Collapse Of Roman Silver Monetary SystemThe precious metals will offer one of the best safe havens as the world enters into the next paradigm… “The Death of the Business Cycle.”
Unfortunately, very few analysts, economists or investors realize the darkness that lies ahead.
Gold and silver are more than insurance…. they will be the wave of the future, and the future is now here.

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From the SRSRocco Report:

While science, technology and specialization allowed mankind to advance to levels thought impossible during the 1800′s, it also destroyed of our ability to perceive the FULL PICTURE.  Basically, the left hand knows not what the right hand is doing.

This is a very dangerous situation indeed as analysts and economists continue to provide forecasts based on superficial and incomplete data.  This very factor was the inspiration to start my website.  My attempt was to provide information and data to help analysts–investors CONNECT THE DOTS.

Unfortunately, my energy articles receive a fraction of the reads my precious metal articles receive.  I have found that most energy analysts do not want (or care) to understand the merits of the precious metals, while many of the gold and silver bugs could care less about the ramifications of peak oil.

This strange dichotomy would be simply HILARIOUS if the future wasn’t so bleak.

ENERGY & THE PRECIOUS METALS are tightly interwoven, regardless if analysts or investors fail to make the connection.  That is why I made the point in my article, Why Gold’s Base Price Should Be North of $2,000, that the Gold-Oil Ratio is way below its historical norm shown in the table below:

Gold vs Oil Ratios & Price Values

I labeled it as a GOLD BASE VALUE of $2,000 because it doesn’t include any future revaluation (gold backed fiat currencies) as well as the huge amount of leverage in the debt and derivatives markets.  What I mean is, the paper price of gold should be north of $2,000 without any of the factors listed above.

Of course, the Central Banks manipulate precious metals LOWER, while the stock and bond markets are pushed HIGHER.  Evidence is found in a recent article by Zerohedge, “Cluster of Central Banks Have Secretly Invested $29 Trillion In The Markets”:

To summarize, the global equity market is now one massive Ponzi scheme in which the dumb money are central banks themselves, the same banks who inject the liquidity to begin with.

You see, the current plateau in global oil production forced the Central Banks to prop up the markets as real growth is virtually impossible.  So, inflation is now the only tool remaining which gives the illusion of world GDP growth.

Not only will the peak and decline of global oil production kill future world GDP growth, it will also destroy the BUSINESS CYCLE.  According to Wikipedia, there are four business cycles:

All of these cycles are based on a growing energy supply.  Rome fell victim to the Death of the Business Cycle as it basically ran out of cheap and available energy (Falling EROI – Energy Returned On Invested) to sustain its empire.  The decline of the Roman Empire was shown by the debasement of its monetary currency — the silver Denarius:

Collapse Of Roman Silver Monetary System

(courtesy of Martin Armstrong)

 

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The United States took the Roman monetary debasement playbook…. HOOK, LINE & SINKER:

GreenBack Purchasing Power

Even though the U.S. Dollar still functions as the world’s reserve currency, the United States (and world) will soon experience the same fate as the Roman Empire.  The debasement of the monetary system is due to the FALLING EROI – Energy Returned On Invested of our economic system.

As I mentioned several times before, the EROI of U.S. oil and gas was 100/1 in 1930, declined to 30/1 in 1970 and is currently… 10/1.  Shale oil is not an energy solution as its EROI is a lousy 5/1…. lower than the EROI energy carrying capacity of our modern economic system.

Note:  an EROI of 100/1 means the energy of a barrel of oil provides 100 barrels for the market.

As the Romans suffered from the EROI decline, their collapse was inevitable and the DARK AGES were the result:

Dark Ages & Death of Business Cycle

(courtesy of NOBELIEFS.COM)

 

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This chart represents the crash after the Roman Empire and what will occur after Peak Oil.  While this chart provides a religious cause in the demise of the West, to me it really doesn’t matter.  The Dark Ages had more to do with the decline of the Roman Empire’s EROI than it did with religion.

So, I would imagine many of the Roman economists and analysts during the last days of the empire were offering solutions and forecasts for continued growth and prosperity.  Unfortunately, MSM in Ancient Rome fell victim to the same IGNORANCE the modern MSM suffers.

Again… the LEFT HAND knows not what the RIGHT HAND is doing.

