Warren Buffet, Bill Gates, and Silver

You may have read in recent years that both Microsoft’s president Bill Gates and Berkshire Hathaway (founded and still led by Warren Buffet) acquired large hoards of physical silver when silver prices neared their low ebb in the late 1990s first few years of this decade. Bill Gates purchased at least $10 million worth, with his “personal investment money.” Meanwhile, Berkshire Hathaway bought 129.7 million ounces. According to published accounts, the latter bought their silver at $4.40 per ounce, in 1997. The recent news on Wall Street is that Berkshire Hathaway has quietly sold off their silver position in the past year. One of my favorite economists, Jason Hommel, opined that Warren Buffet sold his silver too soon. Given the timeframe of their sales, we can presume that Berkshire Hathaway sold out when spot silver was between $9 and 12 per ounce. Hommel wrote: “This is very bullish for silver, because it explains why silver’s rise took longer than we thought (Warren was selling), and it also means that there is much less silver above ground than we thought. Buffet’s hoard of 130 million ounces no longer exists!”

At the same time that Berkshire Hathaway was selling their silver, iShares Silver Trust–the first of two newer silver exchange traded funds–started buying silver. To “fund the fund” they will need at least 100 million ounces. There one more silver ETF in development. And given the early success of iShares Silver Trust (stock symbol SLV) , I wouldn’t be surprised if one or two more silver ETFs jump on the band wagon.

As I recently mentioned, economist Jason Hommel presented some great silver market fundamentals, explaining why silver must rise. I think that he is correct in his analysis. With gold approaching $700 per ounce, and silver bouncing around $14.40, it is obvious that the precious metals bull is gaining speed.

Things don’t look good for the U.S. dollar–all through the rest of this decade and perhaps beyond. It is noteworthy the U.S. Dollar is again starting to lose ground to many foreign currencies. For example, a Canadian dollar now costs $0.90 USD. (Remember a few years back when they were making “Canadian Peso jokes? Not anymore!) With a progressively weaker dollar expected, I am quite bullish on silver. At anywhere under $16 per ounce, silver is a bargain. And at the current +/-$14.40 per ounce, it is a screaming buy. We may see silver at $20 per ounce by the end of Aught Six. There could be a full scale dollar crisis, precipitated by the out of control U.S. debt spiral. If that happens, then all bets are off for silver, as well as gold. Some economists in the “gold bug” camp have suggested prices as high as $100 per ounce silver and $5,000 per ounce gold!)

The bottom line: The bull market in precious metals is still in its early stages. Buy on the dips.

Letter Re: Lister Engines for Power Generation

James:
A site to be mentioned when it comes to slow speed diesels and the like is www.utterpower.com. I agree with the site linked – getting one of these small diesel engines is the hardest part in the process. Both the lister types and the small horizontal diesels (made in mainland China) appear on eBay.com from anywhere from $375 to $2000. Shipping is also a bit of a bear due to the high weights; [since] lots of cast iron is used on these. – Rick L.

