Gold Up In 2008 , Where To In 2009 ?

[Nouf]

Flying, I think that gold may have seen its high for 2009 already, but given the severe recession in the worldwide jewelry market and the deflationary trend that is griping the worlds economies for the foreseeable future, I do think that gold has very possibly seen its high for the year already biggrin.gif

Oh boy..........You sure you want to make that prediction 7 days into the 1st of 12 months of 09?

I'll see you at $650 as well nouf After golds $40 loss yesterday I expected a dead cat bounce to at least $835 today but gold only managed a 80 cent dead cat bounce to $821.80. You can pretty much stick a fork in gold for a while as it is done Once gold breaks down below $810 it will be a freefall to the $770's where the next resistance level is, then the $730's and finally $682 will get taken out and gold will base in the $625-$650 area. Sorry flying the HUI chart says it all

Sorry Dude your HUI was soooooooo wrong BWAHAHAHAAH

HUI needs to get back above 300-20 with ease before i become a bullish on that sector it needs to get back above those 200 & 50 MA`s on the weekly time frame.

300-325 is an extremely tough area to crack and a soild area of resistance, if buyers of gold stocks, really want to step up to the plate now` their chance

The fact that Physical gold and the HUI are both below their respective 200DMA is still a bearish sign gold buyers need to get physical and the HUI above these levels

Edited January 17, 2009 by Nouf

[flying]

Good luck in your preservation of your wealth

Thanks You too !

That is what is nice about freedom of choice yes?

[Khun Jean]

I found this link:

http://www.powerswitch.org.uk/portal/index...79&Itemid=2

It is not a speculation about the price of gold, but something more fundamental. Especially when SHTF.

[flying]

I found this link:

http://www.powerswitch.org.uk/portal/index...79&Itemid=2

It is not a speculation about the price of gold, but something more fundamental. Especially when SHTF.

Ouch very sobering read

Thanks for the link though as he also said a lot of very good common sense things. Things only someone who has been there can remind others about.

[Nouf]

This interview is worth listing to, especially the gold buyers amongst Thai visa members

He raises some valid point, against the process of loss of confidence against Fiat currencies however his theis for gold is in both a situation of the re-inflation and severe deflation process

Frank Barbera, he makes some very valid arguments and in general i agree with most of it, i guess where i differ is the timing of any such run to buy Gold(but i will take that risk for now,)

but the flip side to any argument, if anarchy arises, and any such, loss of confidence in a fiat system, then i think we will have more problems than owning gold (but thats just my opinon)

still a very good interview, and for most i agree with the other points on the currency stabilty and the crazy games the FED is playing, but as he mentions i guess there maybe be a snapping point in the future. Alot of it is common sense.

There is other factors to consider with any currency metdown regardless if it`s the US$ such as the Bond market of that currency

There are many aspects of this cycle and knowing them in the correct order will possibly keep your wealth alot longer, we live interesting times, and its a full time job such to keep on top of it

http://www.financialsense.com/fsn/main.html

its the 1st interview, peter schiff is also on there, again, some aspects of what peter says i agree with, other points i think he is way off in his timing, such as his US$ call, but i would rather listen to peter schiff than the idiots from CNBC at least he does and common sense

Edited January 18, 2009 by Nouf

[Khun Jean]

Someone found a document from the federal reserve. It is from 1961. read it, and weep. It explains a lot about the condition the US is in now.

http://fraser.stlouisfed.org/docs/historic...06_19610405.pdf

Here: http://emsnews2.wordpress.com/2009/01/15/1...xchange-report/

and here: http://www.gata.org/node/7095

you can find some commentary of the important parts.

Edited January 20, 2009 by Khun Jean

[humbug]

thanks khun jean for the above links

link below shows manipulation of the gold and silver markets by us government and us big banks

http://seekingalpha.com/article/112535-the...d-silver-prices

Edited January 20, 2009 by humbug

[flying]

Surprising to me that gold is now going up even on days that the dollar rises.

[Khun Jean]

Can't stop a bull market.

Everyday a bank needs a bail out, more people jobless, more money poured in as debt, all reasons for gold to rise. Until the comex opens and it is pushed down again.

Just look at the graphs, almost every day between 09:00 and 10:00 NY time you see a sudden drop. It is so obvious that it is scary, because they are not afraid for consequences. There aren't any. Probably from a 'other asset'.

[Nouf]

Surprising to me that gold is now going up even on days that the dollar rises.

I would becareful of that, alot of the gold stocks are showing bearish candles if you look at the HUI you can see a bearish candle here, it`s what we call a reversal topping candle and is usually a sign of a top is near or in place,

Gold still is below $870 and is a key # if you break that it should $900, however as gold holders are usually holders of gold stocks, there is the very possible chance we see gold and gold stocks move in tandem together, so personally if your looking to make gold purchases, it might be an idea to wait till the direction is clear

$870 on Gold is a Big# as is $900

youre right strange that gold is up when the $dollar is going to the moon at the moment, but it also may be one of the last sectors, like i said before, banking stocks and alot of other stocks are already in reversal trends, i think gold/mining stocks are the last to the party

the HUI is struggling up here as it attempts to push through the 280-300 area i think you have simply ran out of buyers, the move in the DX is impressive, as the need for holding $`s is far outweighing the need for other fiat curriences, as it shows itself to be the #1 currency at the moment

The at the moment is very mucg needed regardless of its flaws, it just shows you the severity of the credit/debt problem and how the Fed has lost control

If i was a holder of gold stocks or the HUI i would be looking to sell into strength up here based on the rally we have had from November

1st rule of trading - buy low, sell high, when others are fearful you are looking to buy when others are greed you look to sell into that greed and leave the bagholders high and dry.

Thats not to say gold or Hui is a Short candidate either(needs some more work) but potenially there is risk to the downside for gold stocks, as the stock market is looking like a confirmed downtrend has now started. so it will be very interesting to see if the gold stocks take gold with it

so a good test for strngth on the yellow metal very possibly coming, up as if we are seeing new lows in the Stockmarkets we may get margin calls once more or an all out capitulation

Edited January 21, 2009 by Nouf

[flying]

Gold still is below $870 and is a key # if you break that it should $900, however as gold holders are usually holders of gold stocks, there is the very possible chance we see gold and gold stocks move in tandem together, so personally if your looking to make gold purchases, it might be an idea to wait till the direction is clear

$870 on Gold is a Big# as is $900

youre right strange that gold is up when the $dollar is going to the moon at the moment, but it also may be one of the last sectors, like i said before, banking stocks and alot of other stocks are already in reversal trends, i think gold/mining stocks are the last to the party

the HUI is struggling up here as it attempts to push through the 280-300 area i think you have simply ran out of buyers, the move in the DX is impressive, as the need for holding s is far outweighing the need for other fiat curriences, as it shows itself to be the #1 currency at the moment

The at the moment is very mucg needed regardless of its flaws, it just shows you the severity of the credit/debt problem and how the Fed has lost control

If i was a holder of gold stocks or the HUI i would be looking to sell into strength up here based on the rally we have had from November

This is a big note when I read & write about gold.

