Odds ‘n Sods:

Reader M.P.S. notes that there are two coupons for home canning jars currently available at on RedPlum.com. You can print each coupon two times.

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A follow-up: Mayor Eddie Perez (recently mentioned in the blog) was sentenced to three years in prison, and three years probation, of a possible 60 year sentence. Perez was convicted on five of six felony charges. He is one of the rogues gallery of Mayor Bloomberg’s Mayors Against Illegal Guns members that have been indicted or convicted of felonies including Sheila Dixon, Kwame Kilpatrick, Gary Becker, Larry Langford, Samuel Rivera, Jerramiah Healy, the late Frank Melton, Will Wynn, and David Della Donna. One can only wonder what the felony conviction rate is for members of Mayors Against Illegal Guns, versus the general population. It is noteworthy that a felony conviction in the U.S. brings with it the loss of the right to own a firearm, for life. So at least these socialist mayors have been successful in getting a few guns out of the hands of criminals–themselves.

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Camping Survival just received two pallets (100 cases) of military specification MREs that had been out of stock since the Haiti earthquake.



Jim’s Quote of the Day:

"If tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy. Of all the enemies to public liberty, war is perhaps the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. The loss of liberty at home is to be charged to the provisions against danger, real or imagined, from abroad." – James Madison



Note from JWR:

Today we present another entry for Round 30 of the SurvivalBlog non-fiction writing contest. The prizes for this round will include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost between $500 and $600, and B.) Two cases of Mountain House freeze dried assorted entrees, in #10 cans, courtesy of Ready Made Resources. (A $392 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A 500 round case of Fiocchi 9mm Parabellum (Luger ) with 124gr. Hornady XTP/HP projectiles, courtesy of Sunflower Ammo (a $249 value), and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $400, and B.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A copy of my “Rawles Gets You Ready” preparedness course, from Arbogast Publishing, and B.) a Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.)

Round 30 ends on September 30th, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.



Family Preparedness: How to Protect Your Infant Child, by Jen J.

When my son was around three months old, I needed to run out and pick up milk and a small tool my husband had on order at a local hardware store.  I anticipated the total outing to be around an hour, and thought I had packed appropriately.  We successfully made it to the farm where I picked up our milk for the week, and placed the glass jugs on the floor of the car.  During the drive to the hardware store, my son woke up and started fussing which rapidly escalated to a full-blown tantrum.  When exiting the freeway, the glass jugs rolled together and one broke, spilling a half-gallon of milk over the front of my car.  We arrived at the hardware store, where I parked around the back.  I hopped into the back seat, fed my son, where he promptly over-filled his diaper and soiled the clothes he was wearing.  On opening his diaper bag, I discovered that I had planned poorly for my outing.  I had several diapers, but no change of clothes.  I’m sure you can imagine this palm-to-forehead moment as I stared in horror at the puddle of milk in my car, my filthy child, and the cold January afternoon outside.  While this event was frustrating and challenging to take care of (I cleaned my kiddo, wrapped him in my jacket, and used the extra diapers I had to sop up the milk, then ran to the store and bought him a clean outfit to wear home), it taught me the value of being prepared for any contingency, a lesson every new mother and father eventually learns.

As avid outdoors’ enthusiasts, my husband and I are always toting our small child out on adventures.  We hike, bike, rock climb, hunt, camp, and disappear into the wilderness every chance we get.  When our son was seven months old, we planned a month-long rock climbing adventure in St. George, Utah, which required frequent drives and hikes deep into the desert wilderness.  Preparation for the comfort and care of an infant for a single-day in the mountainous desert took extensive research.  Between the two of us we carried all of our climbing gear, enough food for about 8-hours, warm clothing (down jackets, cotton long-sleeve shirts and pants, wool hats, and a wool bunting suit for our son), a lightweight travel-cot for our son, blankets, toys, and standard diapering supplies.  On reflection, however, I realized if we had ever encountered a challenge that required us to stay the night in the desert, or hike out due to a flat tire, we would have been in serious trouble.  It never occurred to me to carry extra food in the event we were out past dinner, or a change of socks, or a proper first aid kit, or more diapers than absolutely necessary.  Weight was a huge concern, and we relied on the fact that we weren’t too far from civilization and other rock climbers. 

Shortly after our return from our trip, I read The Long Emergency by James Howard Kunstler; joined a back-country hiking group of moms; and my husband broke his leg at a local climbing area which very quickly demonstrated how dependent I was on him for carrying capacity of our daily gear.  It struck me that in the survival literature that I’ve read, there is no discussion on ensuring the safety of an infant.  On a personal level, ensuring the survival of my son is the most important thing I could do in any scenario; in a TEOTWAWKI situation what could be more important than well prepared women who know how to ensure their babies can survive?  So,  I began reflecting on what was truly needed should something ever occur that required me to survive alone with our son.  Using an extreme example, could I pack a bag that contained everything my son and I would need to survive in complete wilderness and isolation for three days, including carrying my son?

As I began building my lists and sorting out what I truly needed, weight was a primary focus.  At 5’1” tall and 105 lbs, I can’t expect to carry more than 50-60 lbs, including my son.  A strong man could undoubtedly carry far more weight, but he doesn’t have the advantage of being able to breastfeed and has to carry all of the food and additional gear required for an infant’s milk/formula.