Letter Re: Selecting the Right Size Home Backup Generator

Jim:
In response to the question about generator sizing, obviously it depends on how much you want to run. This also determines how much fuel you will burn. I don’t have the money for a 15KW whole house generator so I did things on the cheap. Hopefully my “system” will help with some ideas or trigger your own I have a 5KW “portable” gas model. Nothing fancy, fixed RPM, with a 5 gallon top tank. After several hurricane related power outages, I live on the Gulf Coast of Mississippi, I have developed a good system for me. My house is not pre-wired so I use two heavy gauge extension cords to run the 110 volt outlets into a kitchen window. I use a power strip to plug in the fridge and freezer on one outlet and run the second one for a 5000 BTU window air conditioner that I install after the storms if it gets unbearable. I have an infant so this is a real need. I can also plug in a coffee pot in the a.m. and a fan and a lamp at night. (the air conditioner gets its own cord due to power needs and its safer.) The air conditioner will cool my 400 square foot living room and we can all sleep there if needed.
Fuel consumption: I run the genny about 4-to-5 hours in the am to cool the fridge and freezer and make a pot of Joe. This uses about 1/2 gallon per hour. I pour the brewed coffee into a Thermos and then unplug the pot. If I need to run the air conditioning, my gas usage is about 1-1.25 gallons per hour. I run the genny for 2 4-5 hour shifts, morning and as it is getting dark. This cools the reefers twice a day. I want to get a 2-2.5 KW genny for when I am not using the air conditioner. Only used it once during Katrina in eight days. That should power the fridge/freezer and the coffee pot before I plug in the freezer, and a light and fan. This will decrease my fuel usage and let me run longer on stored fuel. It will also serve as a back-up in case one breaks down. I keep gas in five gallon cans and rotate it by refueling the wife’s car. About five cans a month keeps it fresh.
I keep about 45-50 gallons when [my vehicle tanks and cans are] full but I am raising this gradually. We supplement the lighting with battery fluorescent lanterns and have gas water heat but have to cook on the grill or use my brand new propane stove.
This is somewhat simple and not to fancy but it works on the cheap. By rationing my fuel I have avoided the gas lines. This is not the best system but it works for my family and it has been working since hurricane George in 1998. – Nightshift in Mississippi

Letter from Mr. Bravo Re: What Use is a Penny?

Jim,
A few weeks back, you covered the issue of pennies being more costly to produce than they are worth. Here is my Quixotic take on the issue:

Based on historical precedent, currency/coinage reform is overdue. The half-cent was discontinued in 1857, when it was worth ten cents in today’s inflation adjusted dollars! Source: Historical Statistics of the United States. (USGPO, 1975), Statistical Abstracts of the United States. That means that the smallest monetary unit at the time was worth $0.20 in today’s value. And a $100 bill (gold certificate) in 1863 had a value equal to nearly $2,000.

A penny in 1970 was worth the same as today’s nickel. Not only are pennies obsolete, but so are nickels. What earthly reason could there be for monetary increments less than the value of one minute of a minimum wage (~$6/hr) laborer’s time?

Proposal: Simplify currency and coinage to make transactions simpler. Drop the penny decimal place.

Notes: $500, 200, 100, 50, 20, 10, and 5
Coins: $5, 2, 1, 0.50, and 0.10

Better still, we should make all notes silver or gold certificates, and all coins of $1 and above silver. Best Regards, – Mr. Bravo.

Odds ‘n Sods:

Fuel Bank Offers “Locked In” Price for Gasoline. Meanwhile, Forbes reports,Venezuela Tacks on a New Oil Tax

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Ken Timmerman reports: Iran prepares al Qiyamah (“Judgment Day”) Terrorist Vengeance Attack Plan

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Zimbabwe: A Nation of Millionaires–Where $10 USD buys over $1 million in Zimbabwean toilet paper.

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SurvivalBlog reader “John Z.” mentioned a recent CNN segment about a survival school that’s offered in Virginia. After watching this clip, his conclusion was that Buckshot could offer a better much course that would include survival skills such traps, snares, and skinning game.

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I expect that there will be a lot of conversations around America’s office water coolers today regarding the made-for-television movie that aired last night: “Fatal Contact”. (It was about the Asian Avian Flu.) If just 5% of the American population puts two and two togther, then there will not be a lot of long term storage food available in the near future. Why? There are just a few companies that produce cans of proper nitrogen-packed dehydrated and freeze dried foods. Mark my words: Someday–perhaps sooner rather than later–those companies will be overwhelmed with orders.

