Monday, December 24, 2012

The Nexus - Conspiracy Theory

Significant airtime is devoted to denigrating and insulting the “Fossil Fuel” industry conspiracy. How they keep out alternative energy, don’t want a cleaner earth (they’d be happier, I suppose, if we all died of lung cancer) and influence govts (horrible people, the rest of us don’t try to). Let’s ignore the fact that barely 10% is in the control of the “evil” oil companies, the rest are government owned. Let’s include gas as part of the conspiracy, and of course, coal. Cross holding of coal and oil by private enterprise is pretty low, if at all. Coal fuels powerplants and power plants are increasingly owned by someone else, but lets assume they’re in bed together for good reasons. They must be all bad guys in a nexus, determined to destroy the planet or at the very least, screw us.

Its possible that they aren’t the only bad guys around. The leading lights of the LCD business got busted and fined last year for......rigging LCD prices! Guess how many billion devices they sold / sell? The big banks rigged the LIBOR rates that determine how much you pay as interest on loans. The stock market already sold us out. Politicians are corrupt “sell-your-soul” human being even if till the day before they were elected, they were our neighbours and we drank coffee together every evening. Soccer and cricket matches are fixed, cyclists dope their way to victory etc. Genetic scientists are turning humans into cyborgs and growing food that will turn nature into machines. And the drug companies looking to make profits by killing their clientile. Bleak world.

There are these other blokes who’ve stayed under the radar - if we used similar yardsticks. About 10% of what they produce actually goes into something useful. 90% is based on keeping “perceptions” going that reflect in high prices. Unlike any other such commodity, rising prices don’t fuel further exploration. They’re happy there’s less going around. In fact, not only them, but half the world’s govts are happy there’s less going around. So more than 90% of it sits around doing nothing, while prices are high. Meanwhile, the millions of people who’ve bought it, under the same illusion of value, are also happy. They  can hang on to their lemons and live with the cartelization of markets and pricing.

The leading light under discussion is gold. About 10% has industrial uses. Industry is happier with lower costs. 90% goes into something called “investments”. Global mining production is around 2,500 tonnes (give or take) while consumption in India alone is close to 10,000 tonnes. A lot of it is, therefore, traded or recycled gold.

Gold is produced in a handful of mines in a handful of countries by a handful of producers. Active traders of gold in the banking system are few. Its a little group that’s active. A sub-set of these guys handle platinum too.

Official Gold holdings are about 35,000 tonnes of which ⅔ rds are held by the US and EU countries plus IMF. If the market is supplied by this useless product, then prices will crash (as they should).

No one’s asking why exploration and production hasn’t increased when prices have, like they do for anything else except land. Its in the interests of all gold producers, banks and govts to keep the price high.

There are 17 listed “rare earths” - none of which compete with gold. Sure, the term rare earth isnt’ a reference to existence but meaningful availability. Like found almost everywhere - soil, air etc - but unlike that clever fiend in an Agatha Christie novel, it won’t kill you.

How come no one writes about a Gold conspiracy? Why successive generations are being misled into thinking its of some value - when it has little utility to society? Or why the govts are collaborating with the industry to keep the prices up?

Just thinking aloud!

No comments:

Post a Comment