The planning involved with this also emphasized the need to stay fit and active; have sound first-aid skills that are applicable to an infant (most local first-aid courses include training on infant first-aid); have a good understanding of wilderness survival and knowledge of the region you’re planning to survive in (in my case, the Pacific Northwest); and know your limits.  Traveling with an infant restricts your ability to hunt for food, so knowledge of basic traps for small game is helpful.  You can’t plan for silence from a child when he is completely out of his element, so you need to ensure you don’t attract unwanted attention from predators (human and animal alike) as a result of your child’s crying.  Your focus when surviving with an infant needs to be on warmth, security, hygiene, and food.   Finally, when planning for a worst-case-scenario survival situation, cost should never be an issue.  Unless you live under a bridge, you’re never too poor to afford the best quality items.  You’re life will depend on the choices you make, and the choices I made for my own survival with my son reflect this.

So, on to my list:
Carriers – if your child is less than 5-months old, invest in a Moby Wrap baby carrier (about 2 lbs.) and learn to use it.  It’s a long swath of comfortable cloth you wind around your torso, and tuck your small infant in against your belly.  This is a secure, comfortable, and warm way to carry an infant.  It leaves your arms free, and you can carry a standard backpack. 
Once your child can comfortably sit up on his own, I recommend the Littlelife Voyager.  It weighs 6lbs, 3 oz; has the most carrying capacity of any infant carrier, and has a maximum load of 44 lbs.  Invest in the rain screen, which you will find valuable for keeping your child dry and comfortable above your shoulders.
Combine this with a hip-pack that you can wear in front, packed with essential small items, I carry a S.O.B. (Soldiers Optimized Butt Pack) tactical pouch, which is a good size for carrying a small handgun, my knife, flashlight, compass, maps, snacks for my son and myself, and water) .

Gear –

  • 1.8oz – Swedish Firesteel
  • 11oz – Backpacking cookset which is big enough to wash diapers in.  I found the Open Country 5-Piece Nonstick set to be ideal
  • 8oz – Biodegradable, phosphate free soap – Campsuds fit the bill perfectly
  • 4oz – Hand sanitizer gel
  • 3.1oz – MSR Ultralite pack towels
  • 2oz – String for hanging diapers to dry, building traps, and a myriad of other uses
  • 20oz – Water filtration system such as the Katadyn pocket filtration system, or go super light with iodine tablets
  • 13.2oz – Diapers – avoid packing your standard cloth or disposables, and instead get a set of Gerber baby organic birdseye diapers (10oz for 6 diapers), and combine with 2 Gerber waterproof diaper wraps (1.6oz each)
  • 12oz – Wipes – rather than getting pre-moistened wipes, pick up disposable dry washcloths which are lightweight, cotton, and will work well for multiple applications, just remember – you must have water to use them
  • 4oz – 2 small, lightweight food containers that can hold 4oz of food each. You will find it helpful to be able to prepare your baby’s food in advance, as they typically require food of some kind every two hours;
  • 3lbs – Food – a personal choice, as you can choose to carry MRE’s or freeze dried foods.  If you go with freeze dried foods, plan on at least 2lbs worth that can be cooked soft enough for your child to share with you (if he’s eating solids by this point), and remember that an infant cannot digest complex foods yet, do not choose foods that are heavy in salt, contain honey, or egg whites, and if you don’t know yet about allergies, avoid nuts.  Include in this weight any formula or cereal your child needs.
    • On an additional note to other breastfeeding women, remember you need to take care of yourself.  Do not skimp on food because it makes your load easier to bear.  Your body needs proper nourishment and water in order to care for your child.
  • 2.5lbs – Water bottle for yourself, and to share with your child – at least a 1-litre bottle, whatever you can carry
  • 6oz – Sippy cup or bottle for your child; necessary if using formula
  • 1lb – Survival Knife – get one of quality that can strap to your thigh or has a good sheath for MOLLE attachment for ease of access
  • 1.5lbs – Hatchet (Swedish handmade quality is vital)
  • 6oz – LED compact flashlight (both a Petzl Tikka headlamp and a Surefire 6P or similar)
  • 3oz – Compass
  • 3lbs – 1st Aid Kit; In addition to a standard kit, remember to include in your kit the following important items you may need:
    • Infant Tylenol; gripe water; diaper rash cream; lanolin for breastfeeding; nasal syringe bulb; nail file; Vaseline; natural insect repellant (not DEET based); tweezers
  • 6lbs 12oz – A tent of some sort – I prefer the Bibler/Black Diamond Tempest as it’s lightweight, compact, and can withstand any weather on earth.
  • Lightweight, good quality clothes for layering in.  You can find light wool layers for your child, as well as a lightweight wool bunting suit, I have found that natural fibers like wool work far better than synthetics in maintaining an infant’s core temperature; Make sure you have at least one down jacket packed for yourself, large enough to snuggle your child in when sleeping at night; down booties for sleeping; extra socks; at least one full change of clothes for your child (weight varies depending on your need); hats for you and your child (wool and/or cotton beanies and a waterproof cap with brim for yourself.  Your own clothes need to have a top-layer that’s reasonably water-resistant, and have warm, comfortable, waterproof hiking shoes that are ready at all times.
  • Thermal blankets

After careful calculation, my total weight before clothing and blankets are considered is 30 lbs.  With the weight of my son added in at 23 lbs, I’m within my limit range of 50-60 lbs.  After estimating clothing and blankets, my total 3-day emergency kit for wilderness survival averages close to 60 lbs.  Remember that children grow rapidly, so you can’t plan on the emergency clothes too far in advance.  Always invest in a few high-quality clothing items that are slightly large on your child, and that are durable, warm, and can be layered.  I can just lift my pack into position on my own with my son in place already.  For a long hike, I need to carry a set of lightweight poles to help support the load.  For a TEOTWAWKI situation, I intend to carry a Walther P22 with appropriate ammunition in my hip pack. [JWR’s Comment: A .22 rimfire pistol might suffice for stopping small game, but it would be foolhardy to depend upon one for self defense.]

