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The Precious Metals Bull Continues His Charge

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I have a good friend with whom I chat on the phone quite regularly. I have been bugging him to hedge into metals for the past three years. When the spot price was $4.35 an ounce with the dealer’s commission a 100 ounce Engelhard bar was about $500. At that time, I suggested that my friend buy at least buy one or two $1,000 face value bags of pre-1965 “junk” silver coinage–just in case. He waffled. Then, when silver was $4.80 an ounce, I was practically begging him to buy.  Even though he was sitting on substantial dollar-denominated liquid assets, he kept coming up with reasons not buy. Once silver passed $5 per ounce, he claimed that he was waiting for “the next time that it dips below $5.” Then that dip came, and I pointed it out, and he came up with yet another excuse. This went on and on.  Once silver passed $6 an ounce, he claimed “I’ve missed the boat.”  I tried explaining to him that silver was heading well past $12 an ounce in this bull market, but he wouldn’t budge. I finally gave up trying to convince him. Some deer just can’t resist standing and watching those approaching headlights…

The recent spike in gold and silver prices is interesting, because it came at a time when the dollar was strengthening versus the Euro. In contrast, the previous recent rallies occurred when the dollar was losing ground to the Euro. Similarly, gold has traditionally gone up when he price of oil was climbing. But wait a minute–the price of oil is slumping. So why is gold galloping? Something has changed. Perhaps there has been a collective realization that all paper currencies are risky, and that it is therefore time to hedge. The only problem is that in the grand scheme of things is that there just are not a lot of metals to buy. The COMEX is a relatively small market. That is why it tends to be volatile–just a few investors making significant trades can move the market dramatically. If just 10% of  America’s stock and bond investors decided to hedge a fraction of their portfolios into metals, they could buy the entire COMEX inventory, several times over.

I’ve been surprised to see that there has not yet been any significant profit taking, which is the norm, following COMEX price spikes. If there is no pulback–just a staircase climb upward, –this could be a portent of a paradigm shift. As I’m writing this, (Friday evening), silver is at $8.03/oz., and gold is at $485.20/oz. If gold breaks out above $500 per ounce, watch out! It could be a precursor of a full scale dollar panic. For those of you that have read this blog regularly, you know the larger implications–at the societal level. Be ready.

Adjusted for inflation, even after the recent surge in prices, the price of silver is still near its historic low. The spot price of silver was as high as $45 an ounce as recently as 1979. (That equates to pre-1965 U.S. coinage being worth 32 times its face value.)  I consider silver at anywhere under $10 an ounce a real bargain.  For those of you that dawdled, don’t feel that you missed the boat.  Just wait for the next dip, and then don’t hesitate: Buy!

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Letter from Goatlady Re: Miniature Goats and Canning Meat

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Seems to me you would need quite a large herd of miniature goats to have chevron throughout the year using minis considering three meals per butchered animal, once a week = 52 goats just for butchering which means at least 26 females producing twins once a year plus being sure you have two bucks for service those females, plus enough browse for them to thrive on. Seems to me you would be much better off having two to three full size meat goat does to produce 4-6 butcher goats at (depending on the breed) 50-100 pounds of meat per animal. Can it, dry it, salt it, smoke it – 200 to 600 pounds of meat properly preserved should last you for the year. I’m sure you know to butcher in the cool fall weather NOT in spring or summer. This avoid avoids flies, contamination by bacteria, etc caused by warm/hot weather and believe me meat cuts a LOT easier when its VERY cold if not half frozen – doesn’t skitter around and mush out of the way of the knife when you are trying to slice steaks or even sized chunks for stew. Best, – The Goatlady

The Memsahib Replies:  Dear Goatlady, Thank you for writing. Most goats do come into season only in the Fall, but African pygmy goats are very unusual in that they ovulate all year round. They also have a strong tendency toward kidding triplets and quadruplets. The large herd of miniature animals is a benefit in my eyes because you spread your risk.  A loss of one goat from a flock of three could be devastating, but not that bad from a flock of 25. Also you will have have extra animals you can give to neighbors to start their own flocks. I don’t mind butchering little animals frequently.  Once you’ve done it a time or two you develop a routine and it is a snap. I already do this with chickens, rabbits, and ducks. But to each her own. And I completely agree with butchering large animals in the Fall.  That is the only way to go.