Jim’s Quote of the Day:

“To my mind it is wholly irresponsible to go into the world incapable of preventing violence, injury, crime, and death. How feeble is the mindset to accept defenselessness. How unnatural. How cheap. How cowardly. How pathetic.” – Ted Nugent

Note from JWR:

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Letter Re: Selecting the Right Size Home Backup Generator

Jim,

The folks out there have some good information re. electrical considerations, codes and such for installing a hookup for a generator for the home. However, unless I missed a post, no one has mentioned how big a generator one may need to power essentials to get by comfortably in a grid down situation for the short term, at least.
My family and I live in the eastern US and we are prone to power outages from hurricanes, ice storms and to a lesser extent tornados and heavy snowfall. Since moving to a rural area out near the end of our power line service we have had everything from one day to a week long stretch without power to our home.
I knew when we built our home that I wanted a transfer box wired in to our outside box for just such emergencies, but I didn’t know how big a generator I needed that would not break the bank, so to speak. If you have enough scratch for a 15KW to 25KW whole house standby generator, fine, but most of us will be getting along with smaller, more portable units to power the essentials. Also, there are pros and cons as to which generator to buy depending on the type of fuel(s) you wish to use that
are available. [JWR Adds: I generally prefer low RPM diesel generators, because of their far greater longevity and the superior storage life of diesel fuel. They can also run on home heating oil in a pinch.] Ours is a convention gasoline powered generator, though I gave consideration to a propane generator, since we have that fuel source handy as well. Others may wish to address the fuel issue. We got a reconditioned factory Coleman 5500 watt generator for a bargain price at one of the local discount retailers in the wake of one of the last big hurricanes, which was a bargain for the price and has not let us down yet. I found that my main concern was having enough wattage capacity in a generator to turn over the well pump so we can provide water for our livestock and family. The minimum required for our 300 ft. well was about 3500 watts initial surge to turn over the well pump which then falls back to just a thousand watts or so for continued use. Fans and lights, added one at a time as you turn them on with the generator running use very little wattage, so they can be added with little load on the generator during runs in the evening or morning, when folks are up and about. Large appliances, however (microwaves, ovens, toasters, etc.) take a lot of wattage that would best be served by a larger standby generator. I have heard that electronic appliances such as computers, charges, radios, televisions etc. might be damaged if run off generator current, but I am not sure of this – we just don’t use those items during an outage anyway.
To make a long story short, we settled on a 5000 watt generator that weighs about 225 lbs. We bought it with a wheel kit, cover, and custom 60 ft. 220 volt cord that can be directly linked to our outside power transfer box during an extended outage. This setup will give us water, enable us to flush and shower and run the fans and lights, which, combined with our gas heat and cooking, keeps us comfortable until the power returns. It is kept in our detached garage for safekeeping and for operation by the open garage door to vent the exhaust and keep the noise down. As they say, your mileage may vary, but I draw the line at about 5000 watts for home use in extended circumstances. I consider smaller more portable generators you can run out of the back of your pickup truck or other conveyance as convenient for remote work and for power tools, but not big enough for your home.
By the way – I have found that cranking the generator monthly to check it out and taking it in yearly for a check-up is advisable, so it will be ready when needed. STA-BIL [or similar] gas stabilizer in your generator gas tank can also help preclude gumming up the engine and leading to hard cranking, if it will start at all. Although I have a hand crank generator, I understand that electric start is preferred. Just my $.02 cents. Regards, – Redclay

Two Letters Re: Folding Fighting/Utility Knife Recommendations?

James:

Regarding the recent posts, I want to make a few posts about folding knives. First, while larger folders are definitely better for larger tasks and of course for self-defense, One needs to take time to learn what is legal to carry in their state. My state, for example, only allows a maximum blade length of 3.5 inches. I follow the law, but carry TWO such folders. It would be a massive hassle to get in trouble with an overly zealous police officer. Better to be sure, and know the law.

As for folders, I like several Spydercos, such as the Endura and Delica, the Para Military and the James Keating model. I have several CRKT [Columbia River Knife and Tool] models, as I am the CRKT Forum moderator at www.knifeforums.com The CRKT Hawk D.O.G. Lock is a sleeper in their line. I’ve carried one off and on for a few years, and you couldn’t kill it if you tried. I didn’t see it in Columbia River’s latest catalog, but there are a lot of them out there for sale in shops, on line, and on eBay. The CRKT Hammond Cruiser is also a very stout knife. I know of a soldier who has used his in Iraq to open cans, MREs and all kinds of things you shouldn’t be able to open with a folder.