Each person is unique in what their situation may bring about. If I were to use a stroller or car for planning my survival, I could carry significantly more gear and in far greater comfort.  However, I wanted to use an extreme example, from which I could adjust my calculations for other situations such as when I have my husband to help share the load. 

I hope that by sharing my experience in preparing for the survival of an infant, others will also take the time to invest in appropriate items to ensure their smallest and most precious cargo will survive regardless of the situation.       



Letter Re: A New Edition of Where There is No Doctor is Now Available

James,

Thank you for your excellent blog. It is one of my daily read sites, no matter where in the world I am. The Hesperian Foundation just published their updated 2010 version of Where There Is No Doctor: A Village Health Care Handbook by David Werner. It is 450 pages and has lots of excellent updated information. The download version is free, but I highly reccomend purchasing the paper copy for $22 USD
The last I heard paper books are still EMP proof. It will be nice to have a useable reference, if and when the computer is fried!

Best Regards, – The Consultant

JWR Replies: Thanks for that update. Readers should be sure to order the latest (2010) edition. Also note that translations in more than 180 languages (From Albanian to Zulu) are now available.



Economics and Investing:

More than a dozen readers sent this: Doomsday warnings of US apocalypse gain ground

B.B. sent us this: CBO Predicts U.S. Debt Crisis if Deficits are Not Controlled

Sovereign defaults ahead? Wreck the Currency or Default on the Debt? by Jeffrey Rogers Hummel. (Thanks to G.G. for the link.)

Randy F. forwarded a bit of Gloom und Doom: Our Debt Is More Than All the Money in the World

Items from The Economatrix:

Era of Economic Illusion Over

Mutant-Rat Epidemic Spreading Economic Black Plague

Chinese Manufacturing Data Points to Dismal US, EU Christmas

China Fears Depreciation of $2.45 Trillion of Reserves Still Heavy in Dollars

Japan Alarm Over China’s Japanese Government Bonds

Oil, Gasoline Up on US Crude Pipeline Leak



Odds ‘n Sods:

Reader R.P.B. recommended the 12-part instructional video series, available free on YouTube, prooduced by Analytical Survival.

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Reader James C. spotted this: Look what happens when you cross a skateboard with a tank

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Bill R. sent this NPR piece: Consumers Still Gear Up, Camp Out In Recession

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Yet another reason to avoid social networking web services: Burglars Picked Houses Based on Facebook Updates. (Our thanks to G.J. for the link.)

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J.B.G. liked this piece by Ambrose Evans-Pritchard: The backlash begins against the world landgrab. Gee, investing in productive farming land. (Does this sound familiar?)





Notes from JWR:

Monday (September 13th) is the last day of the big sale at Ready Made Resources on Mountain House freeze-dried foods. Don’t miss out!

 —

Today we present another entry for Round 30 of the SurvivalBlog non-fiction writing contest. The prizes for this round will include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost between $500 and $600, and B.) Two cases of Mountain House freeze dried assorted entrees, in #10 cans, courtesy of Ready Made Resources. (A $392 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A 500 round case of Fiocchi 9mm Parabellum (Luger ) with 124gr. Hornady XTP/HP projectiles, courtesy of Sunflower Ammo (a $249 value), and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $400, and B.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A copy of my “Rawles Gets You Ready” preparedness course, from Arbogast Publishing, and B.) a Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.)

Round 30 ends on September 30th, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.



The Case for Silver Investment, by J. Vigilant

I. Introduction
As of September 2010, it appears that physical silver is today potentially the most explosive precious metal play in history. A combination of factors – chronic scarcity, inelastic demand, and expanding consumption has created potentially one of the most profitable opportunities ever seen. The following analysis presents the base rationale for purchasing silver. Furthermore, significant evidence exists to point towards downward manipulation of the silver market by large bullion banks, further compressing the market. It is this author’s opinion that a parabolic top in silver could easily surpass the 20x rhodium price increase from $500 to $10,000 over a five year period as the market realizes the supply shortage. Silver’s supply and demand are analyzed below to provide a background for the reader.

II. A Scarcity of Silver
Total world silver production from the prehistory to the end of 2001 was estimated by the USGS to be 1.26 million metric tons, or 40.5 billion troy oz. The Silver Institute reports that 5.1 billion oz have been mined from 2001-2009. In total, 45.6 billion oz have been mined in history, with roughly 1/9 of that total in the last decade. The Silver Institute and GFMS conclude that approximately 800 million oz existed in total above ground official stocks (governments, COMEX, other dealers, and ETFs combined) as of the end of 2008. Assuming that jewelry and other private stocks are unaccounted for, let us assume that an additional arbitrary 200 million scrap oz can be recovered. Furthermore, there is no justification for ETFs to be included in silver stocks – in theory, the ETFs are supposed to hold investor’s silver and to include investor silver in inventories would be to double-count them. Recall that the Hunt Brothers’ silver squeeze in the 80’s pushed many to liquidate scrap silver, implying that individuals today probably either 1) did not sell at $50/ounce in 1980, and probably would not sell now, or 2) sold their silver in the 1980’s and have only silver acquired since then. In summary, a base could rationally assume potentially 1 billion ounces exist in the market today.

