silver_11-image012.gifBy SRSrocco:

The one important aspect that the world has not yet grasped… is the decline of NET ENERGY.  ENERGY is what allows the formation or growth of the money supply… whether that be gold & silver or fiat.  Without the growth of energy… you can’t grow your money supply and you can’t PAY HIGH INTEREST EITHER!
In the graph below, we can see the big change coming in NET ENERGY that will be available to the market:

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I am still quite amazed at folks like PORTER STANSBERRY who keep regurgitated that TECHNOLOGY will save us and will allow more oil to come to market.  While this may be true for a BRIEF PERIOD…. it does not change the fact that this oil will be very energy intensive and expensive to produce.

Thus, there is less available for CAPITAL FORMATION.  As there is less net energy available for the market… there will be less capital for investment and growing economies.


Anyhow, the world is in serious trouble because it has designed a STANDARD OF LIVING based on HIGH EROI energy along with a growing energy supply.  One has been heading lower for decades, and the other will be heading south shortly.

ENERGY is what allows the formation or growth of the money supply… whether that be gold & silver or fiat.  Without the growth of energy… you can’t grow your money supply and you can’t PAY HIGH INTEREST EITHER!

Matter-a-fact, compound interest is only a system that can last for a brief period of time.  It is not natural and it does not conform to finite resources.

SD Bullion

    • Cold Fusion may be the answer.
      Remember Ted Butler is considered a conspiracy wing-nut also and keep an open mind.  An inflection point in the science of Energy may occur in the 1st and 2nd quarter of this year.  The COT (EROI) is about 12 and it takes about 0.001 gram of nickel and a small amount of hydrogen to run a 10 Kwatt eCat reactor for 6 months. 
      I will really believe in the technology when I can test a module for myself.  I have a Electrical Engineering background and I could easily measure the electrical input and thermal output. 

      It is possible that 13 – 1 MWatt eCats are currently being operated by the Naval Research Lab (US Navy).

      Home eCats may be available when enough industry information is available to UL (US Safety Certification authority).  Once enough information is available home eCats will be available for approximately $1k.  10Kwatt of heat would be enough to power the hot water system in my home.

      A competitor to Rossi is currently situated in Yaletown, Vancouver, BC and if they prove worthy, I may visit their office. 

    • A catalyst loading level of 10 ppm seems minimal for just about any chemical reaction, particularly when it is nickel, which is not an especially “hot” catalyst.  It can be made so via conversion to a caustic-leached sponge nickel form which is then de-watered via alcohol washing and decanting but even at that the reactivity will not be nearly as good as might be obtained via Pt or Pd catalysts.  It IS considerably cheaper, however, unless very high spent catalyst recovery levels are obtained for the Pt and Pd catalysts.
      Yes, I also read the magazine article to which you refer but remain skeptical of this process and its inventor, Mr. Rossi.  He seems to have a very shady past and minimal scientific or engineering credentials, which does not bode well for his process.

    • This guy sounds like a total scam.
      As the article says nobody is really sure “it is possible”.
      What I think the guy has a shit load of batteries hidden inside.  Enough to power it for at least 1 hour and make it look like it is generating power.

    • This is one of the problems that they are facing.  I would classify this as an Einstein reaction not a chemical reaction.  Albert Einstein is the originator of the formula e=mc2 and people can use this relationship to calculate 0.001 gram of nickel lost in the reaction.  To weigh the difference between the starting and ending weight of the reactor is difficult if you gain water in the casing then you have a positive gain.

      Hydrogen + Nickel + einstein catalyst = Nickel + Copper + Energy (heat)

      “Einstein owed his position at the patent office to a friend whose close relationship with the director paved the way for Einstein’s appointment by tailoring the requirements of the position to Einstein’s credentials. Thus, the official announcement for the position specified that the candidate should have a background in engineering and physics – qualifications Einstein possessed – but did not require the candidate to have a doctorate, a degree Einstein had not yet obtained.

      Fortunately for Einstein, whose efforts to obtain an academic appointment had proven fruitless, and for the future of theoretical physics, still constrained by the laws of Newton, he obtained the patent appointment in June 1902. Einstein excelled at his job. He typically completed a full day’s worth of patent examinations after just a few hours, leaving the rest of the day for him to work through the “thought experiments” that would transform physics. Even the location of the Patent Office itself, next to the famous Clock Tower in Bern, created a metaphor for Einstein’s theories.”
      If you equate competence with a PHD then Bill Gates is not qualified to be a Billionaire and there is no way he could ever win computer  programming contests since he does not have a PHD in computer science and Albert Einstein cannot create a new branch of physics.

