Survival And Prosperity

Jeremy Grantham On How To Avoid The ‘New Dark Ages’

“The investment business has taught me – increasingly as the years have passed – that people, especially investors (and, I believe, Americans), prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news.”

-Jeremy Grantham, “The Race of Our Lives”

I just finished reading the latest installment (covering Q1 2013) of Jeremy Grantham’s quarterly investment letter. Grantham is the co-founder and chief investment strategist of Grantham, Mayo, Van Otterloo & Co. (GMO), and has a special talent for correctly-calling the direction of the financial markets. In “The Race of Our Lives,” the British-born investment adviser discusses the fall of civilizations, and ponders the fate of ours. Grantham wrote:

Our global economy, reckless in its use of all resources and natural systems, shows many of the indicators of potential failure that brought down so many civilizations before ours. By sheer luck, though, ours has two features that might just save our bacon: declining fertility rates and progress in alternative energy. Our survival might well depend on doing everything we can to encourage their progress. Vested interests, though, defend the status quo effectively and the majority much prefers optimistic propaganda to uncomfortable truth and wishful thinking rather than tough action. It is likely to be a close race.

The body of the letter goes on to focus on falling fertility rates and the increased adoption of alternative energy, which Grantham believes could prevent us from going over the proverbial cliff.

As for investment advice from Grantham, whose individual clients have included Secretary of State John Kerry and former Vice President Dick Cheney, there’s this nugget tucked away in the “Epilogue”:

The two favorable factors described, with luck and some improved effort and leadership, may buy us enough time to completely retune our agricultural system, for it will take many decades to change attitudes and build the infrastructure, training, and research to move to complete agricultural sustainability. That in turn would allow us time in a stable environment to address the problem that will no doubt take the longest time of all: addressing our failing supplies of metals. Yes, we are blessed with large supplies of aluminum and iron ore, although, like agriculture and civilization itself, their usefulness to us is completely dependent on the availability of cheap energy. More to the present point, affordable supplies of most other metals, some very useful, will run low this century and must be replaced by organic alternatives, which process will need all the time and research that success with the other factors might be able to deliver.

(Editor’s note: Italics added for emphasis)

Another fine investment letter from the “crash prophet,” which you can read in its entirety on the GMO website here (.pdf format).

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

Tags: alternative energy, fertility rates, Jeremy Grantham

Mayan ‘Apocalypse’ Update

All is well.

Calling it a night… and a b’ak’tun.

Edwin Hawkins Singers, “Oh Happy Day” (1967)
YouTube Video

Tags: 13th b'ak'tun, Mayan Long Count calendar, Mayan prophecy, Mayans

States’ Response To Health Emergencies Analyzed

How prepared is your state for major health emergencies?

From a press release issued earlier today by the Trust for America’s Health (TFAH) and the Robert Wood Johnson Foundation (RWJF):

In the 10th annual Ready or Not? Protecting the Public from Diseases, Disasters, and Bioterrorism report, 35 states and Washington, D.C. scored a six or lower on 10 key indicators of public health preparedness.

The report, issued by the Trust for America’s Health (TFAH) and Robert Wood Johnson Foundation (RWJF), found that while there has been significant progress toward improving public health preparedness over the past 10 years, particularly in core capabilities, there continue to be persistent gaps in the country’s ability to respond to health emergencies, ranging from bioterrorist threats to serious disease outbreaks to extreme weather events.

In the report, Kansas and Montana scored lowest—three out of 10—and Maryland, Mississippi, North Carolina, Vermont and Wisconsin scored highest—eight out of 10…

(Editor’s note: Italics added for emphasis)

“There continue to be persistent gaps in the country’s ability to respond to health emergencies, ranging from bioterrorist threats to serious disease outbreaks to extreme weather events.”

I’m not surprised. Just one more reason preparedness makes an awful lot of sense these days.

Illinois, where I currently live, received a score of 5 out of 10 possible points in the report.

Boo!

Wisconsin, where I’m planning on moving to down the road, received 8 out of a possible 10 points (as noted in the report).

Nice.

You can read Ready or Not? in its entirety here on the RWJF website or here on the TFAH site.

Tags: bioterrorism, diseases, Illinois, Kansas, Maryland, Mississippi, Montana, North Carolina, public health, public health emergencies, public health preparedness, Ready or Not?, Robert Wood Johnson Foundation, RWJF, severe weather, TFAH, Trust for America’s Health, Vermont, Wisconsin

Jim Rogers Talks About Potential Investment Opportunities In Commodities, His Portfolio

I don’t like to buy things that are moving up. I like to buy things that are moving down… I don’t want to buy anything for a 5 to 10 percent move- that’s not the way I invest. Now, there are many short-term traders who make brilliant amounts of money as short-term traders and a 5 or 10 percent move up is great for them. It’s not my way of investing. I like to find things that are going to go up for many years and go up many many percentages.