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Jim’s Quote of the Day:

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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a
dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage.”  – Alexander Tyler, on the Fall of the Athenian Republic.

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Ten Cent Challenge

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Today, I’m starting the SurvivalBlog “Ten Cent Challenge.”  If you value what you read on SurvivalBlog, then please help support our efforts, and help pay for our ever-growing bandwidth costs. (We recently had to upgrade our ISP account again, this time from a “Gold” to a Platinum” bandwidth plan.)  I challenge every regular reader to donate just 10 cents per day to support the blog. ($36.50 per year.)  If you don’t feel that you don’t get 10 cents worth of  information and entertainment out of the blog each day, then you can pass and forget that we ever asked–donations are purely voluntary.  But I have hopes that at least 5% of readers will pony up. (Statistically, the average sponsorship for free Internet sites like this one is just 2% of readers. I hope that SurvivalBlog readers defy that statistic. Your donations are gratefully accepted via PayPal, YowCow, cash, PMOs, or checks.

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The Silver and Gold Price Spikes

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Silver closed at $8.07 per ounce on Thursday, and gold closed at $485.70. Pardon me for rubbing it in a bit, but I told you so. (See my August 6, 2005 post.) Since $8 is a psychological barrier, there will likely be some profit taking for the next few COMEX market days, so if you missed the boat, you may be able to buy on the dip. But then get ready for the bull to resume his charge. I am still convinced that the metals are just a few years into a long term “secular” bull market. NewsMax reports Gold is already up more than 11% this year. Meanwhile, Bloomberg reports that gold’s rally this year has exceeded the paltry 2 percent gain in the Standard & Poor’s 500 Index. U.S. Treasuries have returned 1.7 percent, heading for the worst annual performance since 1999, according to Merrill Lynch data.

My prediction: Silver at $40 per ounce by the end of the second term of the Bush administration. I’m not kidding.

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Letter Re: South African 155mm Shells in Iraq–The Gerald Bull Connection

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Jim:
The South African arms industry was supplied shells and technology to produce the advanced 155mm during the Angolan Wars, by Space Research Corporation (SRC) of Canada/USA.
This landed Gerald Bull in prison for illegal export.(The PBS Frontline episode on same, or less-so the “Doomsday Gun” has some pretty general information on the subject.  See:  http://www.pbs.org/wgbh/pages/frontline/programs/transcripts/911.html
They got technology to produce Bull’s more up-to-date gun too (and produced two types: one a 155mm, the other a 210mm). It wasn’t necessary to have to use Bull’s 155mm base-bleed shells in his GC-45 as they could also be used to great effect in existing 155mms. It was called the G5 in South Africa (or GC-45, GN-H-45) it was a mobile artillery weapon with better ballistics and hence longer range – most importantly better accuracy than the conventional 155mm guns up to that time – early to mid-80s. The 210mm was self-propelled. It is true that Iraq may have gotten 155mms from SA, but they may have more likely gotten the shells only (still better in the “older” guns) – but what good were they to the Iraqis in the final math of the first Gulf War?

Gerald Bull designed this and other weapons and for a number of complicated reasons was assassinated in March, 1990 in Brussels.
The South African arms industry didn’t design it – this wasn’t suggested per se – just wanted to clarify where the design really came from. – Fitz

JWR adds:  This whole sordid saga is a fascinating bit of recent history. “Base bleed” technology is fascinating.  Most rifle shooters know that boat tail bullets have less drag, because with less rear surface area, there is less suction. Artillery shells suffer from the same drag, but on a grand scale. Gerald Bull’s solution: a small, slow-burning, rocket-like charge that counteracts the suction, and hence greatly increases the range of artillery shells. A brilliant concept.  