    Showing an obvious decline in year on year imported oil deliveries.
    A country that has 17 million empty homes.
    Loses 6 million manufacturing jobs 
    Has 25 million prime working age people living with mom and dad
    Has a car fleet average age of 12 years and rising , meaning 125 million vehicles are on or past their shelf life.
    These are all easily researched up on your own ,  plus a decided drop in number of licensed drivers .  Well I can see a demand destruction event well under way ,  most folks couldn’t afford to put gas in a new car. Even if the new car was free off the showroom floor. Let alone register it , insure it , put plates on it and inspect it.  Maybe that is just crazee talk , perhaps the huge swathe of desperate , angry , shoe leather express  hordes will get a good deal , 99 down and 99 a month for 32 year loan. )

  2. The densest form of energy is nuclear by far.  More BTU’s per pound of uranium than oil or anything else.  World needs to get busy and build safe nuclear power plants.  France is well ahead in this regard.  Cost of energy is a limiting factor to any economy.  Looking forward to your new charts.

    • Safe nuclear reactor technology has been around for about 30 years.  All of these designs use passive safety features that do not require computers or electricity to engage the safety systems.  The controls are all manual.  Cooling water is held in reservoirs that are above the level of the reactor and the piping between the reactor and the reservoirs.  Connecting piping includes flexible joints.  As long as there are people available to open and close the proper valves and gravity still works, the reactor WILL receive cooling water.  Gravity is also used to hold the fuel rod clusters in place for the nuclear reactions to occur.  If power is lost for any reason, gravity pulls the fuel rods into the proper position for shutting down the reactor.  Plants like Fukushima and TMI were built years before these passive safety systems were developed, so rely on electricity and computer controlled valves and other electrical hardware to operate and shut down the reactors.  All operating nuclear-electric reactors should be retro-fitted with these passive safety systems, IMO.  It will be cheap compared to another Fukushima or Chernobyl (yet another old-design type reactor) type disaster.
      Even a passive safety designed nuclear-electric fission power plant is only a stop-gap measure, IMO.  What we REALLY need is a commercially viable nuclear fusion reactor design.  These could supply all of the energy needed to have a thriving economy without the need to burn fossil fuels and crap up the air, water, and land that we all need to thrive ourselves.  Problem now is that while we do have some good basic ideas for how to make such devices, it is very early in the development cycle.  It will likely be 50-100 years before this very tough scientific and engineering problem is solved successfully and that is if the basic R&D is strongly supported between now and then.  While there is some support for it, fusion is considered by many as  pie in the sky idea.  It may be that at the moment but unless it is heavily funded NOW, it likely always will be.

    • Ya no doubt there are safe reactors, supposedly those new container size reactors will be great.
      The problem as always is what to do with the waste.  That is the thing that nuke proponents never really explain well.  The claim is that there are safe disposal sites with mega-casks that will survive a train wreck impact.
      Unfortunately, it is just another can kicking to leave the issue to another generation when it is discovered the casks will probably degrade and lose integrity over time and the underground storage units that they will be placed in for over a millennia are leaking from ground water and rusting metal components
      etc etc
      If the news about Fukushima revealed anything aside from how criminally negligent nuclear operators can be, it is that the waste storage issue is so bad nuke plant storage have been maxed out for a long time.

  3. IMO nuclear energy via thorium is a great thing to look at, but sadly it is a new paradigm versus existing technology. Funny how everyone climbs all over IRAN, but the many nuclear powers have enjoyed the deadly by product of their nuclear energy ambitions. Conventional nuclear energy to me is just too dangerous (see fukushima) especially since we cannot IMO trust any private company or government to ensure the design, execution or maintenance of such things are done by the book.
    As for the main topic – great article as always, and I absolutely agree that LONG TERM energy price will drive the price of everything higher, but indeed for the short term, we could EASILY see oil drop.
    Getting back to IRAN, I have a personal theory that if the price of oil falls too far based on obvious oversupply now, we’ll see the war drums beat immediately to stop it from happening.

