In article <9rmm43lu7mel0pjui1645on0n8t5uhfths@4ax.com>,
beav <BEAVITH1@NETSCAPE.NET> wrote:

On Mon, 14 May 2007 20:28:37 -0500, Mitchell Jones
<mjones@21cenlogic.com> wrote:

In article <5T%1i.14344$b67.10180@trnddc06>,
"hanson" <hanson@quick.net> wrote:

"John Decker" <John_member@newsguy.com> wrote in message
news:f29s2t0gnn@drn.newsguy.com...

Price of copper metal has increased from .75/lb in 2004 to
3.00/lb for 2007 and is expected to increase in the future.
increasing number of copper thefts across central Texas.
"Some thieves have even snatched window unit air conditioners
and sold the roughly 20 pounds of copper they typically contain."
http://www.statesman.com/news/content/news/stories/nation/05/12/12copper.
htm
l

[hanson]
Nothing new about that, JD. Couple decades ago, when Nickel
spiked like that, there was a rash of raids on Ni-metal storage
places

***{Nickel prices are just below their all time highs right now and,
predictably, such thefts have resumed. (See
http://www.isri.org/AM/Template.cfm?Section=Home&CONTENTID=9577&TEMPLATE=
/CM/ContentDisplay.cfm.)

In fact, we are back in another boom in the prices of storable
commodities like we had in the '70's. The cause is the usual one: the
creation by central banks of counterfeit ("fiat") money at rates faster
than production of goods and services can be increased. With the prices
people actually pay (as opposed to the government's lying CPI) rising at
rates higher than interest rates, savings parked in interest bearing
paper experience negative returns--which means: the savings plus
interest, at year's end, will purchase less than the savings alone would
have purchased at the beginning of the year. That is the condition known
as negative real interest rates. (To compute the real rate of interest,
you subtract the rate of inflation from the rate of increase you are
getting on your savings.) Thus smart people avoid the negative returns
by shifting their savings into storable commodities, to take advantage
of the fact that prices in general are rising at rates above the rate of
interest. Result: due to the influx of buying from savers who are trying
to protect their assets, the rate of increase in storable commodity
prices rises *above* the generalized inflation rate. In effect, storable
commodities begin to pay positive real rates of interest.

As is normal in the first phase of such a boom, base metals prices rise
faster than precious metals, because businessmen are the first people to
recognize what is happening, and they respond by carrying ever larger
inventories of base metals in their warehouses. But then, in the second
phase, upper class families begin to apply such thinking to their
personal savings. They start buying gold and silver coins and bullion,
and precious metals prices begin to rise faster than the prices of base
metals. Result: by the end of phase two, overall percentage gains
precious metals, from their lows to their highs, are as great as the
total gains in the base metals. When that point is reached, phase three
begins. In phase three, middle class families begin protecting their
savings in the same way as the upper classes, and a runaway boom in
precious metals prices ensues. Result: in phase three, precious metals
prices run away from all other prices.

Right now, we are late in the first phase of the process, in a zone of
reaction and consolidation, with the metals swinging wildly back and
forth beneath their all-time highs. Copper, for example, has been
swinging wildly back and forth beneath $4/lb, while nickel has of late
been trading back and forth beneath $23/lb, which is far above the
highest nominal price it reached in the '70's. (For recent nickel
prices, see
http://www.kitcometals.com/charts/nickel_historical_large.html#5years.
Other links on the same page will take you to copper and other base
metals.)

On the 5-year chart, nickel has risen from about $3/lb to around $23/lb,
which is a gain of [(23 - 3)/3][100] = 667%. Gold, by way of contrast,
has risen from roughly $260/Troy oz to about $700/Troy oz, for a gain of
[(700 - 260)/260][100] = 169%. (In comparison to gold, the Dow
Industrials in the same period--Sept '99 to present--have risen from
11200 to 13500, for a gain of [(13500 - 11200)/11200][100] = 21%. To
make this comparison, go to http://www.bohlish.com/ and punch the
required buttons.)

When the vast majority of the metals have broken out above their present
sideways patterns of consolidation and reaction, phase one will be over,
and phase two will begin.

That's the way I see it, at any rate. :-)

--Mitchell Jones}***

rather than a conspiracy theory

***{What conspiracy theory do you propose? --MJ}***

, maybe its simply because demand is
up. WAY up, thanks to the 10+% year over year economic growth in
China and India?

