Gold ...
- Thread starter Tilted
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blacklabman
Well-Known Member
Firearms are a better investment.
Larry Gude
Strung Out
Think about that!
aps45819
24/7 Single Dad
So two more years of Obama will get gold up to where it was under Jimmy Carter
Larry Gude
Strung Out
No. If that were going to happen, I'd buy gold!
My intent was to think of gold at, what, $1800 or so?
Tilted
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Yeah, I know. I'm actually surprised that it isn't higher right now (not necessarily for the long term though) with all of the capital that is scared (or doesn't have much motivation) to go to work, and all of the (retail) peddlers aggressively peddling their gold wares.
People like to point to how good an investment gold has been over the years, but reality doesn't necessarily bear that out. Looking backward, you can make almost any investment look good if you pick hypothetical buy points that represent pricing troughs and sell points that represent peaks. On the other hand, you can pick hypothetical buy points for gold that 'reveal' that it would have been a terrible investment - easily outperformed by equities and even Treasury Securities.
I'll say this, gold has - over long periods of time - generally been a better option than keeping your money under the mattress. When compared to other investment options though, it hasn't faired that well. Whether or not it was a better option has, as with many investments, depended on the wisdom of your timing.
Larry Gude
Strung Out
I'm not. As long as oil is so easy and so predictable, it's a good place for TONS of dough.
I, of course, would change this were I to be in a position to.
Tilted
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Tilted
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I'm not. As long as oil is so easy and so predictable, it's a good place for TONS of dough.
I, of course, would change this were I to be in a position to.
Did I ever tell you about my idea for securing our oil supply and dampening price fluctuations (as well as suppressing pricing generally). It would have involved breaking a few (bureaucratic) eggs and, likely, pissing off some environmental types, and it wouldn't have had immediate effects, but ...
No one that might have mattered seemed interested.
Larry Gude
Strung Out
Did I ever tell you about my idea for securing our oil supply and dampening price fluctuations (as well as suppressing pricing generally). It would have involved breaking a few (bureaucratic) eggs and, likely, pissing off some environmental types, and it wouldn't have had immediate effects, but ...
No one that might have mattered seemed interested.
Excuse me while I grab a beer...brb
E
EmptyTimCup
Guest
Tilted
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Excuse me while I grab a beer...brb
It's nothing complicated, and I'm sure I wouldn't be the first to suggest it. I'd like to see a 'we're gonna land a man on the moon and return him safely' type, just get it done and don't let the 'that's not possible mindset' get in the way, national initiative to expand our Strategic Petroleum Reserve storage capacity by a factor of 20.
I'm not sure how much you know about how the SPR works. We can discuss it at greater length if you want (and you can tell me why this is a foolish and naive idea), but for now I'll skimp a bit on the details. We store the SPR oil in underground caverns carved out of naturally occurring salt domes. For a number of reasons, this is a great way to store it. To create them, we pump in fresh water to dissolve the salt and then pump the resulting brine out into the ocean (as it is now, the storage facilities are all along the Gulf Coast).
Currently, we have just over 700 million barrels of storage capacity. That's something like 50 or 60 days worth of total import replacement. We passed law in 2005 that would have us expand that capacity to 1 billion barrels. But, guess what, all we've done so far is talked about it, picked out sites, developed plans, considered the environmental impacts, held public meetings so that people could come voice their concerns about pumping the brine two miles out into the ocean, etc.
The last cost estimate I read for the proposed expansion was under $4 Billion (for about 260 million barrels worth of additional capacity), and that includes creating an entirely new site (we currently have 4) with all of the necessary infrastructure, as well as expanding the capacity of 2 of the existing sites. The point being, my gut tells me that you could do an expansion on a larger scale and see the site infrastructure costs (and thus the overall costs) decreased on a per barrel basis. But, let's assume that wouldn't be the case. Let's assume it would cost roughly $15 per additional barrel of storage capacity. I'm talking about creating 10 or 15 billion barrels worth of capacity (2 or 3 years worth of total import replacement) - $150 Billion, $225 Billion in costs.
Instead of finding busy work to create with the Stimulus money, let's use it for this (yeah, I know, it wouldn't be shovel ready). To facilitate that, let's make up our mind to cut through the bureaucratic BS. If Louisiana doesn't want the several years worth of jobs (as well as a few facility operation jobs going forward), and wants to ##### and complain about it, then Texas can have them. If Texas, feels the same way, then maybe Mississippi won't be so whiny. The point being, sometimes you just need to get things done. This isn't new technology or a new concept. Petroleum companies were using this method of storage even before we decided to create the SPR in the 70's.
As to why do it - again, I won't go into incredible detail now, but we can explore it at length if you want. We certainly can - and should - increase drilling efforts here in the U.S. However, there's only so much flow we're going to be able to tap into. The more the better, but we're not gonna be able to create an additional 10 million barrels a day of domestic production. That's particularly true if we also want low oil prices. Once you get down around $50/barrel, some of the potential sources of oil (to include things like shale) become economically unattractive. We could use a huge SPR sort of like domestic production (more importantly, as the threat of domestic production).