  4. Thanks for continuing to explore and present this EROI theme, Steve. Energy alternatives may not reach practical use to fill the supply gaps which will emerge as this fossil fuel story plays out. Importantly, most of the alternatives are not PORTABLE on a scale as is needed for personal or commercial use, ie: as in machinery for mining, as it affects silver production.
    We may ultimately transistion to alternatives as supply and cost dictates, but the world is far from proacively preparing for a dramatic drop in EROI. Slack demand in the West is replaced by demand growth in the emerging markets; so net world energy consumption is not likely to drop long term; especially considering demographics of the emerging economies.
    The current generation of primary silver mines are nearly UNIVERSALLY levaraging old mine workings, shafts and drill data to subsidize current production. Alot of energy was expended in prior commodity cycles when it was CHEAP, many years ago, to find much of today’s ore and gain access… When you consider the full energy consumption to develop a green field project; there is NO WAY current metals prices can persist. A declining EROI for portable liquid fuel is only going to exasperate this fact.

  5. It seems there is a disconnect between hydrocarbon sources and electrical sources.  So much of the mining industry relies of fossil fuels that power the 300 ton earth haulers, shovels, drills and crushers.  The mining industry, if it could afford it, would have to convert a significant part of their CAPEX equipment to nuclear or electrical, powered either remotely, or with huge generators connected to the machinery.  This does not seem feasible and what I have seen of mine videos and pictures, these mines are distant from power sources and don’t have enough onsite generating capacity  Small nuclear power plants seem a little futurists. But then, I’m no engineer. It seems that the fossil fuel applications will remain in place for decades while alternate sources of power from hydro, wind, solar and biomass need to sorted out.  Nuclear seems to be questionable ater Fukushima since it is becoming increasingly clear that all nukes have potential problems with hazardous waste and emissions. 

    • Sub sized reactors would be portable enough and should be enough to power a mine if 2 or 3 are used.
      As oil dwindles we are going to see more than mining problems. Shipping heavily relies on oil and food, clothing, electronics, everything gets shipped a long distance right now. We need to bring small scale production back and have regional centers that provide most of everything used. Get shipping under a couple hundred miles and future electric transportation could move it.
      The USA also needs to get the rail system back up and running, even my small town has a rail spur that could transport goods and people.


      If you spend enough time looking around and getting to the ROOT OF THE PROBLEM, you will realize that there is a great deal more BULL EXCREMENT than meets the eye.  The INFAMOUS ECAT is just one of those BULL DOOGIES.  Professor Ugo Bardi of Chemisty at the University of Florence in Italy has done a wonderful job proving just what a SCAM… the E-CAT is.

      According to Bardi:

      Let’s start with what Rossi himself had declared about his E-Cat. He said that it is based on the fusion of hydrogen and nickel nuclei (see Rossi’s patent) and that gamma rays are produced during operation (seehere) so that lead shields had to be placed inside the device. Rossi also said that he was building a factory in the United States where he would produce E-Cats by the millions; to be sold as water heaters for people’s homes. According to some recent statements by Rossi, the device had been undergoing safety testing for months at Underwriters Laboratory.

      It couldn’t go unnoticed in Florida that someone was claiming to be producing nuclear reactors in large numbers. On February 24, an officer of the State of Florida Bureau of Radiation Control went to investigate what was going on in the pretended “E-Cat factory” in Miami. There, he found no factory, but an apartment and Andrea Rossi in person. Questioned on the E-Cat, Rossi declared that “no nuclear reactions occur inside the device.” Rossi also stated that all the facilities for testing and production are “overseas,” and that safety certification with Underwriters Laboratory will be arranged in the future. The officer then left, writing in his report that his bureau has no jurisdiction over a device which has nothing nuclear inside. (The complete documentation is here, comments can be found here and here. Rossi himself confirmed the story here.

      You can read all about it at Ugo Bardi’s blog here :

      The problem with people today is that they don’t want to face reality.  Instead they want to believe that TECHNOLOGY will save the world from Peak Oil.  Unfortunately, technology is doing quite the opposite.  The more technology… the more complex the system…. the more energy is used.. and the more of a NET EROI LOSS it becomes.

      AGXIIK… brings up some excellent points that seems to miss the typical JOE BAG OF DOUGHNUTS.  First, liquid energy is different than electric energy.  Second, it takes nearly 3 decades to switch from one energy technology to the other.  If we wanted to change our current liquid energy system… we should have done so 2 decades ago.  We have run out the clock.