Note: Jewelry should not be included in the aforementioned supply.  A 5-gram sterling silver ring, for example, has 0.148 troy oz, costing $25 on Amazon as of July 2010. As silver is roughly $20 for one troy ounce including premiums, rationally speaking, silver prices must reach substantially over $100 (potentially $120) in order for a buyer to sell that ring at melt value for a profit. However, as Cash For Gold has shown, some individuals are willing to sell below market value, so the actual liquidation value should be assigned a discount – arbitrarily, assume any price above $50/ounce would bring in scrap sales.

Furthermore, silver production is directly tied to the world economy – the Silver Users Association stated that 70% of silver in 2004 was produced as a by-product of mining for lead, zinc, copper, and gold mining. Should the economy take a turn for the worse, silver mining will be cut significantly as demand for other commodity metals decline. Furthermore, it is commonly known that US government stockpiles of silver in the 1950’s and 1960’s numbered around 3 billion oz (the largest single stockpile in history), and the US government literally has none today.  From 2000-2009, silver’s fabrication demand has exceeded new mining at an average rate of 200 million oz/year according to calculations based on Silver Institute statistics. At current run rates in a normal economic environment, known world stocks will be depleted within this decade.

III. The Changing Nature of Silver Demand
In addition to the increasing scarcity, silver demand is drastically changing. Silver’s usage is increasing dramatically as it being used in a number of nanotech applications, including most tech products, inks, medical technology, and clothing. While some controversy surrounds the usage of silver in clothing and medical technology for anti-bacterial purposes, silver products continue to increase in popularity. Silver is used in virtually every electronics product. Most importantly, silver is used in trace amounts in virtually all of its industrial products – should the price increase by multiples, overall input costs of silver on a per-product basis will remain negligible. For example, a new silver-laced sports shirt has a miniscule amount of silver. Should the price of silver rise significantly, the cost of the silver in each shirt would be pennies on the dollar compared to the other costs of production.  Silver appears to have an inelastic demand curve.

IV. Pricing Silver
In summary, silver is a commodity with 1 billion ounces under a base case scenario, with potentially 200 million ounces being irretrievably used each year. As the price increases, industrial demand will not diminish. In light of the above facts, a fair value for silver would be difficult to establish. It is entirely possible that figures for silver are vastly understated compared to actual supply. However, even assuming that 5 billion ounces of silver are readily available at higher prices, it is important to keep in mind that a similar metal  – gold – has 5 billion ounces above-ground. In other words, the supply of silver under a conservative scenario equals the supply of gold, and in an optimistic case, is 5x rarer than gold. Yet, gold is 60 times the price of an ounce of silver (assuming $1.200 gold and $20 silver). Given that the historical ratio of gold to silver in the earth’s crust is around 1:14 or 1:15, an upward revaluation to the price of silver must occur. While it is true that higher silver prices would increase mine production, recall that 1) 70% of silver mining is from by-product, and 2) new mines take from 1-3 years to start up production. Even after silver’s necessity is recognized by the public, it will be years before new production would be able to match the soaring demand from a shortage.
When considering that much silver demand at present is industrial, the amount of silver available for investment is necessarily much smaller. Furthermore, when the shortage becomes known to the public, a massive squeeze must occur as people “panic buy” at the same time silver-users also attempt to place larger-than-normal orders to ensure business continuity. Possible prices may be left to the reader to predict.

V. Evidence of Manipulation
In addition to the fundamental supply/demand imbalance noted above, a further element favoring the supply shortage must be introduced. Many silver investors believe two statements about silver: 1) elements of the Western governments – i.e., central banks – are working with large bullion banks to purposefully suppress the price of silver, and 2) certain precious metal ETFs and exchanges are fraudulent. These issues will now be addressed.

  • “Central banks stand ready to lease gold in increasing quantities should the price rise.” – Alan Greenspan, July 24, 1998 in testimony before the Committee on Banking and Financial Services. The full market manipulation theory states that large bullion banks, specifically, JPM and HSBC, enter the London market and the COMEX to manipulate silver prices downward. The mechanism by which this is done is through “paper shorting” – the banks allegedly issue thousands of precious metal contracts (not backed by the actual metal) in a short time period to overwhelm the market and force liquidation by technical funds and speculators.

The CFTC’s own Commitment of Traders (COT) report has been analyzed by Theodore Butler on a weekly basis. As an example, he submitted a letter with details to the CFTC, indicating that 4 or less banks control the commercial short position. The fact that the market is concentrated so heavily in these hands appears to constitute prima facie evidence that manipulation is in fact possible.