I tend to forget that many like yourself are firmly anchored in paper gold.

mining stocks etc.

The market I see is only physical & it seems very different than the rest.

I judge things more on my end by availablity & premium above spot.

Seeing prices & talking about them is one thing... Physically getting the gold in the form & denominations is I want is another.

God knows who rules the paper trade but I am sure supply & demand rules the physical trade. At least from my lowly viewpoint

[flying]

Can't stop a bull market.

Everyday a bank needs a bail out, more people jobless, more money poured in as debt, all reasons for gold to rise. Until the comex opens and it is pushed down again.

Just look at the graphs, almost every day between 09:00 and 10:00 NY time you see a sudden drop. It is so obvious that it is scary, because they are not afraid for consequences. There aren't any. Probably from a 'other asset'.

Yes I have noticed that too. I am sure that makes me paranoid in someones eyes

Have you noticed or did you know that none have been allowed to physically enter or audit Fort Knox since the 70's? Odd to say the least considering it is our reserves....or so I thought

[gregb]

If the thesis of the destruction of fiat money does happen as i stated earlier, gold will be the least of your problems as you play out Mad Max scenerio, i would take my chances with guns and tinned food.

You do yourself a disservice by assuming that fiat money breaking down implies a Mad Max scenario. That is probably the least likely scenario that may occur. Yes, law and order could break down as collapse progresses, but roving hoards on motorcycles with you protecting your stash as a lone gunman needs to stay in the realm of science fiction. No, what is likely to occur is more local authority....warlords and mafia control over small fiefdoms. And black markets will be the normal course of business. All fiat systems collapse. It is inevitable, and never except in Hollywood has it given rise to Mad Max. You probably won't really need a gun, although there is certainly nothing wrong with having one. However trying to hold off a roving hoard by yourself or with a small group is ridiculous. But you will need to pay for local mafia for protection. Physical gold is great payment mechanism.

You've obviously thought about this Nouf, so you are already ahead of a great majority of people. However, I don't believe it is possible to time the bottom as you are attempting. If you can, then you are a luckier man than I, and I wish you all the best. I do know other people who are adopting your strategy. They are fully in cash right now and waiting with an itchy trigger finger to jump out and into gold and commodities when inflation returns. I wish them the same luck I wish you.

However, there are many scenarios where this strategy simply doesn't work. For example, let's say the US Fed decides it is time for a really radical move that they know will cause panic. They won't tell you. They'll shut down all the banks and markets for a holiday, and then when they reopen, you could be destitute. And don't think that overseas markets will necessarily help you. All the central banks are cooperating, and they would clearly act in a coordinated manner on something serious. Should something horrible come, you may not have time to get out. There is a very real probability that you and my other friends who share your thinking will simply get left behind. When trust goes, it just goes and it is very difficult to get it back. You might be shocked at the speed.

In times of very serious uncertainty as we are now entering, I will not be concentrating on increasing wealth. I just want to keep from losing whatever I can. I'm not concerned if gold drops a few percent, just as I'm not concerned if it goes up. I buy when I have the money and hold it. I try and get the dips, but sometimes I've been unlucky and bought high also. Trying to time this market or even make sense of it is madness. Gold isn't a money maker, it is an insurance policy. How many people have life insurance? Do you see them get angry every day they don't die because they wasted their money? Consider that.

As for food, everyone should keep at least 2 months in the house at all times. The Australian government has advised its citizens to keep 6 months of supplies. Much to my wife's chagrin, I do try and keep the cabinets stocked. It pains her to go to the grocery store when the shelves aren't bare, but she tolerates my idiosyncrasies because she loves me. None of that is relevant to my purchase of gold.

I don't want to convince you Nouf. You have your own goals and ideas and I respect that. However, there are others out there that may be reading this thread, and they need to get a balanced perspective so they can make an informed choice.

Best of luck whatever path you choose for the coming painful times.

[flying]

You do yourself a disservice by assuming that fiat money breaking down implies a Mad Max scenario. That is probably the least likely scenario that may occur. Yes, law and order could break down as collapse progresses

You probably won't really need a gun, although there is certainly nothing wrong with having one. However trying to hold off a roving hoard by yourself or with a small group is ridiculous. But you will need to pay for local mafia for protection. Physical gold is great payment mechanism.

I for the most parts agree but would really suggest folks read what happened in other areas during a crisis.

Kuhn Jean posted this one....

http://www.powerswitch.org.uk/portal/index...79&Itemid=2

It is very good & shows what DOES happen.

That was Argentina

Here is USA when none come to help too quickly...

http://www.theplacewithnoname.com/blogs/klessons/index.html

Then also read about Iceland

I agree 100% about being prepared as best you can.

I strongly suggest some form of protection too. Anyone who thinks in a crisis everyone is a loving human is sorely mistaken.

There are some very disturbed folks who take advantage of anytime the law has their hands full. So prepare to at least protect yourself & your family if need be & hopefully that is not for a long time.

Hopefully none of this will ever come to pass but there is nothing wrong with having some extra food, protection & real money available to you if times should get rough....Why Not?

[Naam]

However, there are many scenarios where this strategy simply doesn't work. For example, let's say the US Fed decides it is time for a really radical move that they know will cause panic. They won't tell you. They'll shut down all the banks and markets for a holiday, and then when they reopen, you could be destitute. And don't think that overseas markets will necessarily help you. All the central banks are cooperating, and they would clearly act in a coordinated manner on something serious.

that's in my opinion as utopic as the Mad Max scenario. i also fail to grasp what a radical move (e.g. shutting down banks) could accomplish. declaring unilaterally one or more currencies to be worthless or devaluate them xx% requires only concerted administrative actions by governments. one of the best examples is what happened in Germany june 21, 1948 when a new currency was introduced and the old one demoted to pieces of printed paper.

[flying]

First hand account of what CAN happen after a melt down. Scary stuff.

http://www.backpackfever.com/2008/01/21/su...nomic-meltdown/

Yeah that is the one I posted above

http://www.powerswitch.org.uk/portal/index...79&Itemid=2

But a different page.

It was a good read though...very sobering.

The part about what he never got used too....The hungry kids.

[Nouf]

You do yourself a disservice by assuming that fiat money breaking down implies a Mad Max scenario. That is probably the least likely scenario that may occur. Yes, law and order could break down as collapse progresses, but roving hoards on motorcycles with you protecting your stash as a lone gunman needs to stay in the realm of science fiction.

