  It Wasn't Arabs ---

    Joe also writes:  "Could you possibly provide a reference for this one?  'It wasn't Arabs who formulated American legislation providing pensions to Russian jewish immigrants for doing nothing - it was jews.'  I desperately need to win a dispute over this."
    Try this: http://www.texemarrs.com/061999/redarmy.htm.

    For all who emailed, inquiring about the Stones and Jim Warner because of Hurricane Katrina, Monica writes:  "Just to let you know that we are at least online at this address.  Jim Warner is alive, he lost his home and the office.  We still do not know the extent of the damage as nobody is now again not allowed into St. Bernard Parish.  The CDL Report will not cease, we are trying to get back on track as soon as possible, but all of us were affected in the most horrendous ways, so all we ask is some patience.  Sincerely, Monica Stone."

    Thanks for sharing, folks.  Again, I wish I could reproduce every single one.  Rest assured that I do read them all.