Robert Sczech's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/176696/comments http://seekingalpha.com/article/148215-is-black-gold-worth-more-than-real-gold?source=feed#comment-585151 585151
The main difference between gold and oil is that oil is a depleting asset, while gold is not being used, gold is being accumulated. While the total amount of oil in the ground is decreasing every day, the above ground accumulated gold is increasing every day (more than 160,000 tons of gold are presently above ground). If no replacement for oil is found, this means that oil will outperform gold during the next 50 years.

If oil starts getting scarce, food will become scarce as well. For that reason, the recommendation is, start accumulating food. Storing large amounts of food on your property is not as dangerous as storing large amounts of oil in your backyard.

Like food, oil can not be stored indefinitely. It will eventually evaporate and change its chemical composition. ]]> Sun, 12 Jul 2009 23:12:29 -0400
The main difference between gold and oil is that oil is a depleting asset, while gold is not being used, gold is being accumulated. While the total amount of oil in the ground is decreasing every day, the above ground accumulated gold is increasing every day (more than 160,000 tons of gold are presently above ground). If no replacement for oil is found, this means that oil will outperform gold during the next 50 years.

If oil starts getting scarce, food will become scarce as well. For that reason, the recommendation is, start accumulating food. Storing large amounts of food on your property is not as dangerous as storing large amounts of oil in your backyard.

Like food, oil can not be stored indefinitely. It will eventually evaporate and change its chemical composition. ]]> http://seekingalpha.com/article/94392-metals-manipulation-or-simply-deleveraging?source=feed#comment-248479 248479
Seriously, who would object if the government forced the price of bread lower? ]]> Mon, 08 Sep 2008 12:44:44 -0400
Seriously, who would object if the government forced the price of bread lower? ]]> http://seekingalpha.com/article/88220-where-we-should-be-investing-the-paradox-of-thrift?source=feed#comment-219390 219390
It took nature hundred of millions of years to create the oil in the ground. Mindless consumption has burned more than half of that oil. If we ignore oil imports, the remaining oil reserves in the US would not suffice to run the US economy for more than 5 years. Depletion of natural resources can not be compensated by more investment. People invest into oil and metals simply because they start to realize that these, although nonrenewable, are being wasted by the "consumption economy". ]]> Thu, 31 Jul 2008 12:03:27 -0400
It took nature hundred of millions of years to create the oil in the ground. Mindless consumption has burned more than half of that oil. If we ignore oil imports, the remaining oil reserves in the US would not suffice to run the US economy for more than 5 years. Depletion of natural resources can not be compensated by more investment. People invest into oil and metals simply because they start to realize that these, although nonrenewable, are being wasted by the "consumption economy". ]]> http://seekingalpha.com/article/87383-the-case-for-gold-today?source=feed#comment-216682 216682 Mon, 28 Jul 2008 14:01:13 -0400 http://seekingalpha.com/article/84004-u-s-oil-production-flat-over-past-four-years?source=feed#comment-200567 200567
The claim that oil production was constant during the past 4 years is most likely also wrong. Since 1971, the US production declined at the average rate of 2% per year.]]> Tue, 08 Jul 2008 10:41:47 -0400
The claim that oil production was constant during the past 4 years is most likely also wrong. Since 1971, the US production declined at the average rate of 2% per year.]]> http://seekingalpha.com/article/83834-alternative-energy-for-investors-high-volatility-great-promise?source=feed#comment-199472 199472
In my opinion, we should invest into renewable energy as long as the energy produced is much higher than the energy needed to produce this alternative energy infrastructure. ]]> Sun, 06 Jul 2008 21:41:30 -0400
In my opinion, we should invest into renewable energy as long as the energy produced is much higher than the energy needed to produce this alternative energy infrastructure. ]]> http://seekingalpha.com/article/83296-promising-solar-power-technologies?source=feed#comment-196969 196969
Similarly, solar panels made from flexible thin film may be significantly cheaper than standard panels. But that advantage could be nullified by a possibly drastically lower life expectancy of the cheaper panels. The cost of a panel should be judged against the total amount of energy collected by the panel during its effective life time. The standard silicium panels come with a warranty of 25 years by their manufacturers. What is the warranty on the flexible sheet panels? 10 years would be insufficient.]]> Wed, 02 Jul 2008 01:28:03 -0400
Similarly, solar panels made from flexible thin film may be significantly cheaper than standard panels. But that advantage could be nullified by a possibly drastically lower life expectancy of the cheaper panels. The cost of a panel should be judged against the total amount of energy collected by the panel during its effective life time. The standard silicium panels come with a warranty of 25 years by their manufacturers. What is the warranty on the flexible sheet panels? 10 years would be insufficient.]]> http://seekingalpha.com/article/83430-solar-stocks-feeling-the-heat?source=feed#comment-196967 196967 Wed, 02 Jul 2008 01:06:12 -0400 http://seekingalpha.com/article/83225-common-misconceptions-about-the-fed-and-gold?source=feed#comment-196334 196334
In order to truly understand our monetary system, we need to look at it from the point of view of generating a stream of taxes to support congress and the general government. These tax collections have been rising steadily over the years, regardless of how the economy is doing. It is this rising percentage of the GDP which is collected by the governments which is the actual problem - not the fact that the Fed is officially a private institution. Although the Fed is a private institution, no Fed chairman will ever act against the will of congress or the US president. ]]> Tue, 01 Jul 2008 00:23:36 -0400
In order to truly understand our monetary system, we need to look at it from the point of view of generating a stream of taxes to support congress and the general government. These tax collections have been rising steadily over the years, regardless of how the economy is doing. It is this rising percentage of the GDP which is collected by the governments which is the actual problem - not the fact that the Fed is officially a private institution. Although the Fed is a private institution, no Fed chairman will ever act against the will of congress or the US president. ]]> http://seekingalpha.com/article/82401-net-exports-of-major-oil-exporters-likely-to-fall?source=feed#comment-192113 192113
Let's assume further that peak oil will happen one day - that is a very reasonable assumption given that the earth can hold only a finite amount of oil.