As to whether manipulation occurs in fact, a CFTC hearing on position limits in metals was held on March 25. During that meeting, 2 items of note were revealed.
1) Bill Murphy of GATA alleged that he had a whistleblower on JPM’s manipulation of the markets. Andrew Maguire, a former Goldman Sachs employee, is a metals trader in London. He claimed that 1) he was told by traders from JPM that they manipulate the price of silver. He sent information to the CFTC predicting the time and patter of a silver price crash 2 days in advance.
2) Jeffrey Christian of the CPM Group agreed that certain precious metals have been leveraged by 100 to 1 in the London and COMEX markets (time 4:21). Leverage that high means in fact that should 2 out of 100 ask for delivery, the market would collapse as “price discovery” is attempted.

The following week, Dennis Gartman, a well-known trader, went on the record (time 1:22) grudgingly admitting that silver market manipulation was a possibility.
Not directly related to silver, but to manipulation – The UK Telegraph has reported the controversy about “Brown’s Bottom” – Gordon Brown’s decision as Chancellor to sell 400 tons of British gold when gold reached historic lows “is regarded as one of the Treasury’s worst financial mistakes and has cost taxpayers almost £7 billion.” The stated reasoning at the time was to “generate cash” – but in addition to generating relatively little, the sale was pre-announced, causing the price to decline before the sale and inconsistent with obtaining a good price. Speculation exists that the sale was a secret bailout of banks short precious metals.
2) Some investors believe that the popular metals funds, GLD and SLV, are one of the means by which JPM and HSBC defraud investors. Known issues with these funds are numerous: 1) These two banks are both the largest short-sellers and the custodians of the GLD and SLV funds – a clear conflict of interest. 2) The funds pay no premium for physical metal – all other precious metals funds with verifiable stocks have at times charged large premiums – Sprott Asset Management has charged up to a 30% premium during times of tight delivery, but GLD and SLV have never had any real premium increases. 3) GLD has grown from virtually nothing in 2004 to being in the top 10 holders including official government stocks in 2010. Similarly, if SLV is actually backed by silver, as of 7/16/2010 the fund is stated to hold 9,185.29 tonnes of silver – equivalent to 295 million oz. Based off of the known supplies from the Silver Institute reviewed earlier of 800 million oz, SLV owns ~3/8 of total world supply – not including COMEX silver contracts, warehouse receipts, etc. What are the odds that this group holds almost half of the world’s supply in their vaults? It appears highly unlikely that both the COMEX shorts and SLV are backed by the precious metals. 4) Legal hedges in the prospectus for both absolve the ETFs from any responsibility for ensuring that the custodians actually possess the silver in question. An analysis has of their legal structure has been completed and document various suspicious activities and legal loopholes in the prospectus that could allow for the trusts to hold paper derivatives instead of physical silver. To conclude that SLV is a fraud is not unreasonable, considering that in 2007 Morgan Stanley settled a class action lawsuit accusing them of charging storage fees on precious metals that they did not actually possess.
With the above allegations of manipulation, it appears that silver could literally surpass the value of gold. If above ground stocks have been or are near depletion, for a period of at least one year, silver prices higher than gold could be justified. If manipulation and fraud in the silver markets are discovered, the resulting panic rush would create the largest short squeeze in history – unless a force majeure situation is declared, and cash settlement at an unfair price for longs is effected. Even in that case, however, the demand for silver still rises – holders of the physical metals will be untouched while ETF holders will not profit.

VI. So What Does This All Mean?
1. Silver is hands down the best physical investment you can make, barring lead for bullets. If you want to increase your wealth, you do not buy gold – you buy silver.
2. The day that silver prices explode is probably also close to the day that TEOTWAWKI will occur because that implies that the Western governments have lost control. Currently, the situation can be pictured like this: Western governments can keep putting gold and silver into the market to keep the price down. However, their supply of silver is far smaller than their supply of gold, so silver will run out first. When that happens, the economic system must collapse or be realigned. A failure to realign it quickly means TEOTWAWKI.

VII. Recommendations for Action
Individuals can enter the silver market, demanding physical delivery through dealer purchases or through metal exchanges. In particular, bullion blanks or popular coins such as American Eagles should be bought from reputable dealers. I would avoid all numismatic coins which have a higher premium.



Letter Re: Many Pension Funds are Doomed

Jim:
The following article is one example of why “dot gov” will basically collapse, at every level. The threat is faced by teachers and all public service employees et cetera. All of their “retirements” are doomed.

Fort Worth pension bubble will blow up in our faces

You don’t have to be an actuary to know that this pension plan will end badly. The technical phrase is “trending toward insolvency.”

The key problem is that the city is on the hook for all the promised benefits. Taxpayers will have to pony up hefty contributions for years, even generations, and the city may have to cut services to afford it. The pension for city employees is currently projected to pay out $432 million more than it brings in over the next 30 years. – K.T.

JWR Replies: I concur. Coincidentally, SurvivalBlog reader Jon A. in New York recently sent me this: DiNapoli: Local governments face huge jump in pension costs. Jon’s comment was: “I truly believe this is where the unrest will come from in this country: pensioners and/or welfare recipients ultimately receiving less than what they expected from the government.” Meanwhile, we read: President Obama Plans to Cut Social Security Next. The bottom line: Plan your own retirement, and as part of that, have a component that is heavy into tangibles. This will be your “fire insurance” against a collapse in the U.S. Dollar as a currency unit.



Letter Re: Lessons Learned from Hurricane Ike, by John in Texas

Jim,

I really appreciate the people who share their lessons learned on SurvivalBlog.com, so I thought I would share my experiences and lessons learned from Hurricane Ike.