Hello

Thanks for your comments, The Mad Max scenerio was said in Jest, of course similar circumstances can happen, and if it ever came to that, the the paradox of the world has all but changed for the worst anyhow, so that was a light hearted re-mark,

Of course i dont know what the future actually holds, but like all things in life we make choices, and live by those choices.

My stance is that we are in a deflationary period, so untill i see evidence to the contary i am a holder of Cash, as in a deflationary environment, all assets usually get destroyed

Now for your scenerio to work you have to have the break down in law and order, like what happen in Iceland, and potentially can happen in Italy, Spain, Greece, the UK??? or Ireland and Portugal, as various problems are arising

Now you are very correct to assume if we did venture into world wide anarchy as you put it, then cash overnight could be restricted, and its value worthless, same as Argentina

Of course timing is crucial to everytime, make the wrong choices you loose, make the right choices you win, simple

I am holder of Yen, Singapore $ and sterling

Obviousuly the Sterling is a problem at the moment against other currencies, but i also taken measures to reduce my living costs to hopefully combat the loss of buying power against the Baht, as i presently live in thailand its the only currency that affects me presently, but i also gain in asset deprication if i ever was to move back to the UK

And the measures you have taken are excellent choices "if" your thesis plays out.

Now in order for that to play out, you will need social arrest and a total break down of the country, be it, US or UK or any country for that matter.

Well i want to see evidence 1st, it maybe too late (but it never stopped cash being the no1 asett in the 1930`s)

The whole basis on fiat money is the willingness of society to accept it as a barter of trading goods, hence if the country has nothing to give or back its money with, its deemed to worthless, or at best at a lower rate of exchange

Now i have been around the markets for a while, so i understand peoples psychology, and use that to my advantage.

Its usually when the worst of all news is out in the Media and alot of the noise that goes with it, that we usually mark a turning point,

for ex:

The media is all over the GBP/USD, the headlines read meltdown, UK finished, The £ is finished etc, sterling has been going down for over 14 months yet now the Media want to pickup on the break of the 1992 and 1985 support levels of 137.00

you only have to look back the 1992 bottom, when sterling got booted out of the ERM to see it marked a bottom

i dont trade off the news, i use that to my advantage, i watch price action, to see where investor psychology is taking the currency

when the most bearish of news is out in the public domain such as now its usually marks a turning point, its served me well in the past, and untill that changes i see no reason to change that approach

Its the same with any asset class, supply and demand always rule, investor psychology is a useful tool in the right hands

Now untill i see the evidence of such price action i will never make irrational judgements based on a thesis that may of may or not play out

The markets are always right and any move towards the social breakdown theory i will spot 1st via the markets(i or i should say i will get wind off ) if traders are selling the US$ i will know simply watching, if traders are buying gold i will know

Of course what i cant know is a social breakdown like Iceland, or Argentian, but i can see the clues 1st hand

Another Example is the US$ strength, the media has been crying about its strength and is lost for words, the bearish respsonse is classic of psychology of investors its usually most bearish at bottoms yet many still seemed convinced of its worthless power, yet its gaing strength against all other currencies with expection to the Yen

Price action is telling you all you need to know

Now the US$ may well be toilet paper , but investor confidence is running to the US$ and thats shown in price action its the no1 currency at the moment, the price action dont lie,

We are lucky that we live in a civilization where can make choices, obviously your thesis is based on social break down, (or i should say that what it reads like to me) mine is based upoon waiting for evidence of that social breakdown

You of course may be correct, and you prosper, i may be worng and too late to do anything about that, as my cash becomes worthless, no one knows.

One thing i dont do is make judgement calls on "possible" outcomes untill i see the evidence 1st hand

Now you could be right in your thesis, and if are right, you will prosper, i will suffer, but what i wont do is try to prepare for something that may or may not happen

i will still continue on my stance, i firmly believe in "cash is king" in a deflationary environment. diversification of cash in other stronger currencies is a worthy hedge

As i have noted and mentoned in previous posts

If you beleive in the Hyper-inflation thesis, and the US$ collapse then you buy gold or assets for the upcoming collapse and social breakdown

In order for the Hyper-inflation to occurr you have to have that inflation be passed on to wages, like what happened in 1974, if you dont, you get the social breakdown and living costs got through the roof as the currency is devalued(possibly happening in the UK?)

If you dont believe in the Hyper-inflation thesis and deflation taking hold then you stay in cash, or have a hedge of different currencies, as assets come back down to the mean value of where normal bartering can begin, only then can you see a recovery take place

the only problem you can have which is a probem, is a hyper-inflation of the currency in a deflation, same as Iceland where you have had a social breakdown but credit is squeezed and recovery is very difficult

To use that as an example against the other potential countries like the US, UK, Spain etc is a poor example as the infrastructure of the UK/US is far advance than that of Iceland, as the

IMO the US is in a far superior position world wide than any country at the moment hence the investor confidence of running to treasuries

Of course thats not going to stay like that, but again i will know via the DX and the strength of the US$ and when a potenial recovery/re-inflation takes place

for that to happen you would need to see a balance of power shift in the world, again if you think thats happening at the moment then take precautions,

I personally will watch price action, so far the strength still lies in the US$ as i expect it to as move further into deflation, only when will you see signs of a world wide recovery will you see signs of weakness in the US$ (imo) as investors look to sell those US$ and move into more lucrative investments as recoveries take place

Good luck to you in the choices you make.

We live in interesting times thats for sure

Edited January 23, 2009 by Nouf

[flying]

1) when the most bearish of news is out in the public domain such as now its usually marks a turning point

2) One thing i dont do is make judgement calls on "possible" outcomes untill i see the evidence 1st hand

I think these two of your comments are at odds with one another.

Edited January 23, 2009 by flying

[gregb]

First hand account of what CAN happen after a melt down. Scary stuff.

http://www.backpackfever.com/2008/01/21/su...nomic-meltdown/

Yeah that is the one I posted above

http://www.powerswitch.org.uk/portal/index...79&Itemid=2

But a different page.

It was a good read though...very sobering.

The part about what he never got used too....The hungry kids.

This is actually from a guy named Ferfel. He has alot more stuff at his blog http://ferfal.blogspot.com

It's always good to read first hand accounts of collapsed societies to get an idea about how things might play out, but do remember that every situation will be different. Some things, such as general lawlessness, will be universal, but the exact mechanisms that any specific community adopts during a collapse will be extremely variable. Ferfel is obviously heavily into survivalism and his world view naturally reflects that bias. I am equally certain there are others in Argentina who aren't so heavily armed, but they still manage to survive through other means that Ferfel would probably consider non ideal.