As it is, our SPR system can produce a bit less than 5 million barrels of oil a day. That's the maximum rate at which we can extract it - we pump water into the bottom of the caverns and float the oil out the top and through the pipeline infrastructure. With the kind of expansion I'm talking about, we'd easily be able to produce more oil than we could consume on a daily basis. I'm talking about setting up a program where whenever the price or oil is below X, we buy it to replenish the reserves, and whenever it is above Y we sell it into the market. We could also expand our royalty-in-kind program (where, instead of oil producers paying us the cash royalty they've agreed to in exchange for rights to drill in places like the Gulf, they give us a portion of the oil they produce).
As it stands now, we can't use our SPR to 'fight' the net oil producing countries when it comes to their efforts to restrict supply and support (or inflate, depending on who's doing the talking) oil prices. We just wouldn't have the ability to replace supply for long enough to make them blink - they'd be able to hold their breath longer than we would, and they'd know it. However, if whenever they decided to reduce oil output by 3 million barrels, we could say - fine, we'll provide the market with an extra 3 million barrels (and, by the way, we can keep that up for 5 or 10 years), their hands get a bit tied.
They can only restrict production so much - they've come to rely on oil proceeds. And, if we're talking about OPEC, member compliance is already an issue. They can't cut production by 20 million barrels a day for 2 years and not have individual member states sell out the 'team' - and see the disintegration of their agreement to act cooperatively. Faced with cutting production in half in order to get $10 or $20 more a barrel, and producing at full capacity - they have to opt for the latter (especially if cutting production might not result in the extra money per barrel for a year, because someone else can replace the supply for a while). If we had the ability to 'produce' large quantities of oil ourselves - even if only temporarily (e.g. a year) - we'd have the leverage to use their greed, and dependence on oil dollars, against them (not to mention the reality that net oil producing countries have their own interests, and doing what's best for all the rest is only okay if it's also what's best for the individual). The reality is that we can't expand domestic production capacity enough to give us that ability. But, we can fake it by creating man-made, readily accessible, oil reserves - by burying huge quantities of oil 3 or 4 thousand feet into the ground in salt caverns which are all hooked up to the Gulf Coast petroleum pipeline system, and thus can deliver oil to the market fairly quickly.
As for those speculators you hate so much, think about what this would mean for them - the knowledge that, when oil hit a certain price, someone with deeper pockets than them, different interests than them, and the ability to wait them out, would flood the market with additional supply. The sell of oil wouldn't even have to be price triggered, it could be based on other conditions - people buying oil futures for the sake of trading them would be daily confronting the reality that a large new supply of oil might hit the market and crush short term futures pricing. The only safe speculation (to the extent such speculation is inflating pricing well above where market conditions would have it) would be in long term contracts, where an investor could wait out the effects of additional SPR oil production.
There's a lot more to this discussion, and I realize there are potential issues - not the least of which is government involvement in the marketplace. We can pick up on that and other aspects of the scenario if you'd like.
Larry Gude
Strung Out
Elegant. Simple. Straightforward, A, B, C.
Please remove the term 'hate' from your mind in terms of what you think I think. I don't hate speculators, at all. I don't hate what they are trying to do. It is the lack of national will to get on board with this that I have issues with and even that is not hate.
Consider the geo politics. Let your mind wander to the oval office and ponder what you, as potus, may do when considering how to help things along in the Middle East, with the Russians, Canada, etc. See my point?
$80 is not the market price of oil. It is the agreed upon price in exchange for whatever.
Of all the meetings it would be great to have been a fly on the wall in, the Cheney/oil boys meeting he had back in, what, mid 2001, just might be the ones I most would have liked to been there.
I mean, just what did they talk about? Certainly not the fantasy of peak oil and the impending end of oil as THE primary fuel of the world.
The term 'national interest' is not an objective one.
Tilted
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Super-Rich Investors Stocking Up Gold by the Ton
Gold is trading around $1336/oz this morning - still a long way to go for it to have been a good Carter-era investment.
Gold is trading around $1336/oz this morning - still a long way to go for it to have been a good Carter-era investment.
Tilted
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I apologize, Larry. I didn't mean to seriously suggest, nor did I think, that you actually 'hate' speculators. That word usage was more the product of my often-flippant rhetorical style than an actual belief that you hate those bastards.
Larry Gude
Strung Out
I apologize, Larry. I didn't mean to seriously suggest, nor did I think, that you actually 'hate' speculators. That word usage was more the product of my often-flippant rhetorical style than an actual belief that you hate those bastards.
I think it's worth noting because the word gets thrown around so much and there are people who actually hate complete strangers over politics which is why we have MS1984NBC.
itsbob
I bowl overhand
So if you buy this morning at 1336 an oz..
How high would it have to go for a consumer to be able to SELL at 1336 an ounce?
Figure the BEST buyer they found paid 90% of the true value, the GOOD ones paid 80% and some paid as little as 30%...
At the LEAST gold would have to get to $1500 an ounce for you to just break even.