-Investor Jim Rogers, on CNBC Awaaz (India) in early September

Legendary investor Jim Rogers recently appeared on the Indian financial news channel CNBC Awaaz. On their Market Leaders show, Rogers talked primarily about commodities, potential investment opportunities in hard assets, and what his portfolio looks like these days.

When asked if the commodities bully market is over, the Singapore-based investor who correctly predicted its beginning back in 1999 told viewers:

Oh no no no, not at all. It will be over eventually. It will be over someday. All bull markets have come to an end. But Gorica (spelling?), it will not come to an end until a lot of supply comes on-stream.

On the topic of supply, Rogers said:

I don’t expect world economic conditions to get better anytime soon. I would suspect that 2013 and 2014 will see worse economic conditions after the American election is over, and after the German election is over. I think you’ll see worse conditions. Which means, of course, that there’s not much supply. Now Gorica, if the world economy gets better, then obviously they are going to be shortages of commodities because we don’t have much supply. But, let’s assume I’m right, and the world economy doesn’t get better, then you’re going to have most governments printing a lot of money- that’s not good for the world. But unfortunately, that’s what politicians do. And when people debase currencies, when they print money, the way to protect yourself is to own real assets.

The creator of the Rogers International Commodities Index (RICI) back in 1998 said there were potential investment opportunities in agriculture, precious metals, and crude oil. On agriculture, Rogers said:

If I were an investor looking to invest in commodities, I would start by looking at the things that are most depressed…

Sugar, for instance, is 65 or 70 percent below it’s all-time high… You know, sugar is down 65 to 70 percent from where it was 38 years ago Gorica. That’s astonishing…

Cotton had a big run-up two or three years ago. Made all-time highs. It has come down sharply since then because people planted more cotton. But I would be optimistic about cotton because the prices are down dramatically from where they were. They still are not high enough to bring in lots of new production yet. The world economy has not collapsed yet. China is a net importer of cotton. So, I would be looking favorably at cotton. If someone were looking for a potential place for new investments in agriculture, I would suggest cotton as a place to start looking, because the prices are down from historic highs.

Regarding precious metals, the Chairman of Rogers Holdings repeated a lot of what he’s been saying lately about gold. Rogers said:

I own gold. I am not selling gold. Whenever gold goes down, I buy more. If it goes down a lot, I hope I’m smart enough to buy a lot more, because the price is going to go up much higher over the next decade. Gorica, politicians around the world are printing a lot of money. That’s the wrong thing to do but that’s what they’re doing. And whenever they print money, the way to protect yourself is to own gold, silver, platinum, palladium. Any precious item will protect you in periods like that.

The former investing partner of George Soros likes the prospects of silver more than gold. Rogers explained:

Well, of the two, if I had to buy one today, Gorica, I would buy silver… Silver is about 40 percent below its all-time high. Gold is about 10 or 15 percent below its all-time high. I usually prefer the things that are cheaper. I’m not buying either today, but if I were buying one today, Gorica, I would buy silver on a valuation basis. I own them both. I’m keen on both. Both will go much higher over the next decade. Silver, at the moment, happens to be the cheaper of the two.

The commodities guru sees crude oil going over $150 a barrel in the coming decade. Rogers told viewers:

If America goes to war with Iran, crude’s going to go to $200. If Spain goes bankrupt next month, or somebody, some big surprise occurs in the market, then crude could go to $80 or $70. Who knows where it would go with some sort of sudden bankruptcy. It depends on world conditions. When crude goes down, I buy more. If it goes up, I sit and watch, because I do know that crude is going to go over $150, over $200 a barrel- U.S. dollars a barrel- over the course of the decade…

But I own it, and I don’t plan to sell it for a long time to come.

Talking about his investment portfolio, Jim Rogers revealed:

I mainly am long commodities and long currencies. And I’m short stocks in my portfolio…

I happen to be very bullish on commodities. I think I know what I’m doing. I think that the big shortages are developing, as I said. Whether the economy gets better or doesn’t get better, I want to have my money in commodities.

Great interview.