***{There are lots of factors operating, but the primary force driving
the system is the one I mentioned: the creation of fiat money in immense
quantities worldwide. The U.S., prior to Nixon's decoupling the dollar
from gold in 1971, was a creditor nation with the strongest
manufacturing base in the world. Now, 36 years later, we are the world's
largest debtor, and manufacturing has shrunk to around 10% of our
economy. This has occurred because the link to gold placed limitations
on the ability to the U.S. government to expand the money supply. Gold,
unlike fiat money, cannot simply be decreed into existence. Result: as
long as there was a required amount of gold that had to be kept as
backing for a given number of dollars, the inescapable limits on the
supply of gold placed a limit on the U.S. money supply. Since the
gold-dollar link was severed, however, the U.S. has gone on a spending
orgy fueled by "dollars" created out of thin air, and this has afforded
foreign governments an opportunity to take over the markets that used
to be dominated by U.S. manufacturers.

To see how it works, you need to think about what happens if the U.S.
expands its money supply rapidly under the gold standard. In that case,
lots of dollars flow overseas to pay for foreign goods, and, since the
world is on the gold standard, the foreign manufacturers exchange the
paper dollars for U.S. Treasury gold, and gold flows out of the U.S.
Result: before long, the U.S. is forced to cease expanding its money
supply, because if it runs out of gold, it will be bankrupt, and nobody
will take dollars.

Under the regime of fiat money, however, international accounts are not
settled in gold. Result: there is no feedback to stop the U.S.
government from inflating the money supply, because foreign central
banks can simply create their own fiat currencies in whatever quantities
are required to keep the dollar cross rate against their currencies from
falling. (They couldn't do that by creating gold, because you can't
create gold.) Result: under the fiat money regime the more astute
central bankers (e.g., China and India) long ago discovered that if they
kept their currencies at low enough levels vis-a-vis the dollar--i.e.,
if they kept the dollar strong *despite* Washington's inflationary
policies--they could give their domestic export industries a competitive
advantage in U.S. markets. Result: by holding the dollar cross rates at
levels favorable to themselves, they have basically stripped the U.S.
bare of manufacturing capacity, manufacturing jobs, and manufacturing
technical know-how.

Thus the alternative explanation you proposed--i.e., that global demand
for metals is "WAY up, thanks to the 10+% year over year economic growth
in China and India"--is not really an alternative explanation at all.
The reason: it is excessive creation of fiat money by the U.S. and by
foreign central banks, that has enabled nations like China and India to
experience the rapid growth they have experienced in recent years. What
we have here is an unsustainable worldwide boom, due to the creation by
central banks of counterfeit ("fiat") money at rates faster than
production of goods and services can be increased, just as I said in the
beginning. One consequence of that boom is the erosion of the U.S.
manufacturing base, and another is the soaring demand for raw materials,
including storable commodities, to feed the economic expansions in
India, China, and elsewhere.

In short, what we are seeing here is not prosperity, but the destruction
of civilization. The reason: these sorts of expansions always lead to
financial and economic collapse further down the road. (That's why the
phenomenon is known as the "boom and bust" cycle.) However, in the past,
booms and crashes brought about by fiat money have been confined to
individual countries, and, as a consequence, disaster never occurred
everywhere at the same time. This time, the entire world is on a binge
of fiat money creation, and when the bust comes this time, every economy
on Earth is going to come crashing down simultaneously. Result: every
government on Earth is going to "serve mankind" by putting forth a
blizzard of "emergency" legislation violating property rights "in the
public interest." Every country on Earth will be caught up in the
madness. Hence after the dust settles none will be capable of expanding
economically to take up the slack, and, thus, forcing other countries to
rescind their crazy legislation in order to become competitive again.

--Mitchell Jones}***

the number of mines opening and the capacity of the open mines is
outstripped by demand.

***{Yup. One reason is that mining costs are rising almost as rapidly as
the price of the refined product, even in countries like China and
India, where there is an immense supply of cheap labor. The costs of
fuel, for example, are skyrocketing due to the soaring price of crude
oil, even in areas where labor costs are stable. --MJ}***

it didn't help that one buyer in China screwed up the Cu market a
couple years back. Ford botched the Pd market. Inco has always
messed with the Ni market. maybe that'll change going forward thanks
to them getting sucked up.

its cheaper for companies to buy smaller producers than it is to open
new mines. if prices stay up long enough, more production will come
on line.

***{Phase one of the current boom, which seems to be almost over, has
taken 8 years. Still ahead is phase two, consisting of a long period of
ascension punctuated by an ending period of consolidation and reaction,
to be followed by phase three. All together, the period of rising metals
prices should last around 20 years. Since it all began in 1999, it would
in the normal course of events end sometime around the year 2020.

Unfortunately, things could accelerate out of control ahead of schedule,
due to a number of things that do not have to happen, but may happen
anyway. For example, the U.S. may be on the brink of civil war right
now, due to the overweening arrogance of the neocons in Washington, who
seem to think they can rig elections, and even rig the campaigns that
lead up to elections, with impunity. If they don't back off, I can see
this situation blowing up very quickly, to the benefit of no one.
Another example: Bush may attack Iran. If he does, we head off into
terra incognita, with unknown and unpredictable consequences. In such
situations, storable commodity prices are guaranteed to explode, but
only those who have taken themselves out of harm's way--i.e., far from
the major cities--can expect to benefit from having them.