The 2014 BP Statistical Review was just released, and let me tell you… the oil production-consumption data doesn’t look pretty.  And, it only gets worse from here on out.

Folks, PEAK OIL will destroy the BUSINESS CYCLE:

Typical Business Cycle RED SLASH

After much research and a great deal of reflection, I believe the best physical assets to own in a peak oil environment are the PRECIOUS METALS.  The world is heavily invested in paper and physical assets that derive their value from a growing energy supply (which is now peaking).

Not only will the world suffer from a peak in global oil production, it also has two other nails in the ENERGY COFFIN:

1) Decline of Net Oil Exports

2) The Falling EROI – Energy Returned On Invested

In my opinion, the world will be a much different place by the end of the decade.  Those who believe most Stocks, Bonds, Insurance Funds, Retirement Accounts and Real Estate will be excellent investments in the future (due to the eventual UPSIDE of the business cycle), will experience a rude awakening.

The precious metals are not investments or stores of wealth to trade or relate to the insane valuations in our present markets.  Gold and silver are more than insurance…. they will be the wave of the future, and the future is now here.

 

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  1. Each and every reader of this article should make a copy, laminate it, and place it where they can refer back to it should they EVER become cloudy on where they should put there available fiat.
    SRSROCCO you have written many excellent pieces I have had the pleasure of reading, however, this one is spelling it out so even our HS graduates and college graduates (who read at a fourth grade level) can understand!  Now only if they would take the time!

    • “Now only if they would take the time!”
       
      What?  And miss the latest episode of Dancing with the Stars, Duck Dynasty, or the nightly propaganda… er, news?  Are you mad???
       

  2. I grew up in the retail gasoline business in Texas and started supervising gasoline stations in 1967. Went through the 1973 and 1978 price explosion and knew first hand these price increases were manipulated by Big Oil. Being in the gasoline business in Texas is different than other places because most of my friends and my father’s friends were in the oil business. A geologist friend told me years ago there is oil everywhere. Every once in a while an article surfaces about an inexhaustible supply of oil near the core of the Earth. http://www.americanthinker.com/2010/10/sustainable_oil_production.html. In the DeepWater Horizon which was a deliberate man made catastrophe the oil hit was oil from the Earth’s core and the reason its flow was so massive and difficult to stop. Big Oil knew the Gulf oil spill would be huge and manipulated the disaster to stop drilling and take oil off the market. In Northern Iraq there is a massive oil field with estimated reserves of 45Billion barrels. Big Oil is behind the Sunni uprising and you will note the Sunni are stopping the flow of Kurd oil. Its deliberate because Big Oil does not want this massive oil reserve bring down the price of oil. The countries the US  invades have massive amounts of oil and the reason for the invasions is to take the oil off the market so the monopolists can keep the price of oil up. Hugh amounts of land in and around Russia and China have untold amounts of oil. Peak oil is a myth spun by Big Oil. Anyway before long hydrogen energy is going to come on line and there will be no need for oil at all. It appears inflation is deliberate and we can assume the possible Billions who will be killed is all part of a Fed parasite scam to keep their free ride in the wagon. Shame on the parasites.

    • Sorry I didn’t mean to post the thing about weeds on your comment.  That was supposed to stand alone.  OK so you and your buddies at the American thinker and a few Russian scientists say that the earth’s core manufactures petroleum.  So how fast is the stuff coming off the production line and how fast are we humans using it up? wake me up when you guys figure that out.

    • “Every once in a while an article surfaces about an inexhaustible supply of oil near the core of the Earth.”
       
      You DO know that this is a physical impossibility, right?  The core of the Earth being about 5,500 degrees Celsius.  At that temperature, no organic molecule known to Man can exist without complete molecular dissociation.   In short… POOF!
       
