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A Change is Coming – 2013 & Onwards – Part II

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Published : November 21st, 2012
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Category : Editorials





In the first part of this article we looked at the sad events that appear unavoidable in 2013 and beyond, despite the best efforts of politicians and monetary officials. We then said events are on the way to bring nations in the developed world the ability to survive these blows.

Oil Self-Sufficiency in the U.S.

The first point of hope pointing that way came from the news that the U.S. is headed to becoming the world’s largest oil producer in the world, even ahead of Saudi Arabia. Through the use of a system of “Fracking” (the pumping of water into oil wells to extract remaining reserves) the U.S. will become not only self-sufficient in oil by 2016 but could become a net exporter after 2020.

It current dependence for 20% of its oil needs from imported oil will disappear. The consequential impact on the U.S. Balance of Payments will be dynamic. Strategically and politically the U.S. will look considerably more robust. It remains to be seen whether it will save the dollar or its buying power but it will give resiliency to the U.S. economy it sorely needs now.

Considerably lower oil prices –which we imagine will follow, but not necessarily so— inside the U.S. will have a dynamic impact on the profitability of the U.S. economy and the underlying state of its economy. We cannot say whether this will be enough to provide enough growth to absorb the massive money supply we currently see threatening ‘stagflation’ or not. We cannot say that it will arrive in time to do so either. We are too far away from these events to paint an accurate picture of their impact. But the change will remove the danger of a collapse of the U.S. economy and the dollar, provided politicians have not caused it already.

Oil Self-Sufficiency in the Eurozone

The news that the Eurozone may become self-sufficient in oil as well is very new news as well. Yes, “Fracking” could do the job in the old Eurozone oilfields but better still, it appears that Albania has as much oil as Kuwait and that it is light crude oil. This is favored by a Europe with a rising dependency on Russia for gas and oil that makes it uncomfortable. Being able to access Albanian oil (still 5 years plus away) will lower dependency on Russia and on the Arab suppliers of oil to those nations. Not only that, but the Eurozone’s balance of payments will look far healthier and provide the same buffers that U.S. oil self-sufficiency will do.

The protection against outside economic shocks that such oil independence will give the Eurozone might eventually save the euro’s bacon.

Loss of the “Measure of Value”

The events now taking place in the monetary system and the financial markets and those that will happen in the future will not be conducive to a sound dollar even with oil self-sufficiency. Right now the dollar and the rest of the world’s currencies have lost a considerable portion of their ability to measure true value. This has been pointed out by much respected monetary leaders in globally respected institutions over the past few years. We cannot see this changing.

For the monetary system to survive the shocks that lie ahead, in the relatively near future (bear in mind that medium term has not been reduced to five years and long-term to ten years) a great deal need to be done to reinforce it, to withstand the shocks that lie in wait for it and for us. In its present form, the unbacked paper currency system, entirely dependent on the confidence that governments can garner, looks far too vulnerable to even stem the further decline in confidence in currencies.

Worst of all, that loss of confidence is being seen inside the banking system itself. It’s there that it needs to be combated first. The sight of banks unwilling to lend to each other in the last couple of years and their placing liquidity given to them to resuscitate lending in the economy back with their central banks highlighted those dangers. Presently attempts at modifying the system to face these threats is moving at such a slow pace that they will be too late.

Bear in mind that the state of the global banking system has been shown to be the top priority of both government and central banks with measures taken to date designed to rescue them and not the consumer. We expect this to remain the case in the future!

Monetary System Adjustments Accelerated

But at the start of this article, we pointed out that any view of the future must be pragmatic and face current realities. The monetary system will not be adjusted until present events demand it. Then the sight of scrambling monetary officials will be on the news daily as they accelerate adjustments to stave off collapses. As it is, the chances of a financial accident on both sides of the Atlantic have increased exponentially. When push comes to shove, the plans already in the works will appear out of the blue. This we believe will include those on gold taking it to a level I asset on bank balance sheets.

One of the prime adjustments will be the movement of gold to a pivotal position in the system, not being directly used in line with its market value, but in the background, much like a guarantee is used. To use it at its market value is to undervalue its capabilities in a monetary role. It’s quite correct to reject the idea that gold will be confiscated to expand the money supply. Central Banks need no assistance in this. They already do it without reference to gold. Gold has considerably more value than paper currencies have in another way.

Provider of Confidence

Gold will have to act as a counter to currencies rising in value as they fall. It must be harnessed to provide liquidity at reasonable rates as was the case when involved in the gold/currency swaps undertaken by that central bank of central banks, the Bank of International Settlements three years ago and thereafter in a less discernible role.

Its prime function will be to act as defense, as back-up to paper currencies. Its role will be to provide confidence in currencies when it is waning visibly. And we’re not far from that happening on a broad front.