Then we should be very grateful to the financial speculators since by artificially pushing prices up, they force us to lower our consumption of oil and in this way, direct our efforts to alternative forms of energy. In this way, when the true peak oil arrives (in 2030 by the most optimistic predictions), then we will be well prepared so that the transition to other forms of energy will be easy and relatively painless.

To sum, it would be foolish to prohibit speculation in energy futures. These speculators are in fact beneficial to our long term interest. ]]> Tue, 24 Jun 2008 17:36:55 -0400
Let's assume further that peak oil will happen one day - that is a very reasonable assumption given that the earth can hold only a finite amount of oil.

Then we should be very grateful to the financial speculators since by artificially pushing prices up, they force us to lower our consumption of oil and in this way, direct our efforts to alternative forms of energy. In this way, when the true peak oil arrives (in 2030 by the most optimistic predictions), then we will be well prepared so that the transition to other forms of energy will be easy and relatively painless.

To sum, it would be foolish to prohibit speculation in energy futures. These speculators are in fact beneficial to our long term interest. ]]> http://seekingalpha.com/article/82297-the-gold-oil-ratio-approaches-all-time-lows?source=feed#comment-190996 190996
Having said that, I agree with you that gold is a highly desirable metal. The main usage of gold is jewelery (wedding rings). In other words, we need gold in order to attract a woman. We need oil in order to give more than 6 thousand million humans the privilege to participate in the unfolding drama on this beautiful planet located in a tiny spot of the universe. Without oil, the human population would be much smaller. ]]> Mon, 23 Jun 2008 12:31:58 -0400
Having said that, I agree with you that gold is a highly desirable metal. The main usage of gold is jewelery (wedding rings). In other words, we need gold in order to attract a woman. We need oil in order to give more than 6 thousand million humans the privilege to participate in the unfolding drama on this beautiful planet located in a tiny spot of the universe. Without oil, the human population would be much smaller. ]]> http://seekingalpha.com/article/82297-the-gold-oil-ratio-approaches-all-time-lows?source=feed#comment-190839 190839 Mon, 23 Jun 2008 09:59:41 -0400 http://seekingalpha.com/article/82297-the-gold-oil-ratio-approaches-all-time-lows?source=feed#comment-190830 190830
I think the declining gold/oil ratio is just a reflection of a global revaluation process. Energy used to be extremely cheap, in the future all energy will be very expensive. My bet is that the gold/oil ratio will decline further towards a long term equilibrium value somewhere between 1 and 3. ]]> Mon, 23 Jun 2008 09:55:10 -0400
I think the declining gold/oil ratio is just a reflection of a global revaluation process. Energy used to be extremely cheap, in the future all energy will be very expensive. My bet is that the gold/oil ratio will decline further towards a long term equilibrium value somewhere between 1 and 3. ]]> http://seekingalpha.com/article/82162-market-power-asset-allocation-and-oil-price?source=feed#comment-189802 189802 The production of crude oil in the US is declining since 1970. We produce today roughly 50% of the amount of oil we produced in 1970. That decline of production happened despite lots of drilling and the usage of the most sophisticated pumping technology in the world. It has little to do with politics but a lot with the geology of the oil fields. The remaining US oil to be pumped yet is less than 20% of the oil the US was originally equipped with before the oil bonanze started. In other words, we already used more than 80% of our own oil. What is left, could power our way of life for less than 5 years if imports were not allowed. Energy independence is a delusion.