Hurricane Ike hit Houston on Friday night September 13, 2008.  The hurricane was classified as a strong category 2 with maximum sustained winds of 110 MPH.  What was unusual about this hurricane was the large size of the storm.  Hurricane force winds extended 120 miles from the center. 

Gas stations in our area ran out of gas the day before the storm (Thursday).  I waited in a very long line of cars only to find out that the station had run out of Regular gas.  I was happy to pay extra to fill up with Premium.  The gas station was a zoo with everyone in panic mode.  It was all the owner could do to maintain order with people complaining about credit card issues, the station running out of Regular, and how people were taking too long to buy gas.  I will never again wait until the last minute to buy gas.  Grocery stores were also crazy.  The grocery stores we visited had all run out of bottled water and batteries.  People were buying canned goods and ice in large quantities. 

On Friday morning I finished installing our plywood storm shutters on our most vulnerable windows and bringing everything inside that could be damaged by the high winds.  In the afternoon we continued with our preparations inside.  We charged all of our batteries, filled up our camping water storage bags, and got all of our battery lamps ready.  I also setup inverters and car batteries in the house for backup power.

Our home is about 70 miles north of the coast.  The high winds and rain started to hit around 9 PM on Friday night.  We went to bed early to try to get some sleep before the strongest winds of the storm hit.  Around 1 AM the wind was making so much noise that I was no longer able to sleep.  The house was making a lot of strange noises due to the high winds.  It was at that point that my panic started to build.  What made me feel uneasy was the fact that my family and I were completely on our own.  If we had any kind of emergency, I would not be able to call anyone for help.  What helped me to calm down was keeping busy reviewing all of my preparations and walking around the house checking for problems.

Our power was intermittent most of the night and finally went out around 2 AM.  The television weatherman said that when your electricity goes out, that is when you know the strong winds are approaching.  That is exactly what happened in our case.  I continued watching the news with a battery powered television.  A television is very helpful to track the movement of the storm.  Since television stations in our area no longer broadcast analog television signals, I had to find another solution to receive digital television with backup power for future storms. 

As I watched the eye of the storm pass near our home to the East on television, I thought the worst was over.  To my surprise, the strongest winds hit our house on the back side of the storm.  During the peak winds, I heard a loud crash and our entire house shook.  I ran upstairs and found a tree had hit our house.  I was amazed at the damage.  The roof framing, roof decking, shingles, sheet-rock, insulation, and tree branches had fallen into my son’s bedroom.  The larger tree branches had come through the roof like spears.  Fortunately, I had insisted that everyone sleep down stairs during the storm.  As the hurricane force winds raged outside, we rushed around in the dark trying to find something to catch the water.  We needed a lot of bins and buckets to catch the water falling from such a large area of the roof.  This kept us very busy for the rest of the night as we were constantly bailing the water out of all of the bins.  We were able to catch enough of the water that the sheetrock downstairs was not damaged.

As the sun came up, we were able to see the damage outside.  Most of the large pine trees near our home had been blown down.  The tree that hit our house was a large pine in our neighbor’s yard.  The tree had broken at mid-height and the top part of the tree was still connected to the bottom half.  A second tree in my neighbor’s yard has snapped (clean break) and the top half landed in my back yard.  A third tree had landed on the roof of the house behind ours and the top part was in our yard.  We also had a mature queen palm that had blown over.  The trees all fell in different directions.  I do not think it was a tornado from the hurricane that blew down the trees since the damage was so widespread in our neighborhood.  The funny thing was that I had cut down all of the tall pine trees in my yard after I realized how dangerous they could be if they fell on the house.  All the pine trees that hit my house and landed in my yard were all from my neighbors and all of the cleanup efforts and repairs were my responsibility.  My neighbors paid none of the cost to remove the trees or repair the damage to my home and yard.

The day after the hurricane hit, I called insurance company and told I was on my own and I could not make any major repairs before the Insurance Adjuster arrived.  We started the cleanup process by removing all shingles, roof decking, tree branches, sheet rock, and insulation that was in the room.  The contractor (thick plastic) garbage bags we had worked great for this cleanup.  I highly recommend everyone keep a few boxes of these contractor bags for emergencies.  We then pulled up the carpet and removed the wet pad.  We used fans to circulate the air and help dry the room out.  We learned from a previous flooding that if the house is not dried out quickly, a strong musty odor will develop.  Since we could not put a tarp on the roof due to the tree, we hung a tarp inside the room to catch all the water and funnel it into a large bucket.  The tree company we hired to remove the trees in our yard used a 100-ton crane to remove the tree on our house.

We started running our generator the first day using gas.  The only gas I had was two years old with Sta-Bil gas stabilizer added.  I was amazed the generator ran well on two year old gas.  I now rotate my gas yearly and put it on my calendar so I won’t forget.  Our generator has a natural gas conversion kit installed.  After the rain stopped, we moved the generator to our back yard and connected it to natural gas.  The generator ran flawlessly for 13 hours per day on natural gas.  I remember praying that our generator would keep running since we were totally dependent on it for all of our power.  I strongly recommend a good quality generator and maintain it well for best reliability.  My natural gas bill went up $100 and my electricity bill went down $200, so I actually saved money running the generator.