As for folder fighting skills, I encourage everyone to buy the Gabe Suarez “Big Folders Fighting Skills” DVD. Gabe shows several drills to teach a student to draw and deploy large Cold Steel Voyager clip point folders. He favors the XL and X2 models, which are fine for woodsy camping carry, but not legal to carry here, because of their six inch blade length. However, his skills transfer to other similarly designed folders. I encourage anyone who carries a folder as a back up to buy this DVD and study it. – Lawrence in West Virginia

Sir,
I completely agree with both OSOM and yourself; a fixed blade is preferable for many reasons, but the convenience and legalities of a folder make it the one I carry everyday.
Emerson Knives has a middle ground I believe, a feature called the “wave” that catches on the edge of your pocket, causing the blade to come open as you draw it.
A gent who posts under the name “Goshin” on Alpharubicon suggetsed a way to add the same functionality to any tip up carried folder that utilizes a thumb hole. Using a Dremel tool or a hacksaw, you can remove enough steel from the thumbhole to allow a “catch” on your pocket and open as you draw. Another way (and superior, in my opinion) is to attach a cable or zip tie to the thumb hole and cut it short; this provides the same function without destructive modification.
(See: http://www.alpharubicon.com/leo/speedkngoshin.htm )
I find it performs best to reverse the pocket clip so the knife comes up in a reverse grip. It is truly amazing how quickly a folder can be deployed this way [from a front pants pocket], perhaps even faster that a concealed fixed blade as there is no concealing garment to clear before drawing. As always, thank you for the resource your blog provides. Respectfully, – Pat R.

Jim’s Quote of the Day:

"I do not believe there ever was any life more attractive to a vigorous young fellow than life on a cattle ranch in those days. It was a fine, healthy life, too; it taught a man self-reliance, hardihood, and the value of instant decision…I enjoyed the life to the full." – Theodore Roosevelt

Letter Re: Vulnerability of Fish to Asian Avian Flu?

Regarding the question of fish and infection with H5N1 influenza virus: This is not the first time this question has come across my desk. While it is not wise to say “absolutely never” in biology, I find actual infection of fish with influenza viruses to be extremely unlikely. I’ve never encountered any study to show that fish (or insects, before someone asks) can be infected with or transmit influenza viruses. I am a public health M.D./epidemiologist, not a virologist, so I am prepared to be wrong. But I’d be surprised. The issue is not so much that certain animals are “cold blooded” — although that perhaps plays a role, since viruses have preferred temperatures for carrying out the molecular steps for infection — but rather involves the specific molecular biology of the influenza virus. In particular, there are specific proteins (hemagglutinin or “HA”) on the outside of each virus that determine what sorts of animal cells the virus can attach to and thereby infect. I don’t think any HA molecule subtypes will attach to the cell receptors found in fish or insects. Further, the various other components of the virus are also necessary for an infection cycle to be successful, and these components would probably not be expected to function properly in non-mammal, non-avian cells.
Having said all that, the issue of environmental “contamination” with this virus has indeed been raised with regard to fish farming. Influenza viruses in general are able to remain viable in the environment for extended periods, especially if cold and wet. There have been concerns raised (and refuted, but with little direct evidence one way or another) about chicken manure used as fish food in integrated operations in Asia. The real concern is that transport and spread of untreated manure from infected poultry could contribute to local spread of the virus, not so much that the farmed fish are directly infected. It’s worth reminding everyone that cooking easily kills influenza virus and other pathogens. If preparing raw meats, always practice safe kitchen procedures and avoid cross-contamination of cutting boards etc. Then WASH YOUR HANDS. I eat sushi, for what it’s worth. – A Public Health Physician