Certainly the accounts I've read of the collapse of the Soviet Union did not include the individual brazenness that he describes, so I think the underlying culture has alot to say about how things will eventually play out. I would say it is safe to assume there will be some kind of break down of order and enforcement during a collapse, and that a new power structure will be created to take its place, and that new structure will be based on fear rather than laws. This seems to be a universal constant. Trying to assume more than this in my view is problematic. And, as Nouf says, this collapse is still speculative, although I personally am completely confident it is coming and it will affect the entire world. As much as I'd like to be wrong, it just seems too unlikely that a miracle will occur and save us from ourselves.

So again, my advise is to protect yourself from all eventualities. Physical gold should be a part of everyone's portfolio to a level that you personally feel comfortable. You should treat this as an insurance cost rather than an investment. As far as the original topic question of where it is heading in 2009, I've given my WAG elsewhere, but the real answer is that the question is irrelevant. Up or down, you should be holding some just in case some of these viewpoints being expressed elsewhere in this thread are proven correct.

[lannarebirth]

I could be wrong, but I'd say if Gold hasn't topped already in this latest swing move, it is within a week of doing so.

If Gold doesn't reverse today or Monday, I would say that I was wrong, and it has the potential to move higher. I still think it may reverse but we'll see soon enough.

[satiariyan]

If Gold doesn't reverse today or Monday, I would say that I was wrong, and it has the potential to move higher. I still think it may reverse but we'll see soon enough.

Spouse's on your side - lots of supportive prayers out there to make it happen. Don't worry .

[flying]

I could be wrong, but I'd say if Gold hasn't topped already in this latest swing move, it is within a week of doing so.

If Gold doesn't reverse today or Monday, I would say that I was wrong, and it has the potential to move higher. I still think it may reverse but we'll see soon enough.

With all due respect you & Vegas Vic both ( And others I dont remember ) said back when this year started that Gold was done finished for the year was Vic's word back at the beginning of the month.

Your own previous quote above shows on the 10th you said you give it a week.

Then 2 week later your back with a change ?

Lets face it this is a new mess...It is different than the old mess & this mess has its own rules.

All I know is nobody *knows* Crystal balls have been shattered

Today Gold, Silver, Oil & the dollar are up

But I will say one cyclists wrote this in 2006. Not that I follow his recommendations but he sure had some projection there since this was written in 06.

12-02-2006, 02:46 PM

Cyclist

Gold projection long term

--------------------------------------------------------------------------------

As written in June will give to the readers my perspective.

my manual charts of the Toronto gold mine index since the war 1945.

The index gave a high in 1945 ,it had a long decline

till December 1957 where the index had an all time

low of 200 and was the start of a 22 year long gold super cycle with 6 year intervals.The next lows were in December 1963,December '69,December '75 ,with a retest low in August '76 and finishing the supercycle January '80 with an index high of 6500

The low in January '82 gave another retest low in August '82.We made another low in December '87 and retested the low in Dec '88.The next projected low December '93 became a pivot point as it became a major high.

The decline that followed into a low in September '99 , retested the alltime low in October/November 2000

At this point,it was the start of the new gold super cycle.Sometimes this fall 2007 we will get a new low and the start of wave three as was the case with '63 to '69 where'68 was a cyclical top.That would bring us

to a projected cyclical top in 2011.

Crude oil runs in 13 year lows with 10 year cyclical tops. The lows '73,'86,'99,2012.The highs were '81,'91,2001,and 2011 conjuncting the 2011 high of gold.

President Dwight D. Eisenhower supported the creation of a counter-revolutionary alternative south of the seventeenth parallel. The United States supported this effort at nation-building through a series of multilateral agreements that created the Southeast Asia Treaty Organization (SEATO).

This started a long 18 year war by sending advisors in 1957 to Vietnam until 1975 ,as Bush has started the war cycle ,after the 9/11, the campaign in 2001 to do some nation building in the Middle East.

Expecting the next president of 2008 will institute the draft in 2009 as Johnson did with his presidency in 1965.

The parallel is eerie.

These are the broad strokes ,hopeful it will not come to this.

Edited January 23, 2009 by flying

[Khun Jean]

Today Gold, Silver, Oil & the dollar are up

Yes all went up. That does not happen often. Especially dollar and gold going up both. I calculate in euro's and Thai baht to makee it easier.

For that reason i just turn it around and measure everything against gold. Makes it more clear to me.

From that viewpoint the dollar and euro were down, oil and silver about the same.

[lannarebirth]

I could be wrong, but I'd say if Gold hasn't topped already in this latest swing move, it is within a week of doing so.

If Gold doesn't reverse today or Monday, I would say that I was wrong, and it has the potential to move higher. I still think it may reverse but we'll see soon enough.

With all due respect you & Vegas Vic both ( And others I dont remember ) said back when this year started that Gold was done finished for the year was Vic's word back at the beginning of the month.

Your own previous quote above shows on the 10th you said you give it a week.

Then 2 week later your back with a change ?

Lets face it this is a new mess...It is different than the old mess & this mess has its own rules.

All I know is nobody *knows* Crystal balls have been shattered

Today Gold, Silver, Oil & the dollar are up

But I will say one cyclists wrote this in 2006. Not that I follow his recommendations but he sure had some projection there since this was written in 06.

12-02-2006, 02:46 PM

Cyclist

Gold projection long term

--------------------------------------------------------------------------------

As written in June will give to the readers my perspective.

my manual charts of the Toronto gold mine index since the war 1945.

The index gave a high in 1945 ,it had a long decline

till December 1957 where the index had an all time

low of 200 and was the start of a 22 year long gold super cycle with 6 year intervals.The next lows were in December 1963,December '69,December '75 ,with a retest low in August '76 and finishing the supercycle January '80 with an index high of 6500

The low in January '82 gave another retest low in August '82.We made another low in December '87 and retested the low in Dec '88.The next projected low December '93 became a pivot point as it became a major high.

The decline that followed into a low in September '99 , retested the alltime low in October/November 2000

At this point,it was the start of the new gold super cycle.Sometimes this fall 2007 we will get a new low and the start of wave three as was the case with '63 to '69 where'68 was a cyclical top.That would bring us

to a projected cyclical top in 2011.

Crude oil runs in 13 year lows with 10 year cyclical tops. The lows '73,'86,'99,2012.The highs were '81,'91,2001,and 2011 conjuncting the 2011 high of gold.

President Dwight D. Eisenhower supported the creation of a counter-revolutionary alternative south of the seventeenth parallel. The United States supported this effort at nation-building through a series of multilateral agreements that created the Southeast Asia Treaty Organization (SEATO).

This started a long 18 year war by sending advisors in 1957 to Vietnam until 1975 ,as Bush has started the war cycle ,after the 9/11, the campaign in 2001 to do some nation building in the Middle East.

Expecting the next president of 2008 will institute the draft in 2009 as Johnson did with his presidency in 1965.

The parallel is eerie.

These are the broad strokes ,hopeful it will not come to this.