Our generator is 7,500 Watts, so supporting the electrical load of the entire house had to be done carefully.  We powered everything in the house except the central air-conditioning.  The generator load monitor we had was very helpful.  As long as we kept the load under 50%, we had no problems.  When the load was at 70%, we sometimes had problems.  At 90%, the generator circuit breakers would trip within a few seconds.

While working in our yard near the generator, I started to feel the effects on Carbon Monoxide poisoning (headache, nausea, and fatigue).  I realized what was happening and went indoors to recover.  I am now extra careful when working around a running generator.  We also use Carbon Monoxide detectors in our house when running the generator.

All gas stations and stores in our area were closed after the storm since there was no electricity.  Stores reopened slowly as emergency generators were brought in.  When the grocery stores opened, they had none of the basic items (eggs, milk, orange juice, bread, hamburger, etc.).  After the storm we lost electricity, cable/internet, and phone service.  We had no problems with water, sewer, and natural gas service.  Many of the nearby neighborhoods had no water and one had limited sewer service.  I was surprised that phone service went down after 24 hours.  After about a week, the phone company restored service with portable generators they connected to the phone system equipment in the neighborhood.  We had no power for 10 days.  Neighbors asked us to charge their cell phones, laptops, and DVD players.  We setup a table in front room with power strips for them to use.  The item most requested by my neighbors was ice.  I made extra ice before the storm and filled many 1 gallon freezer bags.  After two days, neighbors started to clear out their refrigerators and freezers.  We had many offers to take their frozen food.  Several of our neighbors had electric stoves and could not cook.  They came over to our house and used our gas stove to cook dinner.

We decided to shut down our generator at night to keep a low profile and so we did not disturb the neighbors (too much).  At night I used our inverters to power our refrigerators and freezers.  I was disappointed that we were only getting 3-4 hours of run time from a standard car battery.  On the third night, the inverter I was using for our large freezer stopped working.  I took the inverter apart and found many of the internal components had been damaged.  The operating power of the freezer was within the rated load of the inverter, but the surge current was not.  I am now more careful about overloading inverters.  I also purchased larger deep-cycle marine batteries to extend my run time.  With our generator not running for 11 hours at night, I found the freezers were able to maintain a safe temperature, but the refrigerators were not.  I solved this problem by adding blue-ice to the refrigerators at night.

Many of our neighbors and friends told us they were going to buy a generator and prepare for the next hurricane.  None did.  As soon as the power came back on, they forgot all about it.

My wife does not support my preparation efforts.  She has always told me that our generator was a waste of money and a hurricane is never going to hit Houston.  As our neighbors and friends told us how smart we were to buy a generator, I thought to myself I have finally won this argument.  Unfortunately (for me), I was mistaken.  She still says the generator was a waste of money and a hurricane is never going to hit us again.

We spent more time preparing than anyone else on our street and ended up with the most damage to our house and yard.  Just because you are prepared, don’t assume everything will go well for you.  This is my biggest lesson learned from the storm.

The entire process of filing an insurance claim, hiring contractors, completing all necessary repairs, and negotiating the final settlement with the insurance company took well over a year.  Overall we were blessed that the damage was not worse, we did not have to move out of our home, we had a good test of our emergency preparations, and we learned a lot from the storm.



Letter Re: Assessing Those Electromagnetic Pulse Risk Assessments

Electromagnetic Pulse (EMP) risk assessments have been published by journalists, defense analysts, and foreign policy experts. Unfortunately, some of these assessments rely on incomplete or incorrect information and give the mistaken impression that EMP is not an immediate threat. For example, STRATFOR Global Intelligence recently published a report titled “Gauging the Threat of an Electromagnetic Pulse (EMP) Attack.” The report assesses that the risk from an EMP attack is low because “the EMP threat has been around for more than half a century and there are a number of technical and practical variables that make a HEMP [High Altitude Electromagnetic Pulse] attack using a nuclear warhead highly unlikely.”

STRATFOR is a well-respected organization that publishes many excellent reports on national security threats. However, this particular report is badly flawed, suffering from both analytical misconceptions and factual errors. Below I quote from the report, describing why this assessment should not be relied on. (STRATFOR generously allows republishing of its reports with the following statement: Gauging the Threat of an Electromagnetic Pulse (EMP) Attack is republished with permission of STRATFOR.)

“Only the United States, United Kingdom, France, Russia and China possess both the mature warhead design and intercontinental ballistic missile (ICBM) capability to conduct such an [EMP] attack from their own territory, and these same countries have possessed that capability for decades. (Shorter range missiles can achieve this altitude, but the center of the United States is still 1,000 kilometers from the Eastern Seaboard and more than 3,000 kilometers from the Western Seaboard — so just any old Scud missile won’t do.)”

The report makes the error of assuming that any EMP attack would be carried out with a single nuclear warhead that must be centered above the continental United States for maximum effect. An immediate result of any EMP attack would be the destruction of power grids within line-of-sight of the nuclear detonation. The continental United States has only three power grids—Eastern, Western, and Texas. Therefore, an effective EMP attack need not be a single detonation over the center of the US, but could instead consist of two separate detonations over the Eastern and Western power grids. Such an attack could easily be carried out by Scud missiles. Moreover, as the 9/11 attacks showed, it is well within the capability of terrorist organizations or rogue states to conduct simultaneous attacks.