“Market Leaders: Jim Rogers”
YouTube Video

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Tags: cotton, cotton prices, crude oil, crude oil prices, gold, gold prices, Iran, Jim Rogers, palladium, platinum, silver, silver prices, Spain, sugar, sugar prices

Peter Schiff Claims QE3 Attempt To Inflate Another Housing Bubble, Shares Investment Advice

Anyone who’s visited Survival And Prosperity over the last two weeks probably noticed all the housekeeping items and other topics besides finance I’ve been blogging about. Whew! Time to move on. And who better to get back on track with as it concerns economics, finance, and investing than one of the original “crash prophets,” Peter Schiff. In his September 14 entry on the The Schiff Report YouTube video blog, Schiff, who correctly-predicted the bursting of the U.S. housing bubble and 2008 global economic crisis, explained to viewers what QE3 was really about:

This is the plan that Ben Bernanke has. Ben Bernanke’s plan to revive the U.S. economy, and create jobs, is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy, that the Fed wants an encore…

How is another housing bubble going to solve anything. Now one thing that Ben Bernanke hasn’t figured out yet- it ain’t gonna work. No matter how much he tries, no matter how much air he blows in to that housing market, he’s not going to reflate that bubble. There are simply too many holes in it, and there is no precedent for relating a busted bubble. More likely, all that cheap money is going to go someplace else…

So where is all this money going to go? Commodities. It’s going to go to gold. It’s going to go to silver. It’s going to go into oil. It’s going to go into agriculture. It is not going to make the economy better. It’s going to make the economy worse. It’s not going to create jobs. But what it is going to create is a higher cost of living for everybody, whether you have a job or whether you’re unemployed. And believe me, if people are spending more money on food, and more money on energy, they’re not going to have any extra money left over for discretionary spending. None of this is going to work.

The President/Chief Global Strategist of Euro Pacific Capital and CEO of Euro Pacific Precious Metals shared the following investment advice:

You’ve got to look through all this smoke. You got to buy gold, buy silver. Get out of dollars. Get out while you can. Get into real things. Own stocks outside the United States, in currencies with dividends and income that are not U.S. dollars.

This is the most important thing that you can probably do. You’ve got to save yourself first if we’re going to save our country… We’re going to go over a real fiscal cliff. We have a real crisis coming because of the Fed, but we’ve got to protect ourselves.

“Operation Screw: The Fed goes all-in on QE”
YouTube Video

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Tags: Ben Bernanke, crude oil, dividends, foreign currencies, foreign stocks, gold, housing bubble, Peter Schiff, QE3, silver, U.S. dollar

Post Number 1,000

Well here we are.

Post number 1,000 on Survival And Prosperity, “Protecting and Growing Self and Wealth in These Uncertain Times.”

It feels like it was only yesterday when I launched this successor to Boom2Bust.com, “The Most Hated Blog On Wall Street.” In fact, it’s been almost 22 months since its debut. My how time flies. Especially when bad economic news keeps piling on. The Pollyanna gang might argue that Keynesian strategies pursued by Washington and the Fed successfully ended the “Great Recession” and have put the United States on a sustainable path to recovery. I’m of the approach that when a lot of money is poured into the financial system you’re bound to see some sort of pick-up in activity. At least initially. And, as we’ve witnessed, only temporarily, as more “stimulus” is required to keep the whole thing afloat.

But where has that left the country? As of last week, over $16 trillion in debt. And on the verge of yet another “quantitative easing.” And anyone who really believes debt doesn’t matter is in for a rude awakening when the nation’s “financial reckoning day” finally does arrives.

Since the launch of Boom2Bust.com back in May 2007, I’ve been warning about a coming U.S. financial crash. As much as some might credit me for calling it, the maelstrom that blew through the U.S. and global economies back in the fall of 2008 was only a part of the collapse that I still see heading our way. Somewhat surprisingly, Washington and the Fed have managed to “kick the can down the road” for the time being. But the road only goes so far. Will the crash happen all it once, or will it be drawn out over several years? I don’t know. I just know that my interpretation of the available data leads me to believe its coming.

To complicate matters, these days Americans must take into account other threats besides an economic crash. Depending on what one believes, these could include:

• Global warming
• Nuclear terrorism
• Overpopulation
• Pandemic
• Peak oil production
• Resource shortages
• Solar flares

There are others. Nevertheless, a lot of threats exist these days which endanger our survival and prosperity.