I've been in Lao for 3 weeks so really haven't tracked the board. Anyway I said "if it hasn't topped already (at 892) Dec. 27, I thought it might within the week. Until today that high held. With all due respect, please don't associate anything I may have to say with vegas vic.

I try to stay on ther right side of the trade, and when evidence shows I'm not any longer I change my view. FWIW I'm not trading it one way or the other. Perhaps you missed my calling the cyclical gold top to the hour, but the mid six figures that trade produced says it was the right call. Most are, some aren't.

Edited January 23, 2009 by lannarebirth

[flying]

Today Gold, Silver, Oil & the dollar are up

Yes all went up. That does not happen often. Especially dollar and gold going up both. I calculate in euro's and Thai baht to makee it easier.

For that reason i just turn it around and measure everything against gold. Makes it more clear to me.

From that viewpoint the dollar and euro were down, oil and silver about the same.

Interesting times indeed !

[gregb]

However, there are many scenarios where this strategy simply doesn't work. For example, let's say the US Fed decides it is time for a really radical move that they know will cause panic. They won't tell you. They'll shut down all the banks and markets for a holiday, and then when they reopen, you could be destitute. And don't think that overseas markets will necessarily help you. All the central banks are cooperating, and they would clearly act in a coordinated manner on something serious.

that's in my opinion as utopic as the Mad Max scenario. i also fail to grasp what a radical move (e.g. shutting down banks) could accomplish. declaring unilaterally one or more currencies to be worthless or devaluate them xx% requires only concerted administrative actions by governments. one of the best examples is what happened in Germany june 21, 1948 when a new currency was introduced and the old one demoted to pieces of printed paper.

You've at least zeroed in on the correct area Naam. This is indeed the big question right now. Exactly how would a default or complete instability of the USD be enacted by the financial world? You can't convince me central banks around the world would sit around and let the market do whatever it wanted. There would be interventions on a massive scale. The only things we have to go by up until this point in history are isolated collapses of individual countries like the Wiemar Republic or Argentina or Zimbabwe. This situation is orders of magnitude larger, and is hardly isolated.

The problem here is, in economic terms, the USD is simply "too big to fail". However, geology and physics tells us it MUST fail, despite what economists would wish. And the geology has the trump card. So how will this come about?

So I give you a thought experiment. You pride yourself on being an expert, or at least more experienced than most of us, in economics. Put all your experience to work, and explain to all of us in your view exactly what would happen in the event that hyperinflation is triggered in the US. Say that in the past month people have realized that the US economy is encountering massive inflation. USD start coming out of hiding, Treasuries are being sold off and Bernacke is creating digital dollars as fast as he can type to buy them up, making the situation worse. The central bankers of the world recognize the game is up.

In this situation, independent of your views on how realistic it is, what will they do? What will be the consequences? A global bank shutdown to me seems to be the obvious thing. A new emergency reserve currency for international trade being set up overnight (the composition of which is hard to predict, but possibly including gold as a component), and when the banks reopen the USD is worth say 10%-20% of what it was when they closed the week previous. Countries and insiders will be given first dibs to get out of their USD at preferred rates. This passifies China who would otherwise be in a world of hurt. But you and I, the little guys, by the time we get a chance to dump our Dollars, the value has plummeted.

Traditionally, we say this can't happen because the US has the world's largest military and can enforce their will on the rest of the world, but this period is coming to a close. The US economy can not survive the physical limits of geology in its current form, and retooling will take generations. The USD will stop being a reserve currency soon. Exactly how will this play out? That's my question. Nothing directly to do with the price of gold in 2009, so perhaps we should start a new topic if we're going to head off on this tangent. But since you brought it up, I'm curious to hear how an optimist such as yourself sees the crash of the USD playing out that would not, in your view, be "utopic".

[lannarebirth]

However, there are many scenarios where this strategy simply doesn't work. For example, let's say the US Fed decides it is time for a really radical move that they know will cause panic. They won't tell you. They'll shut down all the banks and markets for a holiday, and then when they reopen, you could be destitute. And don't think that overseas markets will necessarily help you. All the central banks are cooperating, and they would clearly act in a coordinated manner on something serious.

that's in my opinion as utopic as the Mad Max scenario. i also fail to grasp what a radical move (e.g. shutting down banks) could accomplish. declaring unilaterally one or more currencies to be worthless or devaluate them xx% requires only concerted administrative actions by governments. one of the best examples is what happened in Germany june 21, 1948 when a new currency was introduced and the old one demoted to pieces of printed paper.

You've at least zeroed in on the correct area Naam. This is indeed the big question right now. Exactly how would a default or complete instability of the USD be enacted by the financial world? You can't convince me central banks around the world would sit around and let the market do whatever it wanted. There would be interventions on a massive scale. The only things we have to go by up until this point in history are isolated collapses of individual countries like the Wiemar Republic or Argentina or Zimbabwe. This situation is orders of magnitude larger, and is hardly isolated.

The problem here is, in economic terms, the USD is simply "too big to fail". However, geology and physics tells us it MUST fail, despite what economists would wish. And the geology has the trump card. So how will this come about?

So I give you a thought experiment. You pride yourself on being an expert, or at least more experienced than most of us, in economics. Put all your experience to work, and explain to all of us in your view exactly what would happen in the event that hyperinflation is triggered in the US. Say that in the past month people have realized that the US economy is encountering massive inflation. USD start coming out of hiding, Treasuries are being sold off and Bernacke is creating digital dollars as fast as he can type to buy them up, making the situation worse. The central bankers of the world recognize the game is up.

In this situation, independent of your views on how realistic it is, what will they do? What will be the consequences? A global bank shutdown to me seems to be the obvious thing. A new emergency reserve currency for international trade being set up overnight (the composition of which is hard to predict, but possibly including gold as a component), and when the banks reopen the USD is worth say 10%-20% of what it was when they closed the week previous. Countries and insiders will be given first dibs to get out of their USD at preferred rates. This passifies China who would otherwise be in a world of hurt. But you and I, the little guys, by the time we get a chance to dump our Dollars, the value has plummeted.

Traditionally, we say this can't happen because the US has the world's largest military and can enforce their will on the rest of the world, but this period is coming to a close. The US economy can not survive the physical limits of geology in its current form, and retooling will take generations. The USD will stop being a reserve currency soon. Exactly how will this play out? That's my question. Nothing directly to do with the price of gold in 2009, so perhaps we should start a new topic if we're going to head off on this tangent. But since you brought it up, I'm curious to hear how an optimist such as yourself sees the crash of the USD playing out that would not, in your view, be "utopic".

Probably, neither one of you will be right, but its fun to guess at isn't it?