      However, if you look up the work of Dr. Thomas Gold, you will find a fascinating theory that describes how oil is created by the Earth itself via bacterial action on naturally occurring inorganic elements.  This occurs in the very uppermost regions of the Earth’s crust where temperatures are far more modest and highly conducive to bacterial growth and activity.  While Gold’s hypothesis has never been proven, he did find petroleum in a well drilled into a basalt rock formation, I believe in Norway, where the conventional petroleum creation theory stated definitely that no petroleum could possibly exist.  But it did, thus strongly indicating that the conventional theory of petroleum creation is incorrect.  The amount was small but that is hugely larger than zero, which the conventional theory predicts.  This petroleum then travels through cracks in rock strata, eventually collecting in large pools that can be tapped via oil well drilling.  If Gold was correct, petroleum is a natural material that is continuously produced by the Earth.  While that would be good news on the energy front, it is tempered a bit by the thought that we seem to be consuming it faster than the Earth creates it.  Oil fields that took millions of years to be created are pumped dry in less than a century… and sometimes MUCH faster than that.
       
      Of greater importance, however, is the presence of methane hydrate on the bottom of the ocean.  This is a material that is naturally created by combining water and methane under high pressure but at low temps.  This is the slushy material that looks a lot like water ice.  It plugged the collection pipe when the Deepwater Horizon crew tried to pump up and collect the oil blowing out of the well head in the Gulf of Mexico.  For them, it was an annoying problem but for the world it is a relatively safe and clean source of fuel that dwarfs that of the MENA.
       

  3. The denarius chart above illustrates the utter stupidity of stamping ‘fixed’ unit ‘value’ on coinage, far moreso than ramifications of EROI. The fact is that population slightly outpaces recovery of PMs, commensurately raising their per-capita rational value over time. It can be phrased as ‘Population Demand Factor’.

    Also, the ‘decline of the greenback’ has nothing to do with ‘business cycles’. I’ve explained exhaustively that it’s systemic to the whole notion of banknote credit-’money’. The core design is one of a ‘Positive Feedback Loop’, where currency incurs debt, which in turn compels yet more currency. This is an exponential progression that can only mathematically destroy itself … all by itself.

    • Pat, I was talking to my LCD about 2 weeks ago as I purchased some Canadian Maples. He mentioned that he liked the fact that the Canadians had impressed “5 Dollars” on them, and immediately thought about your remarks on the subject. I didn’t argue with him, but upon reflection, your point is an interesting one.

    • Cyberspace Void … “The denarius never had a fixed value stamped on them”

      Granted, it was not directly by numeral, but by nominal inference … ‘a’ denarius was ‘one’ denarius. By supplanting the weight and metallic content of the coin with nominal valuation … infusing the mere name with value … the means was prepared and executed, to alter the content while purporting the ‘value’ of ‘one denarius’. The same is true today with ‘a’ or ‘one’ banknote. The unit ‘value’ is purely nominal.

      Unlike others, I don’t presume any of this to have a criminal genesis, but rather administrative. The ‘Population Demand Factor’, slowly raising the value of coin, has to have become recognized even if not precisely understood at the time. So, to preserve the numerical accounting (a fiction) in favor above self-balancing rational Weight and Measure, the debasement of coinage began as a ‘practical solution’. Of course, ‘Gresham’s Law’ kicked in, exacerbating the unforeseen problems inherent in the planned ‘adjustment’, by reducing circulation and thus accelerating the real value appreciation of metal in relation to goods … and the whole process ‘snowballed’.

      Trade partners (and domestic Roman constituency itself), naturally came to resent the depreciating coinage as a device, not to equalize nominal value of currency and goods pricing, but to cheat people out of full compensation for their Labor and that’s what we find in ‘standard’ history accounts. A thousand years of strife can be laid at the ‘false idol’ of accounting in numbers alone.

      Money Is Weighed, Fictions Are Counted.

    • You are paying more because of a fear factor that is driving up prices at the wellhead due to possible supply interruptions. The ones who ‘win’ are the traders who hedged their purchases and the existing wellhead owners who have already paid their development costs (unless those wells are damaged). It also drives up service and labour costs that never seem to go down afterwards.

  4. With current upside in Gold and Silver, I believe is a static event. J P Morgue controls more Gold and Silver paper as of late than six months ago. Even though Barclays and Deutsche Bank  have lost part of the London fix, The Morgue has been set up by The New York Fed to control PM prices, so the short situation squeeze I believe is very short term and believe the real break out will be late August, mid September. The Black Swan positive that may allow a quick upside to the PM’s is the continuation of The HNIC’S ineptitude to carry any weight in Iraq and what Russia will do about the ongoing killing in Ukraine, which a very cunning pragmatic Putin can solve in quick time. Europe allies will have none of this and the U S will be on the hottest bed of coals. Extending the financial and human battle to the upside for PM’s, The Saudi Oil is now in danger of take over by the increasing size of ISIS and variant armies. Oil could and most likely be up to $130.00 per barrel within 10 days.