Coincidentally, this story is also a tie-in to another recent SurvivalBlog topic: border straddling. The SRC Corporation’s headquarters were on an 8,000 acre parcel that straddled the U.S. Canadian border.  I’m sure that made “import-export” issues a breeze. 😉

For more background, see:  http://en.wikipedia.org/wiki/Gerald_Bull and  http://world.std.com/~jlr/doom/bull.htm

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Letter from Lyn: Lessons from the Siege of Leningrad

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James:
This is an interesting link. See:  http://www.historylearningsite.co.uk/siege_of_leningrad.htm  A city of 2.5 million ( about the same as Philadelphia and immediate suburbs) cut off from food deliveries. One big difference from today was the general patriotism and social order. The magnitude of deaths is ominous for those of us aware of future scenarios disrupting the grid and/or trade. (I was going to write up a historical essay for the contest from a lot of material on this, but alas, too busy. But this link is one good article). – Lyn

Excerpt:
When the Germans invaded Russia in June 1941, the population of Leningrad was about 2,500,000. However, as the Germans advanced into Russia, a further 100,000 refugees entered the city. The area that the city authorities controlled produced just 1/3rd of what was needed for grain, 1/3rd of what was needed for coal, 1/12th of what was needed for sugar and half of what was needed with regards to meat – if the supply lines could be kept open. On September 12th, those in charge of the city estimated that they had the following supplies:

Flour for 35 days
Cereals for 30 days
Meat for 33 days
Fats for 45 days
Sugar for 60 days