      Third… Nuclear is nice if you think its smart to have the power of the sun in ones backyard.  I had the great opportunity to spend the summer with retired Nasa Engineer, Don Arabain back in the 1990’s.  Don was head of the MER in Houston during the Apollo program.  The public thought the brains behind the Apollo missions were the folks at mission control in Cape Kennedy, FL… they werent.  The real brains were at the Mission Evaluation Room in Houston, TX.  These were the best of the best engineers who solved the worst of the worst problems… and Don Arabian was in charge.

      My chats with Don during that summer were extremely enlightening.  His views on Nuclear power were very negative.  He said… WHY ON EARTH WOULD YOU TAKE THE POWER OF THE SUN… AND PUT IT IN YOUR BACKYARD?”

      I could tell your stories about Don and what he did at NASA.  Sure… some folks believe we didn’t go to the moon.  When I asked Don about this… he said, folks with really good HAM RADIOS were able to receive information from the astronauts before NASA.  They were able to detect that the signal was coming from the moon due to the time delay.

      Anyhow… the world is heading into a path that does not have a future.  That is why I don’t blame those who hope and pray that TECHNOLOGY WILL SAVE US.

  6. Hey Mr. Electricity, Ted Butler is not a conspiracy wing nut.   And is being a conspiracy “wing nut” necessarily a bad thing considering “they’ve” been right so often?   You obviously don’t know much about silver if you don’t hold Ted Butler’s work in high esteem.   He probably has more honesty and integrity than all the people at the CFTC and SEC put together.   

    • I wish to clarify that I believe Ted Butler is right and I have personally used linear regression to prove to myself that there is a correlation between concentrated short commercial positions and the silver future prices.  I am saying that the JP Morgan labels Ted as a conspiracy wing nut. 
      I am basically comparing Andrei Rossi to Ted Butler to point out to silver bugs that Andrei may follow Ted Butler’s footsteps.
      Conspiracy Wing Nut -> World Famous Silver Expert
      Conspiracy Wing Nut -> World Famous Einstein Reaction Expert

  7. Cold fusion has been less than a decade away for , the last 80 years ?
    Everything oil does , hemp does better.  Even though capitalist  saint henry ford could not get hemp into production , at the height of his wealth/power.

  8. It may be of some considerable note to point out that a huge percentage of cost in producing energy of all forms is … government rule compliance, gross tax totals, fees, et cetera … all loaded on from exploration to consumption. So, if a decline in ‘standard of living’ commensurate with a decline of oil availability is impending, perhaps in order to assuage its effect, we might take steps to get government out of the business of ‘energy policy’ and rather compel a free market to replace its bumbling ineptitude.

  9. Pat
    Just when you thought it was safe to post this AM, your comment really set me off.  You are spot on about the price of gas. If there was ever a way to create a cycle of embeggarment for the common folks, its taxes embedded in the energy we must use every day.  The lower income people who must pay for increasingly punitive price increases in their fuel and energy, these people are becoming hungry and cold due to this. 
    In this country the choice of whether to drive, eat or heat their homes is driven by the taxes and regulations in the price of energy and what’s left in a shinking pocket book.  I estimate that about 30% of every energy dollar is part of these costs.  The guy who owns a gas station makes about 12 cents a gallon pool margin, his net profit.
    The various fed, state and local taxes can easily top 50 cents a gallon and the pump.  Down the fuel food chain the rest of the taxes add another 20-25% to the cost per gallon, therm or kilowatt.  This is the same as a VAT.  When people scream about high gas prices the politicians take out their clubs and beat the rented mule, Big Oil, the same beast that feeds the goverment tax garbage pit. I have no sympathy for big oil but the political bravery of beating the hand that feeds them is soooo impressive. Right!
    All the government imposed taxes are paid by we, the people, so there is little pain at that Big Oil pump head.  It’s like Big Tobacco.  Did anyone at the top get hurt by the $250 billion settlement? Nope. Big Tobacco and Big government profited immensely  Ordinary Joe and Jane, the folks who want to smoke what I’ve always considered an enjoyable vice, now costs $5 a pack.  While I don’t smoke anymore,  what’s the cost to the lower income folks who enjoy their small pleasures?   The government does not give a rat’s ass about their plight.   They take considerable pleasure in taking from the common folks.  Even wonder why these political maggots have a big old S*** eating grin?  They know they are sticking to us every day in everey way.  They laugh all the way to the bank.
    PS don’t get me started about the price of alcohol. The taxes on Gin and Scotch are obscene.