It is a great tragedy that this simple truth, 30 years after the onset of the production decline, is still unknown to the educated people of this country. ]]> Sat, 21 Jun 2008 14:25:31 -0400 The production of crude oil in the US is declining since 1970. We produce today roughly 50% of the amount of oil we produced in 1970. That decline of production happened despite lots of drilling and the usage of the most sophisticated pumping technology in the world. It has little to do with politics but a lot with the geology of the oil fields. The remaining US oil to be pumped yet is less than 20% of the oil the US was originally equipped with before the oil bonanze started. In other words, we already used more than 80% of our own oil. What is left, could power our way of life for less than 5 years if imports were not allowed. Energy independence is a delusion.

It is a great tragedy that this simple truth, 30 years after the onset of the production decline, is still unknown to the educated people of this country. ]]> http://seekingalpha.com/article/81321-why-today-is-different-from-the-inflationary-1970s?source=feed#comment-185532 185532 CPI). Consumer prices have indeed risen very slowly during the past 25 years. This is perfectly illustrated in the cost of a first class stamp which in the fall of 1984 was 24 cents while today it is 42 cents. This price change translates to an average yearly price change of 2.4%. Unfortunately, that low figure is misleading.

The majority of all consumer goods sold today in the US is manufactured abroad, not in the US. The low cost of consumer prices reflects therefore the high productivity of foreign economies, not the productivity of the US economy. Secondly, these foreign made consumer goods have not yet been properly paid for (persistent trade deficits). We pay for these consumer goods not with our own goods and services but with financial assets (like US Treasuries). However, financial assets represent claims on future production of US goods. That is, consumer goods in the US are being paid for with promises of future US production of goods. The deception is in the fact that this future US production will never materialize, at least not at today's low prices (indicated by the looming bankruptcy of Ford and GM). In order to arrive at a correct figure of the consumer price index, one has therefore to take into account the growth of the total amount of US financial assets held by foreign creditors. This sum (many trillions of Dollars) represents the unpaid cost of imported consumer goods.

Looking at the second meaning of the word inflation, namely the growth of the money supply, then we experienced during the past 25 years an almost hyperinflationary growth of the money supply. That growth is visible in stock market charts, in the cost or real estate in New York City and in the level of yearly bonuses paid to people working on Wall Street.

To sum up, the past 25 years were indeed a paradise for consumers and people working on Wall Street. The price for these excesses has not been paid yet. But we can not avoid it in form of either a global depression or hyperinflation depending on how the central banks decide to rebalance the system.

There are no free lunches. This wisdom hold true not only in daily life, but also in macro economics as well as in financial engineering. ]]> Sat, 14 Jun 2008 12:06:31 -0400 CPI). Consumer prices have indeed risen very slowly during the past 25 years. This is perfectly illustrated in the cost of a first class stamp which in the fall of 1984 was 24 cents while today it is 42 cents. This price change translates to an average yearly price change of 2.4%. Unfortunately, that low figure is misleading.