In short, the situation is dangerous, unstable, and in most aspects is
highly unpredictable. Making the best of it clearly involves the
movement of assets into nontraditional forms such as storable
commodities and the stocks of companies that produce such commodities;
but despite our best efforts to get through what is coming, there are
far more unknowns than knowns.

--Mitchell Jones}***

otherwise, i'm astounded at the prices, too.

***{Then you'd best strap yourself into your chair, because the prices
that are coming will make the ones that are already behind us look like
nothing. --MJ}***

*****************************************************************
If I seem to be ignoring you, consider the possibility
that you are in my killfile. --MJ

Under the regime of fiat money, however, international accounts are not
settled in gold. Result: there is no feedback to stop the U.S.
government from inflating the money supply, because foreign central
banks can simply create their own fiat currencies in whatever quantities
are required to keep the dollar cross rate against their currencies from
falling. (They couldn't do that by creating gold, because you can't
create gold.) Result: under the fiat money regime the more astute
central bankers (e.g., China and India) long ago discovered that if they
kept their currencies at low enough levels vis-a-vis the dollar--i.e.,
if they kept the dollar strong *despite* Washington's inflationary
policies--they could give their domestic export industries a competitive
advantage in U.S. markets. Result: by holding the dollar cross rates at
levels favorable to themselves, they have basically stripped the U.S.
bare of manufacturing capacity, manufacturing jobs, and manufacturing
technical know-how.

Thus the alternative explanation you proposed--i.e., that global demand
for metals is "WAY up, thanks to the 10+% year over year economic growth
in China and India"--is not really an alternative explanation at all.
The reason: it is excessive creation of fiat money by the U.S. and by
foreign central banks, that has enabled nations like China and India to
experience the rapid growth they have experienced in recent years. What
we have here is an unsustainable worldwide boom, due to the creation by
central banks of counterfeit ("fiat") money at rates faster than
production of goods and services can be increased, just as I said in the
beginning. One consequence of that boom is the erosion of the U.S.
manufacturing base, and another is the soaring demand for raw materials,
including storable commodities, to feed the economic expansions in
India, China, and elsewhere.

In short, what we are seeing here is not prosperity, but the destruction
of civilization. The reason: these sorts of expansions always lead to
financial and economic collapse further down the road. (That's why the
phenomenon is known as the "boom and bust" cycle.) However, in the past,
booms and crashes brought about by fiat money have been confined to
individual countries, and, as a consequence, disaster never occurred
everywhere at the same time. This time, the entire world is on a binge
of fiat money creation, and when the bust comes this time, every economy
on Earth is going to come crashing down simultaneously. Result: every
government on Earth is going to "serve mankind" by putting forth a
blizzard of "emergency" legislation violating property rights "in the
public interest." Every country on Earth will be caught up in the
madness. Hence after the dust settles none will be capable of expanding
economically to take up the slack, and, thus, forcing other countries to
rescind their crazy legislation in order to become competitive again.

--Mitchell Jones}***

"John Decker" <John_mem...@newsguy.com> wrote in message
news:f29s2t0gnn@drn.newsguy.com...>

Price of copper metal has increased from .75/lb in 2004 to

3.00/lb for 2007 and is expected to increase in the future.
increasing number of copper thefts across central Texas.
"Some thieves have even snatched window unit air conditioners
and sold the roughly 20 pounds of copper they typically contain."
http://www.statesman.com/news/content/news/stories/nation/05/12/12cop...

[hanson]
Nothing new about that, JD. Couple decades ago, when Nickel
spiked like that, there was a rash of raids on Ni-metal storage
places and the more inventive, creative thieves rented Vacuum
tanker trucks, drove up to metal-finishing shops in the dark of
the night, pierced the windows with the fire hose and sucked
all the Nickel solutions out of the 10'000 gallons Ni-plating tanks.
ahahaha... Same with Gold when it peaked at ~$900/troz up
from $250. 3 eight-hour shifts were carried out for protection.
ahahaha... ahahahanson

[Eric]

Are you aware it would be profitable for you to melt down
nickels and sell the nickel?
It is a federal crime, oddly enough, but you could do it.

[hanson]
Yeah, yeah, yeah!... "Behind every great fortune there is a crime",
Honoré de Balzac, Paris, ca. 1840... ahahaha... ahahaha
Unfortunately, last time I checked nickels were made of alloy
Cu75Ni25. The chem separation of Cu & Ni and the logistics
to acquire sufficient quantities of coins to make the job
profitable are not there... yet... But keep your criminal mind
under development, Eric. One day you may discover that
crime pays far better than singing odes to Einstein... ahaha...
Thanks for the laughs.... ahahaha... ahahanson