The next 100 Years

<IMG height="100%" width=99 border=0><IMG height=2 width=2 border=0>

OVERTURE

An Introduction to the American Age

Imagine that you were alive in the summer of 1900, living in London, then the capital of the world. Europe ruled the Eastern Hemisphere. There was hardly a place that, if not ruled directly, was not indirectly controlled from a European capital. Europe was at peace and enjoying unprecedented prosperity. Indeed, European interdependence due to trade and investment was so great that serious people were claiming that war had become impossible—and if not impossible, would end within weeks of beginning—because global financial markets couldn't withstand the strain. The future seemed fixed: a peaceful, prosperous Europe would rule the world.

Imagine yourself now in the summer of 1920. Europe had been torn apart by an agonizing war. The continent was in tatters. The Austro-Hungarian, Russian, German, and Ottoman empires were gone and millions had died in a war that lasted for years. The war ended when an American army of a million men intervened—an army that came and then just as quickly left. Communism dominated Russia, but it was not clear that it could survive. Countries that had been on the periphery of European power, like the United States and Japan, suddenly emerged as great powers. But one thing was certain—the peace treaty that had been imposed on Germany guaranteed that it would not soon reemerge.

Imagine the summer of 1940. Germany had not only reemerged but conquered France and dominated Europe. Communism had survived and the Soviet Union now was allied with Nazi Germany. Great Britain alone stood against Germany, and from the point of view of most reasonable people, the war was over. If there was not to be a thousand-year Reich, then certainly Europe's fate had been decided for a century. Germany would dominate Europe and inherit its empire.

Imagine now the summer of 1960. Germany had been crushed in the war, defeated less than five years later. Europe was occupied, split down the middle by the United States and the Soviet Union. The European empires were collapsing, and the United States and Soviet Union were competing over who would be their heir. The United States had the Soviet Union surrounded and, with an overwhelming arsenal of nuclear weapons, could annihilate it in hours. The United States had emerged as the global superpower. It dominated all of the world's oceans, and with its nuclear force could dictate terms to anyone in the world. Stalemate was the best the Soviets could hope for—unless the Soviets invaded Germany and conquered Europe. That was the war everyone was preparing for. And in the back of everyone's mind, the Maoist Chinese, seen as fanatical, were the other danger.

Now imagine the summer of 1980. The United States had been defeated in a seven-year war—not by the Soviet Union, but by communist North Vietnam. The nation was seen, and saw itself, as being in retreat. Expelled from Vietnam, it was then expelled from Iran as well, where the oil fields, which it no longer controlled, seemed about to fall into the hands of the Soviet Union. To contain the Soviet Union, the United States had formed an alliance with Maoist China—the American president and the Chinese chairman holding an amiable meeting in Beijing. Only this alliance seemed able to contain the powerful Soviet Union, which appeared to be surging.

Imagine now the summer of 2000. The Soviet Union had completely collapsed. China was still communist in name but had become capitalist in practice. NATO had advanced into Eastern Europe and even into the former Soviet Union. The world was prosperous and peaceful. Everyone knew that geopolitical considerations had become secondary to economic considerations, and the only problems were regional ones in basket cases like Haiti or Kosovo.

Then came September 11, 2001, and the world turned on its head again. At a certain level, when it comes to the future, the only thing one can be sure of is that common sense will be wrong. There is no magic twenty-year cycle; there is no simplistic force governing this pattern. It is simply that the things that appear to be so permanent and dominant at any given moment in history can change with stunning rapidity. Eras come and go. In international relations, the way the world looks right now is not at all how it will look in twenty years . . . or even less. The fall of the Soviet Union was hard to imagine, and that is exactly the point. Conventional political analysis suffers from a profound failure of imagination. It imagines passing clouds to be permanent and is blind to powerful, long- term shifts taking place in full view of the world.

If we were at the beginning of the twentieth century, it would be impossible to forecast the particular events I've just listed. But there are some things that could have been—and, in fact, were—forecast. For example, it was obvious that Germany, having united in 1871, was a major power in an insecure position (trapped between Russia and France) and wanted to redefine the European and global systems. Most of the conflicts in the first half of the twentieth century were about Germany's status in Europe. While the times and places of wars couldn't be forecast, the probability that there would be a war could be and was forecast by many Europeans.

The harder part of this equation would be forecasting that the wars would be so devastating and that after the first and second world wars were over, Europe would lose its empire. But there were those, particularly after the invention of dynamite, who predicted that war would now be catastrophic. If the forecasting on technology had been combined with the forecasting on geopolitics, the shattering of Europe might well have been predicted. Certainly the rise of the United States and Russia was predicted in the nineteenth century. Both Alexis de Tocqueville and Friedrich Nietzsche forecast the preeminence of these two countries. So, standing at the beginning of the twentieth century, it would have been possible to forecast its general outlines, with discipline and some luck.

The Twenty-First Century

Standing at the beginning of the twenty-first century, we need to identify the single pivotal event for this century, the equivalent of German unification for the twentieth century. After the debris of the European empire is cleared away, as well as what's left of the Soviet Union, one power remains standing and overwhelmingly powerful. That power is the United States. Certainly, as is usually the case, the United States currently appears to be making a mess of things around the world. But it's important not to be confused by the passing chaos. The United States is economically, militarily, and politically the most powerful country in the world, and there is no real challenger to that power. Like the Spanish-American War, a hundred years from now the war between the United States and the radical Islamists will be little remembered regardless of the prevailing sentiment of this time.

Ever since the Civil War, the United States has been on an extraordinary economic surge. It has turned from a marginal developing nation into an economy bigger than the next four countries combined. Militarily, it has gone from being an insignificant force to dominating the globe. Politically, the United States touches virtually everything, sometimes intentionally and sometimes simply because of its presence. As you read this book, it will seem that it is America- centric, written from an American point of view. That may be true, but the argument I'm making is that the world does, in fact, pivot around the United States.

This is not only due to American power. It also has to do with a fundamental shift in the way the world works. For the past five hundred years, Europe was the center of the international system, its empires creating a single global system for the first time in human history. The main highway to Europe was the North Atlantic. Whoever controlled the North Atlantic controlled access to Europe—and Europe's access to the world. The basic geography of global politics was locked into place.

Then, in the early 1980s, something remarkable happened. For the first time in history, transpacific trade equaled transatlantic trade. With Europe reduced to a collection of secondary powers after World War II, and the shift in trade patterns, the North Atlantic was no longer the single key to anything. Now whatever country controlled both the North Atlantic and the Pacific could control, if it wished, the world's trading system, and therefore the global economy. In the twenty-first century, any nation located on both oceans has a tremendous advantage.

Given the cost of building naval power and the huge cost of deploying it around the world, the power native to both oceans became the preeminent actor in the international system for the same reason that Britain dominated the nineteenth century: it lived on the sea it had to control. In this way, North America has replaced Europe as the center of gravity in the world, and whoever dominates North America is virtually assured of being the dominant global power. For the twenty-first century at least, that will be the United States.