    • @AGXIIK … The sooner The People comprehend that government-banks-monopoly industrialists are the modern-day Slavers, the sooner we are to recover our Liberties. You’d slashed the beast to the bone when you recognized that ALL TAX is a bourn on the backs of consumers, wearing down even the ponderous to pebbles and sand. And, what IS slavery, but command of Labor at cost of mainteance? In that scheme, ‘wealth building’ is to ‘leverage’ that Labor to take such command over still MORE Labor. ‘Taxes’ on imaginary ‘money’ are the weightless, invisible chains and manicles that comprise THEIR ‘stock in trade’.

  10. Booyah Pat  that was what I was trying to express.  IMO the entity trying to ‘build wealth’ and doing it for themselves, are the governments who feed on the labor of the people.  In the last couple of decades the primary theme we’ve heard over and over is ‘wealth building’  Grow your wealth with X, Y and Z methods.  Each means depends on paying  labor in increasingly unvaluable FIAT.  There is  a stat the makes the contention that the heads of large corporations on average make about 350 times as much as their workers. It used to be about 10 to 1.  This hugely skewed income stream has made a surplus of billionaires who increased their net worth by $210 billion over the last year   This  has all happened while the average US worker’s net worth declined by 40% and income declined an average of 10% in the last 4 years.  Gee, I can only guess where all that FIAT found a new home. 
    But all the while, the governments have continued to steal the substance of the Average Joe and Jane, telling us that this is all done in the name of tax fairness and distribution of wealth.  What The F***. 
    The tax increases just passed by the lame SOBs in the US gummint  fall heaviest upon those least able to afford them while every nickel of tax increases, such as they are, that were levied on the top income earners will trickle down on the least of us, the ordinary worker.   I guess that’s what they mean by distributing wealth and fairness.  This benefits no one except the kleptocrats in the governments and the uber wealth that run these pathetic sock puppets who think they have power. 
     Like Dennis Hopper said.  Listen slick, don’t piss down my neck and tell me it’s freakin’ raining.
    When I add up first my labor income and later the business income, both gross and net, then deduct the overall tax rate of 65% on that income plus the cost of foolish and unwise investment of my after tax dollars in the gover/banker fools casino I realize that I am just about the luckiest guy in town. I still have some of the FIAT left over to buy gold and silver. Thanks Doc

  11. My bottom line is Defkalion, Andrei Rossi, and Brillouin has a greater then 0% chance to succeed (all LENR) companies.

    Telsa cars can run on battery power for about 350 miles.  Solar and Wind power can be used to power battery power vehicles as regular Hydroelectric power

    Mike Maloney endorses Telsa.

    Hydrogen can used to power trucks in an Internal Combustion Engine to drive a mining Truck  Electrolysis can produce


    Electricity can replace Natural gas in heating applications and Natural gas can be used to power internal combustion engines.

    Natural gas can replace oil in transportation.

    Ted Butler was a commodity broker and he was censured by the CFTC and he quit being a broker.   Liar Liar, he is never to be believed, but I believe him so do many people.

    The most important thing is the LENR companies succeed with their products.  Defkalion may have a product which is suitable for cars.

    Instant on.

    10 Kilowatt LENR engines

    Ni + H2 = gamma rays + heat (steam)

    gamma rays = electromagnetic radiation similar to microwave radiation (10 to 37 Hz)

    Defkalion might actually succeed or fail ( they have committed more moral transgressions than Rossi)

    Their products could be used in a Stanley Steamer type car.

    “You have to dream”
    D-Wave is a Quantum computer company in Burnaby near Vancouver.  To the best of my knowledge they are the only company in the world to build quantum computers which can break Encryption systems using 128-bit RSA type encryption system (Royal Bank of Canada – RBC).

    “Banks are not safe”

    Buy Silver.

    I have a small chequing account in this bank.  The NSA(US spy agency) could use quantum computers to crack any bank that has a 128-bit encryption system. I advise you to convert paper cash into silver.

    I like the Royal Canadian Mint Silver Wildlife Antelope 1 oz silver dollar.


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