-- Posted Friday, 10 June 2005 | Digg This Article
First, let’s ask ourselves, “How is the world of gold going?” The following is a nice interesting bit of prophetic news from Pierre Lassonde.
Newmont sees $US525 gold price by Jan
“The price of gold should rise to $525 an ounce by the start of 2006, a top executive of gold giant Newmont Mining Corp. said on Thursday.” “Pierre Lassonde, president of the world's largest gold mining company, cited an expected decline in the U.S. dollar by another 15 per cent against a basket of currencies, world economic growth strong enough to keep physical demand buoyant and a continuing gradual decline in gold output.” The Sydney Morning Herald, 6-10-2005
And?
“Speaking at the Reuters Mining Summit, Lassonde said consumer and investor demand for gold is tenacious at current prices and world production is in a decline, which should hoist gold out of a current "$400 to $475 range." "When you add it up, we think you can see gold at $525 by Jan '06," he said to reporters at Reuters offices in New York.” "The physical market is very strong at these prices. There is enormous demand," Lassonde said.” The Sydney Morning Herald, 6-10-2005
These are valid & positive fundemental facts about gold, but at the moment who really cares, right? But lets talk a bit about oil now as that has caught a lot of attention recently. Interesting subject & one that should become even more interesting as the years progress. I suppose the question foremost on everyone’s mind is just how much of the blasted stuff there is left out there.
From one side of the camp I hear how we have at least 30 or so years left before “peak” production is reached so let our kids worry about the future problem. From the other side of the camp I hear that even if we run out tomorrow no problem! Mother Necessity will just push us forward to come up with something else with nary a bump in our comfortable road.
I love studying history & what I continue to notice & observe is the extreme confidence our generation has today. After all, we have been blessed with almost 25 years of prosperity & every bump along the way we have just sailed right over. But the fun always is to spot the changing “trend” in the wind & some how my instinct tells me these next 25 years will be significantly different & more challenging than the last 25.
First of all we will soon not have Alan around anymore in just another 6 months or so. Has any one any where really contemplated what type of world this will be without Alan Greenspan & his famous bubble baths? But, anyway, let’s get back to the subject of oil.
And will cheap & plentiful oil be available for our children’s future?
"As the 21st century opens, the energy sector is in a critical condition. A crisis could erupt at any time…” “The world is currently close to utilizing all of its available global oil production capacity, raising the chances of an oil supply crisis with more substantial consequences than seen in three decades." US Council on Foreign Relations
When I was younger I used to think I had all the answers. But as I get older I realize just how ignorant I really am.
Any of you out there raising children? Probably the greatest mystery on this earth is how to raise these little buggers & still maintain your sanity at the end of the day. And the older they get the closer they come to that dreaded time of puberty & that horror of horrors – teenager. If any of you out there has all this figured out let me know.
Goldman Sachs recently has suggested the possibility of a "super spike" in oil prices to as high as $105 per barrel.
“LONDON (Reuters) – Oil markets have entered a ``super-spike’’ period that could see 1970’s-style price surges as high as $105 a barrel, investment bank Goldman Sachs said in a research report.” ``We believe oil markets may have entered the early stages of what we have referred to as a ``super spike’’ period – a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return,’’ Goldman’s analysts wrote.” Energy Bulletin, MSN Money, Reuters, April 2005
And just what is the definition of "peak oil”?
“Peak oil” represents the point at which half the total known easily recoverable oil has been consumed & after this point is reached then oil production enters into an irreversible decline.
"This could very well be a signal that world oil production is rapidly approaching its peak, as a growing number of analysts now forecast, especially in view of the diminishing prospects for major new oil discoveries." ODAC, The Oil Depletion Analysis Centre, 11-19-2004
The debate over oil will only continue to intensify. In the face of higher oil prices a “downshift” in global growth is already under way. The surge in oil prices has been driven almost entirely by very strong growth in demand worldwide & will likely continue.
We were speaking about children a few words back & I came across the following interesting news involving past kid presidential contenders in school.
“…newly released records show that Bush and Kerry had a virtually identical grade average at Yale University four decades ago.” “He (Kerry) received four D's in his freshman year out of 10 courses…” ''I always told my Dad that “D” stood for distinction…" John Kerry, By Michael Kranish, Globe Staff, Boston Globe, 6-7-2005
I always thought “D” stood for dumb.
“WASHINGTON - The Fed chief said the "dramatic rise" in oil and natural gas futures prices in recent years carried the potential to "significantly affect the long-term path of the U.S. economy."“…The Fed Chief said the "Dramatic rise in oil & natural gas prices in recent years suggested such elevated prices would prove to be the norm.” money.cnn.com/2004/04/27/news/economy/greenspan.reut/index.htm?cnn=yes
Many geologists & oil professionals believe that global peak oil production is fast approaching – if not already here. This data is derived from historical and present production data and estimates of present oil reserves. What is getting closer & closer is the long downward slope that will occur once peak oil production is past.
"…the world may be facing shortfalls much sooner than expected." USGS geologist Les Magoon, the Oil & Gas Journal
Oil and gas dominate our lives & provide for our high standard of living. When oil’s decline is firmly established then we will begin to see a radical change & a decline in the comfortable world we live in.