The nearest rail head outside of the city was about 100 miles to the east at Tikhvin – but this was soon to fall to the Germans on November 9th. By mid-September (two weeks into the siege), Leningrad was effectively surrounded and cut-off from the rest of Russia with minimal food and energy supplies for her population. The siege was to last for 900 days.
While the city had a rail network of sorts, Stalin ordered that all vital goods in the city that could help defend Moscow be moved out of Leningrad and to the capital.
Rationing had been introduced almost immediately. Soldiers and manual workers got the most of what was available, followed by office workers then by non-working dependents and children. The city authorities found it difficult to grasp just how serious their situation was. While certain food was rationed, restaurants continued to serve non-rationed food in their ‘normal’ way. The authorities also failed to inform people in Leningrad just how much food there was – this was probably done so as not to panic people, but if people had known the true situation, they could have planned accordingly. The number of shops handling food was drastically cut to allow for better control – but it also meant that people had to queue for much longer. There is also evidence that money could buy food away from rationing and the black market thrived where it could away from prying eyes.
Winters in Leningrad are invariably extremely cold. The winter of 1941-42 was no exception. Lack of fuel meant that the use of electricity in homes was banned – industry and the military took priority. Kerosene for oil lamps was unobtainable. Wood became the major source of heat in homes with furniture and floor boards being burned in most homes.
The food needed to fight the cold was simply not available. If bread was obtainable, people had to queue in the bitter cold in the hope that some might be left by the time they got to the front of the queue. Dogs and cats were hunted for food and stories emerged of cannibalism – freshly buried bodies were, according to some, dug up in the night. Gangs of people braved German guns to leave the city and dig up potatoes in fields outside of the city. This actually did bring in some food that was not kept by those who ventured out – the potatoes were handed in to the authorities and then distributed equably.
The city authorities ordered that a bread substitute be concocted by those who might have the skill, as they knew that flour was in very short supply. ‘Bread’ baked by bakers even in the first few months of the siege contained only 50% rye flour. To boost the loaf, soya, barley and oats were used. However, the oats were meant to feed horses and malt was used as an alternate substitute. Even cellulose and cottonseed were tried in an effort to produce bread. Both had little nutritional value but there was plenty of both in Leningrad. The city developed ingenious ways to produce ‘food’ – cats and sheep intestines were stewed, flavored with oil of cloves and the resulting liquid became a substitute for milk; seaweed was made into broth and yeast was made into soup. Regardless of all the work done by the experts in Leningrad, food remained in very short supply and people were only getting 10% of the required daily calorific intake – despite the fact that most of their work was labor intensive. One writer in the city, Tikhonov, wrote about workers who ate grease from bearings in factory machines and drank oil from oil cans such was their hunger. People collapsed in factories and on the streets – and died. The city organized mass burials to cope with the number who died. When not enough grave diggers could be found, explosives were used to blow a hole in the ground and the bodies were simply thrown in with the expectation that snow would simply cover them up. Where people died in the street, there was a scramble for their ration card.
” If this happened, there was an immediate scrabbling for the dead one’s ration card – not because anyone wanted to steal it but because everyone realized that a ration card handed in to the authorities meant an infinitesimal portion more food for all. Such were the indignities we suffered.”
” I watched my father and mother die – I knew perfectly well they were starving. But I wanted their bread more than I wanted them to stay alive. And they knew that about me too. That’s what I remember about the blockade: that feeling that you wanted your parents to die because you wanted their bread.”In November 1941, while the siege was in its early stages, 11,000 people died of what the authorities called ‘alimentary dystrophy’ (starvation) – over 350 a day. However, this number greatly increased as the winter took a hold on the city.
The two lifelines Leningrad had were constructing a road out of the city to allow supply trucks to get through and using Lake Lagoda as a means of transport.
Thousands of people assisted in building the road that was meant to link to Zaborie – the next major staging post east of the fallen Tikhvin. The road was more than 200 miles long when it was completed in just 27 days. However, though it was termed a road, in many places it was barely more than a track not wide enough for two lorries to pass. Parts of it were too steep for lorries to cope with and the snow made parts of it impossible to use. On December 6th, the city authorities announced that the road – known by the people as the ‘Road of Life’ – was to be used for the first time. The news was well received in the city but, in truth, the road was not capable of providing all that the city required for survival. Over 300 lorries started out on the first journey but breakdowns and blizzards meant that the most distance traveled in any one day was 20 miles.
On December 9th, the city received news that Tikhvin, with its vital railhead, had been recaptured by the Russians. The Germans who had occupied the town were the victims of Hitler’s belief that the Russian campaign would be over quickly. They had not been issued with winter clothing and became victims of both the weather and a major Russian assault. 7,000 Germans were killed in the attack and they were pushed back 50 miles from Tikhvin. Railway engineers were brought in by the Russians to repair the line and bridges. For one week they ate food supplies left by the Germans in their retreat. As a result, and by the standards of those in Leningrad, they ate well and all the required repairs to the line were finished in just one week. Supplies started to trickle into the beleaguered city.
Another supply route was to use the frozen Lake Lagoda. Ironically, though the weather was extremely cold for the people of Leningrad, it was not cold enough to sufficiently freeze the lake to allow it to cope with the weight of lorries. The lake was frozen enough to stop barges bringing in supplies but the ice had to be 200mm thick to cope with lorries. It only achieved such a thickness at the end of November, and on November 26th, eight lorries left Leningrad, crossed the lake and returned with 33 tons of food. It was a major achievement – but the city needed 1000 tons of food each day to function. Once the ice had proved reliable and safe, more journeys were made and occasionally this mode of transport brought in 100 tons of food a day.
Though the ‘Road of Life’, the rail system and the use of Lake Lagoda brought much needed relief to the city, they could not provide all that was needed and the city’s records show that 52,000 died in December 1941 alone – lack of food and the cold accounted for over 1,600 death a day. However, the figures collected by the city were for those who were known to have died and been buried in some form or another. They do not include people who died at home or on the street and whose bodies were never found. The official death total for the whole 900 day siege is 632,000. However, some believe (such as Alan Wykes) that the figure is likely to be nearer 1 million.

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Letter from Afghanistan Re: SOCOM’s ATVs

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Mr. Rawles,
I saw your posts about ATVs and your question about the John Deere Gator. I am a former soldier and work with SOCOM troops in Afghanistan. My experience is they use the Gators only on main bases. The workhorse ATVs in the field are Polaris MV 700s or Sportsman 500s. They are gas powered and very tough. The MV 700 is heavily modified and is bulky and rather heavy, but can haul a lot of gear, etc. The Sportsman 500s have some modifications from the standard version, but are largely the same as you can buy from the showroom. I’ve used them over here with those guys, and based on my personal experience and the good recommendations of the SOCOM guys I know, I bought a 500 when I was home on leave. I can’t say much about the Gator, they may be great, but the actual SOCOM field workhorse is almost always a Polaris machine. – Jeff in Afghanistan

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