Julian D. W. Phillips

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No Gold Standard or Money Supply Expander

Confiscation Nevertheless



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Gold and Silver Prices for these countries : Albania | Russia | Saudi Arabia | All
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Julian Philips' history in the financial world goes back to 1970, after leaving the British Army having been an Officer in the Light Infantry, serving in Malaya, Mauritius, and Belfast. After a brief period in Timber Management, Julian joined the London Stock Exchange, qualifying as a member. He specialised from the beginning in currencies, gold and the "Dollar Premium". At the time, the gold / currency world exploded into action after the floating of the $ and the Pound Sterling. He wrote on gold and the $ premium in magazines, Accountancy and The International Currency Review. Julian moved to South Africa, where he was appointed a Macro economist for the Electricity Supply Commission, guiding currency decisions on the multi-Billion foreign Loan Portfolio, before joining Chase Manhattan the the U.K. Merchant Bank, Hill Samuel, in Johannesburg, specialising in gold. He moved to Capetown, where establishing the Fund Management department of the Board of Executors. Julian returned to the 'Gold World' over two years ago and established "Gold - Authentic Money" and now contributing to "Global Watch - The Gold Forecaster".
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Wind, solar, hydrogen, things unknown, are all worthy and may connect eventually—hopefully this century, for sure the next—but they cannot replace Fossils.

Not when the planet uses a 1,000 bbl a second on all things. Not when tens of millions of jobs rest on this platform.

Hydrocarbons account for 99% of the globe’s transportation platform; electricity 99% of its power platform.

There is no hydrocarbon shortage. I sat in lines during the eighties “gas shortage” and dug into it. No shortage then. But there had to be one in order to jack up the ppg. Otherwise America would not have sat still for the gouge. They’re doing it now and there’s more oil available than ever.

Past and present cries for oil independence and alternate fuels has been/is a decade-to- decade meme; an energy strawman used to focus our attention on the lie. Remember when America’s strategic oil reserves were “dangerously low?” Ad infinitum.

Alternates in their present form and efficiency can’t replace fossils. Industry knows this. Have for years.

Nowhere can this be seen any clearer today than in the U.S. power generation industry. Their fuel pie looks something like this:

Coal 50%
Other Fossils 21%
Nuclear 21%
Hydro-Elec. 6%
Alternatives 2%
Source: International Energy Agency

Studies have been done on utilizing free alternate fuels—old tires, wood chips, paper—to power existing generation facilities and electricity cannot be produced any cheaper than it can be with coal. (The U.S. has an unlimited supply and the industry has successfully applied scrubber technology to their stacks.)

Alternate fuels are not an option. Not now. Not this century.

If the problem isn’t a shortage of hydrocarbons, then the problem is one of corporate elites handcuffing citizens and picking their pockets at the gas pump; of looting. Like Wall Street looted the U.S. treasury.
Peak oil? Never was enough dead dinosaurs in the world to keep oil in the ground lo these many decades at the rate humanity has uses it.

Yet, the world’s transportation and energy platforms remain based on oil. Take all the alternate energy sources in the world and combine them and it wouldn’t even approach replacement.

But, ever notice the drilling frenzy every time the price for a barrel of oil creeps up? And the "discovery" of "giant oil fields hither-to-unknown?" Eagle Ford Shale pin South Texas. The Bakkan in Montana and the Dakotas. Gull Island off the North Slope. The oil industry knew about these fields. Know all the fields on the globe and where they’re located. Russia. The arctic. That thing BP drilled into at the bottom of the Gulf or Mexico? They still don’t know how big it is. There are more like that out there. Lot’s more.

Hear anything lately about A-biotic oil? Read a couple of technical papers about it. “Google A-biotic Russia’s Deep Oil Wells” Here’s a rough ovrview:

Then therfe's Gull Island ( the North Slope. . .The huge fields in Montana and the Dakotas ( ). . . Green River Basin ( in Colorado . . . the current South-to-Central Texas’ Eagle Ford Shale boom . . . ANWAR.

The only people who really know about "peak oil" are the oil companies—the town criers telling the world we're out of it.

You can forgive the average for just not knowing., but the oil companies? They know.

Peak oil fear is the perfect cover for manipulating the price of oil-based products.

Internal combustion engine? Think eternal combustion engine.

And all God’s chillern said . . .

You nailed it Julian.
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Another refutation of James Kunstler's prediction that the world is running out of oil and that the only solution left is to run into the woods, or caves, and take up the life of prehistoric man. That is not to say one ought not lay in a supply of gold, silver, and other commodities for the coming effects of Obama's and the Democrats foray into socialism. Hopefully when that storm has past, saner heads will return to Capitalism and limited government.
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Julian, I think you're right to say "Change is Coming" but I think you're way overly optimistic to believe what you "hear" about the U. S. becoming Oil-Self-Sufficient. I've been doing my own OIL research; but I don't want to get into that. Here, on these pages of 24h Gold, there are two belief's stated ~ one by James Kunstler and one by you. Only one of you can be correct on this "OIL" thing. I believe it will take YEARS to learn who is right. As for me; I'm preparing a place, with garden & seeds, and living my life as if James is the correct one on this. Either way: Change is Coming.
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Wind, solar, hydrogen, things unknown, are all worthy and may connect eventually—hopefully this century, for sure the next—but they cannot replace Fossils. Not when the planet uses a 1,000 bbl a second on all things. Not when tens of millions of jobs r  Read more
m. - 11/22/2012 at 6:42 AM GMT
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