  5. For anyone interested in understanding why the “dark ages” came about, John J. O’Neil’s book, Holy Warriors: Islam and the Demise of Classical Civilization, is important. One of the prime causes, namely Islam, which brought about the first dark ages, is helping in no small measure to bring about, or at the very least, take advantage, of the suicide of the West, is a perspective that more than just a few historians have looked into. It helps explain Klummac’s (sp.?) actions, too.
    From Amazon:
    In this ground-breaking work, historian John J. O’Neill examines a great variety of evidence from many specialties and reaches an astonishing and novel conclusion: Classical Civilization was not destroyed by Barbarians or by Christians. It survived intact into the early seventh century. The Vandals and Goths who seized the Western Empire in the fifth century had become completely romanized by the start of the sixth century. Artistic and intellectual life flourished, as did the economy and the cities built earlier under the Empire. Yet sometime in the middle of the seventh century everything changed. Cities were abandoned, literacy plummeted, royal authority declined and local strongmen, or “barons”, seized control of the provinces. The Middle Ages had begun.
    Who or what had caused this? As O’Neill notes, by the 1920s Belgian historian Henri Pirenne had located the proverbial “smoking gun”; but it was not in the hands of the Barbarians or the Christians: it was held by those who, even then, it had become fashionable to credit with saving, rather than destroying, Classical Civilization: the Arabs. In a conclusion that will have resonance for the modern world, O’Neill argues convincingly that all we regard as “Medieval” had its origin in Islam, and that the Muslims terminated Classical Civilization in Europe just as surely as they did in the Middle East. O’Neill shows how the sudden relapse of Europe in the seventh century was due entirely to the economic blockade imposed by Islam’s war against Christendom. The Mediterranean, which had previously been a cultural highway, now became a frontier, and a very dangerous frontier at it. Prompted by Islam’s doctrine of perpetual war against nonbelievers, Muslim pirates scoured the Mediterranean, effectively ending all trade between Europe and the great centers of civilization in the Near East. The flow of gold ended, as did the supply of all luxury items. And so too did the supply of papyrus from Egypt, without which Europeans were forced to rely on expensive parchment. Not surprisingly, literacy plummeted. Worst of all, the great cities of the West, which depended upon the trade in luxury items from the East, began to decline.

    • “One of the prime causes, namely Islam, which brought about the first dark ages,…”

      I stopped reading right here. Obviously you are not knowledgeable in history or all to ready to accept a revisionist version.

      The Dark Ages is generally defined as the period from the decline of the Western Roman Empire up to the beginning of the Renaissance (approx. 400-1400 A.D.) but by no means was it uniformly present. The term refers to a period of relative scarcity of historical and other written records in many areas of Europe rendering it obscure, or “dark” to historians. Mohammad lived between 570 – 632 A.D. so his appearance is a little late to have caused the Dark Ages, and Islam didn’t spread like wildfire, especially in Europe where the term Dark Ages is applied. By 1000 A.D. Islam had slowly spread only to Turkic peoples in central Asia, across the Sahara and along the east coast of Africa. The last 300 years of this period was the time of the crusades … the spread of Islam was halted, and the Byzantine Empire and Spanish kingdoms were effective barriers to the spread of Islam into Europe until near the end of the Dark Ages.

      So in what way do you think Islam created the Dark Ages in Europe again?

  6. Whether or not peak oil is real or not, doesn’t change the immutable fact that with an unbacked fiat currency, the price of energy will rise in dollars.  As SRSRocco has said many times, precious metals are a store of energy value.  Energy costs rising, means the costs of mining metals rises as well.  When you buy silver or gold, it’s like buying barrels of gasoline that can be stored and used indefinitely.  The dollar value WILL rise overall in time.

    • Good point. Even if the number of dollars were held constant, gold should rise in value as they represent the energy needed to mine the material. As that energy becomes more scarce, the supply of gold cannot continue to be supplied at the same value with rising energy costs.
      Thus, gold must go up in dollars (even if dollars are held constant) to reflect the higher cost of energy inherent in gold’s production.

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