The STRATFOR report states: “Countries that build nuclear weapons do so at great expense…Nuclear weapons also are developed as a deterrent to attack, not with the intention of immediately using them offensively. …In other words, for the countries capable of carrying out a HEMP attack, the principles of nuclear deterrence and the threat of a full-scale retaliatory strike continue to hold and govern, just as they did during the most tension-filled days of the Cold War.”

The report assumes that any country or group capable of conducting an EMP attack would share the mindset of the Soviet Union during the Cold War. There is a substantial body of thought that Iran in particular would not be subject to these same principals of nuclear deterrence. Bernard Lewis, the noted Middle Eastern scholar, has stated, “MAD, mutual assured destruction, [was effective] right through the cold war. Both sides had nuclear weapons. Neither side used them, because both sides knew the other would retaliate in kind. This will not work with a religious fanatic [like Ahmadinejad]. For him, mutual assured destruction is not a deterrent, it is an inducement.” While there is substantial debate over whether the position of Bernard Lewis and other scholars is correct, this position cannot be lightly dismissed.

The STRATFOR report also states: “One scenario that has been widely put forth is that the EMP threat emanates not from a global or regional power like Russia or China but from a rogue state or a transnational terrorist group that does not possess ICBMs but will use subterfuge to accomplish its mission without leaving any fingerprints. In this scenario, the rogue state or terrorist group loads a nuclear warhead and missile launcher aboard a cargo ship or tanker and then launches the missile from just off the coast in order to get the warhead into position over the target for a HEMP strike. This scenario would involve either a short-range ballistic missile to achieve a localized metropolitan strike or a longer-range (but not intercontinental) ballistic missile to reach the necessary position over the Eastern or Western seaboard or the Midwest to achieve a key coastline or continental strike…Any use of a nuclear weapon would be vigorously investigated and the nation that produced the weapon would be identified and would pay a heavy price for such an attack (there has been a large investment in the last decade in nuclear forensics). (Emphasis added.)”

Their conclusion is factually incorrect. First, a nuclear weapon detonated at high altitude would likely not leave sufficient material at ground level for forensic analysis. Second, the ability of the United States to conduct forensic nuclear analysis has been degrading, as made clear in a recent report by the National Resource Council titled “Nuclear Forensics: A Capability at Risk.” This report reads in part, “Although U.S. nuclear forensics capabilities are substantial and can be improved, right now they are fragile, under-resourced and, in some respects, deteriorating.” Lastly, any nuclear forensic analysis would require continued functioning of national labs such as Los Alamos National Laboratory and Lawrence Livermore National Laboratory—a dubious proposition if the Western power grid is down.

The STRATFOR report concludes:

“When considering the EMP threat, it is important to recognize that it exists amid a myriad other threats, including related threats such as nuclear warfare and targeted, small-scale HPM attacks. Some things are more likely to occur than others, and there is only a limited amount of funding to monitor, harden against, and try to prevent, prepare for and manage them all. Clear-sighted, well-grounded and rational prioritization of threats is essential to the effective defense of the homeland. But each dollar spent on these efforts must be balanced against a dollar not spent on, for example, port security, which we believe is a far more likely and far more consequential vector for nuclear attack by a rogue state or non-state actor.”

Here the authors confuse the likelihood of various attack scenarios with the consequences of an attack. An EMP attack is of special concern because it would destroy one or more power grids, which are the underpinning of every other critical infrastructure. In contrast, a nuclear attack on a port city—even one as important as Los Angeles/Long Beach—would have a dramatic but localized effect.

In summary, the STRATFOR analysis of the EMP threat fails on two counts. First, the analysis misstates the likelihood of an EMP attack, in both the technical feasibility and motivations of rogue nations such as Iran. Second, the report never explicitly states the consequences of an EMP attack should the US power grids remain unprotected—the likely end of the United States as a functioning country.

The United States Congress is currently considering legislation to protect our power grids against EMP. While Survival Blog emphasizes individual and small group preparedness, another important means of preparation is government action. Should you find the EMP threat credible, please contact your elected representatives. If even 1% of preppers did this, it would represent the equivalent of a tidal wave of letters to Congress. – Thomas P.



Economics and Investing:

John Tamny predicts: The U.S. Goes Back to the Gold Standard. (Thanks to “T Moo” for the link.)

B.B. sent us this: Homebuyer tax credit: 950,000 must repay

Jonathan C. flagged this: Outlook Gloomy at Secret Billionaire Meeting. “They saw the United States in a long-term slow growth environment with the near-term risk of recession quite real,”

Items from The Economatrix:

US Mint Running Out of Silver (and Excuses)

The Lights Have Officially Gone Out in the US

Union Pension Funds, the States, and Financial Ruin

Sustainability Key to Global Economic Health, World Leaders Warn



Inflation Watch:

Fear As Food Prices Soar

Video: DeLaughter Says Food Inflation to Drive Farmland Demand

Reader L.C. wrote: “I feed my family mostly certified organic foods. We deal primarily with local farmers for our meat and produce and dairy needs, but the kids do like a hot dog every now and again. So I have been buying Applegate Farms organic hot dogs from the local organic market for years. The price in the last couple years has been $5.79 for a package of 8. Today at the market they had a “brand new look” on the new packaging. The price is the same, but the package now contains 7 hot dogs. So if your favorite brand suddenly has a brightly-colored new label – Beware!”