“…it is evident that the world supply of certain key resources is being diminished at a rapid pace…” Resource Wars, Michael T. Klare, 2002
About 944 billion barrels of oil has so far been used & it is estimated that about 764 billion remains available as reserves & maybe a further 142 billion barrels are classed as oil yet to be discovered. And if these figures are accurate then overall oil peak usage will be reached in another year.
“World oil supplies are all but certain to remain tight through the rest of this decade, unless there is a precipitous drop in demand, according to the results of a study by the London-based Oil Depletion Analysis Centre (ODAC).” ODAC, The Oil Depletion Analysis Centre, 11-19-2004
Of course the oil companies dispute these figures and publicly state that for the “long term” there is plentiful oil. But the business of estimating oil reserves is controversial and political. And common sense dictates that companies will seldom report their true findings for commercial & business reasons. And governments, which own 90% of the reserves, are prone to mislead the public (lie).
“…all of the major new oil-recovery projects scheduled to come on stream over the next six years are unlikely to boost supplies enough to meet the world's growing needs.” ODAC, The Oil Depletion Analysis Centre, 11-19-2004
And the final consensus is that most figures for oil reserves are unreliable. Even the reserves in the Middle East as reported by Saudi Arabia are beginning to come under question. The two most widely used estimates of world oil reserves, the Oil & Gas Journal and the BP Statistical Review, both depend for their oil reserve data figures released by the government and the oil industry and should anyone have the audacity to question their accuracy?
"Even with relatively low demand growth, our study indicates a seemingly unbridgeable supply-demand gap opening up after 2007…" Mr. Skrebowski, Editor of UK Petroleum Review
The US government has stated for the record:
"…world oil reserves are being depleted three times as fast as they are being discovered. Oil is being produced from past discoveries, but the reserves are not being fully replaced. Remaining oil reserves of individual oil companies must continue to shrink. The disparity between increasing production and declining discoveries can only have one outcome: a practical supply limit will be reached and future supply to meet conventional oil demand will not be available."
Deutsche Bank analysts report that global oil production will soon peak. Conventional oil reserves are declining about 4-6% a year worldwide.
Well, there is another gold show coming up in Vancouver the middle of June. Probably not one new gold or resource investor will come under the fold, but all attendees will have a good time & have fun in the evening bar. These companies who attend will probably spend on average over $20,000 dollars each for this two day trip.
And it really is not my intent to criticize these conferences because I know they really do have their place. But I am merely driving home the point that these “shows” are not BRINGING NEW investors into the fold. Primarily they are just an opportunity for existing gold party club members to get together & shoot the breeze.
As I have said repeatedly the gold & resource sector is the only sector that does not actively seek out in a coordinated & professional marketing fashion new investors & participants. And this information is confirmed to me all the time as I am told by these companies that they do not have the time or resources to seek out new investors.
And let me mention here that there is a distinction in what these companies consider to be the definition of marketing. The resource sector will travel to Europe to cull new financial investors from professional institutions, but it is the RETAIL sector that is being ignored by everyone.
And when this market does eventually EXPLODE & take off it will be because the “retail” sector has discovered gold & resource stocks.
"We should be worried. Time is short and we are not even at the point where we admit we have a problem." "Governments are always excessively optimistic. The problem is that the peak, which I think is 2008, is tomorrow in planning terms." Mr. Skrebowski, Editor of UK Petroleum Review
What is agreed on is that world oil demand is growing tremendously. China's oil consumption grew close to 18% last year and is expected to double over 15 years which is half the US's present demand. India's oil consumption is expected to rise by nearly 30% by the end of this decade.
Do you still believe the world has plenty of cheap & readily available oil for tomorrow’s children? The first half of the oil age is now ended. The second half now has begun and rapid will be the fall & the decline of oil and all that depends on it.
”Goldman said the current oil market environment looked more like that seen in the 1970s -- when oil prices spiked dramatically following the Arab oil embargoes on supply to the West and Iran's revolution.” “The bank also said its super-spike forecast range was conservative…”
Energy Bulletin, MSN Money, Reuters, April 2005
Gold Letter is a review of gold & silver companies. Our goal is to provide a brief review of those gold & silver companies considered to represent respectable & excellent speculations.
FREE TRIAL gold letter
Order toll free 1(888) 836-7758
Or over the Internet: click here
David N. Vaughn
Gold Letter, Inc.
David4054@charter.net
Gold Letter Website
June 10, 2005
Author/publisher does not trade stock of the company being followed for 30 days before & 30 days after an article is published. Readers are advised that the material contained herein is solely for information purposes. The author/publisher of this letter is not a qualified financial advisor & is not acting as such in this publication. Gold Letter, Inc. is not a registered financial advisory. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment related advice. All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Authors of articles or special reports contained herein may have been compensated for their services in preparing such articles. Gold Letter and/or its affiliates may receive compensation & or stock options for the featured company’s right to publish & reprint & to distribute this publication. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.
-- Posted Friday, 10 June 2005 | Digg This Article