The inherent power of the United States coupled with its geographic position makes the United States the pivotal actor of the twenty-first century. That certainly doesn't make it loved. On the contrary, its power makes it feared. The history of the twenty-first century, therefore, particularly the first half, will revolve around two opposing struggles. One will be secondary powers forming coalitions to try to contain and control the United States. The second will be the United States acting preemptively to prevent an effective coalition from forming.

If we view the beginning of the twenty-first century as the dawn of the American Age (superseding the European Age), we see that it began with a group of Muslims seeking to re- create the Caliphate—the great Islamic empire that once ran from the Atlantic to the Pacific. Inevitably, they had to strike at the United States in an attempt to draw the world's primary power into war, trying to demonstrate its weakness in order to trigger an Islamic uprising. The United States responded by invading the Islamic world. But its goal wasn't victory. It wasn't even clear what victory would mean. Its goal was simply to disrupt the Islamic world and set it against itself, so that an Islamic empire could not emerge.

The United States doesn't need to win wars. It needs to simply disrupt things so the other side can't build up sufficient strength to challenge it. On one level, the twenty-first century will see a series of confrontations involving lesser powers trying to build coalitions to control American behavior and the United States' mounting military operations to disrupt them. The twenty-first century will see even more war than the twentieth century, but the wars will be much less catastrophic, because of both technological changes and the nature of the geopolitical challenge.

As we've seen, the changes that lead to the next era are always shockingly unexpected, and the first twenty years of this new century will be no exception. The U.S.–Islamist war is already ending and the next conflict is in sight. Russia is re-creating its old sphere of influence, and that sphere of influence will inevitably challenge the United States. The Russians will be moving westward on the great northern European plain. As Russia reconstructs its power, it will encounter the U.S.-dominated NATO in the three Baltic countries—Estonia, Latvia, and Lithuania—as well as in Poland. There will be other points of friction in the early twenty-first century, but this new cold war will supply the flash points after the U.S.–Islamist war dies down.

The Russians can't avoid trying to reassert power, and the United States can't avoid trying to resist. But in the end Russia can't win. Its deep internal problems, massively declining population, and poor infrastructure ultimately make Russia's long- term survival prospects bleak. And the second cold war, less frightening and much less global than the first, will end as the first did, with the collapse of Russia.

There are many who predict that China is the next challenger to the United States, not Russia. I don't agree with that view for three reasons. First, when you look at a map of China closely, you see that it is really a very isolated country physically. With Siberia in the north, the Himalayas and jungles to the south, and most of China's population in the eastern part of the country, the Chinese aren't going to easily expand. Second, China has not been a major naval power for centuries, and building a navy requires a long time not only to build ships but to create well-trained and experienced sailors.

Third, there is a deeper reason for not worrying about China. China is inherently unstable. Whenever it opens its borders to the outside world, the coastal region becomes prosperous, but the vast majority of Chinese in the interior remain impoverished. This leads to tension, conflict, and instability. It also leads to economic decisions made for political reasons, resulting in inefficiency and corruption. This is not the first time that China has opened itself to foreign trade, and it will not be the last time that it becomes unstable as a result. Nor will it be the last time that a figure like Mao emerges to close the country off from the outside, equalize the wealth—or poverty—and begin the cycle anew. There are some who believe that the trends of the last thirty years will continue indefinitely. I believe the Chinese cycle will move to its next and inevitable phase in the coming decade. Far from being a challenger, China is a country the United States will be trying to bolster and hold together as a counterweight to the Russians. Current Chinese economic dynamism does not translate into long-term success.

In the middle of the century, other powers will emerge, countries that aren't thought of as great powers today, but that I expect will become more powerful and assertive over the next few decades. Three stand out in particular. The first is Japan. It's the second- largest economy in the world and the most vulnerable, being highly dependent on the importation of raw materials, since it has almost none of its own. With a history of militarism, Japan will not remain the marginal pacifistic power it has been. It cannot. Its own deep population problems and abhorrence of large- scale immigration will force it to look for new workers in other countries. Japan's vulnerabilities, which I've written about in the past and which the Japanese have managed better than I've expected up until this point, in the end will force a shift in policy.

Then there is Turkey, currently the seventeenth-largest economy in the world. Historically, when a major Islamic empire has emerged, it has been dominated by the Turks. The Ottomans collapsed at the end of World War I, leaving modern Turkey in its wake. But Turkey is a stable platform in the midst of chaos. The Balkans, the Caucasus, and the Arab world to the south are all unstable. As Turkey's power grows—and its economy and military are already the most powerful in the region—so will Turkish influence.

Finally there is Poland. Poland hasn't been a great power since the sixteenth century. But it once was—and, I think, will be again. Two factors make this possible. First will be the decline of Germany. Its economy is large and still growing, but it has lost the dynamism it has had for two centuries. In addition, its population is going to fall dramatically in the next fifty years, further undermining its economic power. Second, as the Russians press on the Poles from the east, the Germans won't have an appetite for a third war with Russia. The United States, however, will back Poland, providing it with massive economic and technical support. Wars—when your country isn't destroyed—stimulate economic growth, and Poland will become the leading power in a coalition of states facing the Russians.

Japan, Turkey, and Poland will each be facing a United States even more confident than it was after the second fall of the Soviet Union. That will be an explosive situation. As we will see during the course of this book, the relationships among these four countries will greatly affect the twenty-first century, leading, ultimately, to the next global war. This war will be fought differently from any in history—with weapons that are today in the realm of science fiction. But as I will try to outline, this mid-twenty-first century conflict will grow out of the dynamic forces born in the early part of the new century.

Tremendous technical advances will come out of this war, as they did out of World War II, and one of them will be especially critical. All sides will be looking for new forms of energy to substitute for hydrocarbons, for many obvious reasons. Solar power is theoretically the most efficient energy source on earth, but solar power requires massive arrays of receivers. Those receivers take up a lot of space on the earth's surface and have many negative environmental impacts—not to mention being subject to the disruptive cycles of night and day. During the coming global war, however, concepts developed prior to the war for space- based electrical generation, beamed to earth in the form of microwave radiation, will be rapidly translated from prototype to reality. Getting a free ride on the back of military space launch capability, the new energy source will be underwritten in much the same way as the Internet or the railroads were, by government support. And that will kick off a massive economic boom.

But underlying all of this will be the single most important fact of the twenty-first century: the end of the population explosion. By 2050, advanced industrial countries will be losing population at a dramatic rate. By 2100, even the most underdeveloped countries will have reached birthrates that will stabilize their populations. The entire global system has been built since 1750 on the expectation of continually expanding populations. More workers, more consumers, more soldiers—this was always the expectation. In the twenty-first century, however, that will cease to be true. The entire system of production will shift. The shift will force the world into a greater dependence on technology—particularly robots that will substitute for human labor, and intensified genetic research (not so much for the purpose of extending life but to make people productive longer).