So in 2012, are we looking at the end of the world? Probably not. But most likely the end of the world as we know it (TEOTWAWKI), particularly as it relates to the U.S. economy and larger financial system. Accordingly, life in America is about to get a whole lot tougher for most (if it already hasn’t). A number of really smart individuals who predicted the 2008 global economic crisis and “Great Recession” suggest we could see:

• Civil strife, including rioting and looting
• Currency controls
• Hyperinflation
• Martial law
• Much higher taxes and fees
• Rampant crime
• “Second Great Depression”

There’s more, but I think you get the picture.

Despite all this, I must remind you that I’m not talking about the end of the world here. Remember, even at its worst unemployment during the Great Depression ran somewhere around 25 percent. While that really sucked for those without a job, not everyone found themselves in a soup kitchen line. The economy and society, though hobbled, still functioned.

I’m a big believer that, despite the coming crash, things will turn out okay for America in the long-run.

I also believe that focusing on one’s personal and financial safety and growth right now will go a long way in helping you and your loved ones come out on the other side of the approaching storm in reasonably good shape.

Wishing you all the best now, and down the rocky road I see in store for us,

Christopher E. Hill
Editor

Tags: crude oil, currency controls, food shortages, global warming, Great Depression, hyperinflation, looting, martial law, nuclear terrorism, overpopulation, pandemic, peak oil, peak oil production, rioting, Second Great Depression, solar flares, space weather, unemployment, water shortages

Citigroup: Saudi Arabia To Stop Exporting Oil By 2030

The International Energy Agency has released its World Energy Outlook for 2010, forecasting for the first time that the global crude oil production peak that so many have long feared, has in fact already been reached-more than four years ago.

-Reuters.com, November 18, 2010

Here’s something you probably won’t hear through many of the mainstream media outlets in the United States. Ambrose Evans-Pritchard wrote on The Telegraph (UK) website yesterday:

If Citigroup is right, Saudi Arabia will cease to be an oil exporter by 2030, far sooner than previously thought.

A 150-page report by Heidy Rehman on the Saudi petrochemical industry should be sober reading for those who think that shale oil and gas have solved our global energy crunch…

From Heidy Rehman at Citi:

• Saudi Arabia Could be an Oil Importer by ~2030 — Saudi Arabia is the world’s largest oil producer (11.1mbpd) & exporter (7.7mbpd). It also consumes 25% of its production. Energy consumption per capita exceeds that of most industrial nations. Oil & its derivatives account for ~50% of Saudi’s electricity production, used mostly (>50%) for residential use. Peak power demand is growing by ~8%/yr. Our analysis shows that if nothing changes Saudi may have no available oil for export by 2030…

(Editor’s note: Italics added for emphasis)

Last year, confidential cables between the U.S. Embassy in Riyadh, Saudi Arabia, and Washington, D.C., that were released by WikiLeaks suggested Saudi Arabian oil reserves may be overstated. John Vidal wrote on The Guardian (UK) website back on February 8, 2011:

The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%…

According to the cables, which date between 2007-09, [geologist and former head of exploration at the Saudi oil monopoly Aramco Sadad] Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point.

(Editor’s note: Italics added for emphasis)

Plenty of crude oil for everyone. Nothing to see here. Move along…

Sources:

Evans-Pritchard, Ambrose. “Saudi oil well dries up.” The Telegraph. 5 Sep. 2012. (http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100019812/saudi-oil-well-dries-up/). 6 Sep. 2012.

Vidal, John. “WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices.” The Guardian. 8 Feb. 2011. (http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks). 6 Sep. 2012.

Tags: Citigroup, crude oil, crude oil reserves, Heidy Rehman, peak oil production, Saudi Arabia, WikiLeaks

Texas Family Preps For ‘Very Human Stupidity And Desperation’

Speaking of self-reliance and Texas this morning, I happened to stumble on an interesting article about a McAllen prepper family by their local newspaper. Madeleine Smith wrote on The Monitor website Monday:

The Sepúlvedas are by all appearances an average family. They have a house filled with the warmth and bustle of three kids and the family dog. Their home is tasteful and modern, looking for all the world like a normal, suburban abode — but not every home has a secret room. The Sepúlvedas (we’ll call them Raul and Marissa) are what are known as “preppers,”— people who are stocking up for the collapse of civilization, or the end of the world as we know it…

Note what dad “Raul” Sepúlvedas had to say about why they prep:

“We’re not prepping just because it’s 2012 — we are preparing for very human stupidity and desperation,” Raul says seriously. “Whenever there’s a hurricane or things like that, within an hour, the stores are cleared out. If you were in trouble, if your kids were hungry and you knew the people across the street had food, you would try to get some for your family. It’s human nature. People go a little crazy during scary events — it’s just smart to be prepared.”