The majority of all consumer goods sold today in the US is manufactured abroad, not in the US. The low cost of consumer prices reflects therefore the high productivity of foreign economies, not the productivity of the US economy. Secondly, these foreign made consumer goods have not yet been properly paid for (persistent trade deficits). We pay for these consumer goods not with our own goods and services but with financial assets (like US Treasuries). However, financial assets represent claims on future production of US goods. That is, consumer goods in the US are being paid for with promises of future US production of goods. The deception is in the fact that this future US production will never materialize, at least not at today's low prices (indicated by the looming bankruptcy of Ford and GM). In order to arrive at a correct figure of the consumer price index, one has therefore to take into account the growth of the total amount of US financial assets held by foreign creditors. This sum (many trillions of Dollars) represents the unpaid cost of imported consumer goods.

Looking at the second meaning of the word inflation, namely the growth of the money supply, then we experienced during the past 25 years an almost hyperinflationary growth of the money supply. That growth is visible in stock market charts, in the cost or real estate in New York City and in the level of yearly bonuses paid to people working on Wall Street.

To sum up, the past 25 years were indeed a paradise for consumers and people working on Wall Street. The price for these excesses has not been paid yet. But we can not avoid it in form of either a global depression or hyperinflation depending on how the central banks decide to rebalance the system.

There are no free lunches. This wisdom hold true not only in daily life, but also in macro economics as well as in financial engineering. ]]> http://seekingalpha.com/article/80940-hydrocarbons-to-electrons-how-long-will-the-transition-take?source=feed#comment-183644 183644 Wed, 11 Jun 2008 16:37:31 -0400 http://seekingalpha.com/article/80919-bp-ceo-three-oil-myths?source=feed#comment-183637 183637 Wed, 11 Jun 2008 16:27:07 -0400 http://seekingalpha.com/article/80655-why-the-discrepancy-between-oil-and-gold?source=feed#comment-183628 183628
Gold is money (according to J.P Morgan). No form of money can store wealth. Oil is wealth. More generally, wealth is any form of assets which allow survival now and in the future. (If you can not attract a woman, you have no future.) Although it is true that gold can be exchanged into real wealth, that should not tempt us to think that gold is wealth. If nobody is going to share food with you, you are going to perish regardless of how much gold you own. The acceptability of gold in the market depends on the marginal surplus of real wealth. If the farmer is starving, he will not share with you his remaining food. Ownership of gold does not protect against the risk of drowning and starving to death. For that reason gold can not be wealth.

Regarding the gold/oil ratio, that ratio will continue to go down. People who do not believe that do not understand the consequences of peaking energy production. For the next 20 years, oil will be a better investment than gold. The oil market can not be controlled since it is too large. The gold market being very small has and continues to be controlled. Gold will continue to underperform inflation. Nevertheless, we can not afford not to hold gold.]]> Wed, 11 Jun 2008 16:06:27 -0400
Gold is money (according to J.P Morgan). No form of money can store wealth. Oil is wealth. More generally, wealth is any form of assets which allow survival now and in the future. (If you can not attract a woman, you have no future.) Although it is true that gold can be exchanged into real wealth, that should not tempt us to think that gold is wealth. If nobody is going to share food with you, you are going to perish regardless of how much gold you own. The acceptability of gold in the market depends on the marginal surplus of real wealth. If the farmer is starving, he will not share with you his remaining food. Ownership of gold does not protect against the risk of drowning and starving to death. For that reason gold can not be wealth.