“Very human stupidity and desperation.” No shortage of that these days, right? And leave it to some emergency or disaster for it to really shine through in a lot of people.

You can read the entire article on The Monitor website here.

Tags: McAllen, preppers, survivalists, Texas

‘Doomsday Preppers’ Discuss Buying Abandoned Missile Bases

I’ve always been fascinated by those hardened underground complexes built to house, service, and launch our nation’s intercontinental ballistic missiles. So I found it extremely interesting that preppers Ed Peden and his spouse, Dianna Ricke-Peden, who were featured in episode 7 of the National Geographic Channel TV series Doomsday Preppers, owned a company that sold abandoned missile base properties. I wrote about the couple back on March 19:

Ed and Dianna Peden live in a decommissioned Atlas missile site west of Topeka, Kansas. Ed, a retired teacher, first became interested in the complex back in the eighties when the specter of nuclear war hovered over the world…

According to the show, the missile base cost $4 million to build in 1960. Ed bought it in the eighties for $40,000. Like the Rogers family, Dianna and Ed plan on bugging-in, closing their 20-inch-thick blast-proof front door to the outside. Stocked with 12 months of food and supplies, the Peden’s renovated 20,000 square-foot bunker is very secure with its 18-inch-thick walls, an 8-foot tall steel and barbed-wire perimeter fence, a recently-installed automatic gate, and a new 360-degree security camera system.

And just this morning, I came across a video of these “Doomsday Preppers” that was posted on the CNN Money website yesterday in which Ed and Dianna talk about their business selling decommissioned missile sites and the tremendous interest these days in buying such properties. It turns out that getting a mortgage for these underground bunkers can be a real challenge. Interesting stuff:

Tags: Dianna Peden, Dianna Ricke-Peden, Doomsday Preppers, Doomsday Preppers episode 7, Doomsday Preppers TV series, Doomsday Preppers TV show, Ed Peden, missile bases, nuclear war, underground bunkers, underground shelters

Jim Rogers Sees Civil Strife Coming To America

Yesterday, MarketWatch ran a WSJ Live News Hub video in which well-known investor Jim Rogers appeared and talked about a number of topics. The Chairman of Rogers Holdings suspects social unrest of the type seen in Europe will eventually come to our shores:

NEWS HUB: So when we saw pictures in Greece of fire bombings and of stones being thrown and the police in running battles- do you expect to see that here in the U.S.? Maybe down here in New York City.

ROGERS: We saw it in London. We’ve seen it in several countries in Europe in the last year or two. Yes, I expect to see it here too. If you don’t then you should look out the window.

The former investing partner of George Soros predicts inflation in the United States will get worse:

NEWS HUB: So, what do you worry about particularly with inflation? Do you think inflation here in the U.S. is going to get out of control? Do you think the Fed will be unable to control it and keep it under wraps?

ROGERS: Absolutely. They’ve been printing staggering amounts of money. They taken staggering amounts of debt onto their balance sheet- much of it is garbage. The federal government is spending huge amounts of money they don’t have. We have inflation in the U.S.- it’s going to get worse, Simon.

The Singapore-based investor who correctly predicted the commodity bull market that began in 1999 still likes hard assets:

NEWS HUB: Where are you putting your money?

ROGERS: I mainly own raw materials- natural resources- because in times of inflation… Well, let’s put it this way. If the economy gets better, there’s going to be shortages of those raw materials and I’m going to make money. If the economy doesn’t get better Simon, then they’re going to print a lot more money. Mr. Bernanke doesn’t know anything else to do except print money. And throughout history, when governments have debased the currency, you protect yourself by owning real assets. Whether it’s silver, or rice, or whatever it happens to be.

On gold and crude oil, Rogers said he owns both of them. Despite the precious metal’s recent consolidation in price, he said:

I’m not selling my gold by any stretch of the imagination.

And the creator of the Rogers International Commodities Index (RICI) back in 1998 thinks highly of crude oil. From the exchange:

The surprise with oil is going to be how high it stays, and how high it goes. Simon, the International Energy Agency has done a study. The world’s known reserves of oil are in steady decline. We have to find a lot of oil or the price of oil is going to go to unheard of heights.

It’s a great interview. And there’s much more I didn’t touch on, including what Rogers thinks about the upcoming presidential election in November.

“Jim Rogers on Markets, Economy and China”
MarketWatch Video

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Tags: crude oil, crude oil prices, crude oil supply, gold, gold prices, IEA, International Energy Agency, Jim Rogers