Regarding the gold/oil ratio, that ratio will continue to go down. People who do not believe that do not understand the consequences of peaking energy production. For the next 20 years, oil will be a better investment than gold. The oil market can not be controlled since it is too large. The gold market being very small has and continues to be controlled. Gold will continue to underperform inflation. Nevertheless, we can not afford not to hold gold.]]> http://seekingalpha.com/article/76770-parabolic-move-in-crude-oil-looks-extended?source=feed#comment-166200 166200 barrel of oil per day which is insane. At that rate (equivalent to 40,000 gallons per second), all the oil will be gone within a few decades. ]]> Mon, 12 May 2008 10:12:54 -0400 barrel of oil per day which is insane. At that rate (equivalent to 40,000 gallons per second), all the oil will be gone within a few decades. ]]> http://seekingalpha.com/article/76554-what-if-we-d-been-on-the-gold-standard?source=feed#comment-166032 166032
Our present fiat system with its built in inflation may in fact be the best possible monetary system. It slowly destroys the value of wages over time as it should. In a finite world, there can not be an infinite amount of savings. If the value of money does not erode due to non-existing inflation, then over centuries, we would build astronomical savings - impossible in a finite world. Inflation takes care of that by reducing the value of savings over time.

I seriously think that the present system is the best possible one. It allows us to buy gold with our fiat earnings. At the same time it allows the banking system to inflate the money supply in order to keep everybody busy and well fed. It seems to me that everybody should be happy. The gold bugs as well as the professors of economics. ]]> Sun, 11 May 2008 23:54:09 -0400
Our present fiat system with its built in inflation may in fact be the best possible monetary system. It slowly destroys the value of wages over time as it should. In a finite world, there can not be an infinite amount of savings. If the value of money does not erode due to non-existing inflation, then over centuries, we would build astronomical savings - impossible in a finite world. Inflation takes care of that by reducing the value of savings over time.

I seriously think that the present system is the best possible one. It allows us to buy gold with our fiat earnings. At the same time it allows the banking system to inflate the money supply in order to keep everybody busy and well fed. It seems to me that everybody should be happy. The gold bugs as well as the professors of economics. ]]> http://seekingalpha.com/article/73791-how-we-got-into-this-pension-mess?source=feed#comment-157288 157288 The pension crisis is one of the easiest problems to solve: Increase the retirement age gradually to the point where the average retiree does not live longer than 3 years in retirement. When SS was introduced, the retirement age was placed deliberately at an age which most workers did not reach alive. The crisis is not in lacking pension savings. The crisis is in the increasing disparity between retirement age and average life expectancy. ]]> Sat, 26 Apr 2008 21:45:57 -0400 The pension crisis is one of the easiest problems to solve: Increase the retirement age gradually to the point where the average retiree does not live longer than 3 years in retirement. When SS was introduced, the retirement age was placed deliberately at an age which most workers did not reach alive. The crisis is not in lacking pension savings. The crisis is in the increasing disparity between retirement age and average life expectancy. ]]> http://seekingalpha.com/article/71693-why-gold-is-likely-to-keep-moving-higher?source=feed#comment-149517 149517 Sat, 12 Apr 2008 14:48:50 -0400 http://seekingalpha.com/article/71693-why-gold-is-likely-to-keep-moving-higher?source=feed#comment-149035 149035
One further reason to hold gold: It is the only widely recognized asset which can not be taxed away by either collapse of the currency, inflation or direct taxation. Possession of gold was historically synonymous with the ability to escape government terror.

Finally, to say that gold is worthless because it is useless is nonsense. In truth, gold is valuable because it can not be used. Everything which can be used, will be used, and, as the result of that usage, it will wear out and deplete, that is, it becomes worthless because of that usage. Gold is precisely valuable because it can not be used up. It is this almost religious property of gold which explains its popularity in jewelry making.

Finally, it requires a supernova in order to create gold. In other words, all gold on earth comes from outside the solar system as our sun is too young and too small in order to be a supernova.]]> Fri, 11 Apr 2008 12:14:52 -0400
One further reason to hold gold: It is the only widely recognized asset which can not be taxed away by either collapse of the currency, inflation or direct taxation. Possession of gold was historically synonymous with the ability to escape government terror.

Finally, to say that gold is worthless because it is useless is nonsense. In truth, gold is valuable because it can not be used. Everything which can be used, will be used, and, as the result of that usage, it will wear out and deplete, that is, it becomes worthless because of that usage. Gold is precisely valuable because it can not be used up. It is this almost religious property of gold which explains its popularity in jewelry making.

Finally, it requires a supernova in order to create gold. In other words, all gold on earth comes from outside the solar system as our sun is too young and too small in order to be a supernova.]]>