What will be the more immediate result of a shrinking world population? Quite simply, in the first half of the century, the population bust will create a major labor shortage in advanced industrial countries. Today, developed countries see the problem as keeping immigrants out. Later in the first half of the twenty-first century, the problem will be persuading them to come. Countries will go so far as to pay people to move there. This will include the United States, which will be competing for increasingly scarce immigrants and will be doing everything it can to induce Mexicans to come to the United States—an ironic but inevitable shift.

These changes will lead to the final crisis of the twenty-first century. Mexico currently is the fifteenth-largest economy in the world. As the Europeans slip out, the Mexicans, like the Turks, will rise in the rankings until by the late twenty-first century they will be one of the major economic powers in the world. During the great migration north encouraged by the United States, the population balance in the old Mexican Cession (that is, the areas of the United States taken from Mexico in the nineteenth century) will shift dramatically until much of the region is predominantly Mexican.

The social reality will be viewed by the Mexican government simply as rectification of historical defeats. By 2080 I expect there to be a serious confrontation between the United States and an increasingly powerful and assertive Mexico. That confrontation may well have unforeseen consequences for the United States, and will likely not end by 2100.

Much of what I've said here may seem pretty hard to fathom. The idea that the twenty-first century will culminate in a confrontation between Mexico and the United States is certainly hard to imagine in 2009, as is a powerful Turkey or Poland. But go back to the beginning of this chapter, when I described how the world looked at twenty-year intervals during the twentieth century, and you can see what I'm driving at: common sense is the one thing that will certainly be wrong. Obviously, the more granular the description, the less reliable it gets. It is impossible to forecast precise details of a coming century—apart from the fact that I'll be long dead by then and won't know what mistakes I made.

But it's my contention that it is indeed possible to see the broad outlines of what is going to happen, and to try to give it some definition, however speculative that definition might be. That's what this book is about.

Forecasting a Hundred Years Ahead

Before I delve into any details of global wars, population trends, or technological shifts, it is important that I address my method—that is, precisely how I can forecast what I do. I don't intend to be taken seriously on the details of the war in 2050 that I forecast. But I do want to be taken seriously in terms of how wars will be fought then, about the centrality of American power, about the likelihood of other countries challenging that power, and about some of the countries I think will—and won't—challenge that power.

And doing that takes some justification. The idea of a U.S.–Mexican confrontation and even war will leave most reasonable people dubious, but I would like to demonstrate why and how these assertions can be made. One point I've already made is that reasonable people are incapable of anticipating the future. The old New Left slogan "Be Practical, Demand the Impossible" needs to be changed: "Be Practical, Expect the Impossible." This idea is at the heart of my method. From another, more substantial perspective, this is called geopolitics.

Geopolitics is not simply a pretentious way of saying "international relations." It is a method for thinking about the world and forecasting what will happen down the road. Economists talk about an invisible hand, in which the self-interested, short-term activities of people lead to what Adam Smith called "the wealth of nations." Geopolitics applies the concept of the invisible hand to the behavior of nations and other international actors. The pursuit of short-term self-interest by nations and by their leaders leads, if not to the wealth of nations, then at least to predictable behavior and, therefore, the ability to forecast the shape of the future international system.

Geopolitics and economics both assume that the players are rational, at least in the sense of knowing their own short-term self-interest. As rational actors, reality provides them with limited choices. It is assumed that, on the whole, people and nations will pursue their self-interest, if not flawlessly, then at least not randomly. Think of a chess game. On the surface, it appears that each player has twenty potential opening moves. In fact, there are many fewer because most of these moves are so bad that they quickly lead to defeat. The better you are at chess, the more clearly you see your options, and the fewer moves there actually are available. The better the player, the more predictable the moves. The grandmaster plays with absolute predictable precision—until that one brilliant, unexpected stroke.

Nations behave the same way. The millions or hundreds of millions of people who make up a nation are constrained by reality. They generate leaders who would not become leaders if they were irrational. Climbing to the top of millions of people is not something fools often do. Leaders understand their menu of next moves and execute them, if not flawlessly, then at least pretty well. An occasional master will come along with a stunningly unexpected and successful move, but for the most part, the act of governance is simply executing the necessary and logical next step. When politicians run a country's foreign policy, they operate the same way. If a leader dies and is replaced, another emerges and more likely than not continues what the first one was doing.

I am not arguing that political leaders are geniuses, scholars, or even gentlemen and ladies. Simply, political leaders know how to be leaders or they wouldn't have emerged as such. It is the delight of all societies to belittle their political leaders, and leaders surely do make mistakes. But the mistakes they make, when carefully examined, are rarely stupid. More likely, mistakes are forced on them by circumstance. We would all like to believe that we— or our favorite candidate—would never have acted so stupidly. It is rarely true. Geopolitics therefore does not take the individual leader very seriously, any more than economics takes the individual businessman too seriously. Both are players who know how to manage a process but are not free to break the very rigid rules of their professions.

Politicians are therefore rarely free actors. Their actions are determined by circumstances, and public policy is a response to reality. Within narrow margins, political decisions can matter. But the most brilliant leader of Iceland will never turn it into a world power, while the stupidest leader of Rome at its height could not undermine Rome's fundamental power. Geopolitics is not about the right and wrong of things, it is not about the virtues or vices of politicians, and it is not about foreign policy debates. Geopolitics is about broad impersonal forces that constrain nations and human beings and compel them to act in certain ways.

The key to understanding economics is accepting that there are always unintended consequences. Actions people take for their own good reasons have results they don't envision or intend. The same is true with geopolitics. It is doubtful that the village of Rome, when it started its expansion in the seventh century BC, had a master plan for conquering the Mediterranean world five hundred years later. But the first action its inhabitants took against neighboring villages set in motion a process that was both constrained by reality and filled with unintended consequences. Rome wasn't planned, and neither did it just happen.

Geopolitical forecasting, therefore, doesn't assume that everything is predetermined. It does mean that what people think they are doing, what they hope to achieve, and what the final outcome is are not the same things. Nations and politicians pursue their immediate ends, as constrained by reality as a grandmaster is constrained by the chessboard, the pieces, and the rules. Sometimes they increase the power of the nation. Sometimes they lead the nation to catastrophe. It is rare that the final outcome will be what they initially intended to achieve.

Geopolitics assumes two things. First, it assumes that humans organize themselves into units larger than families, and that by doing this, they must engage in politics. It also assumes that humans have a natural loyalty to the things they were born into, the people and the places. Loyalty to a tribe, a city, or a nation is natural to people. In our time, national identity matters a great deal. Geopolitics teaches that the relationship between these nations is a vital dimension of human life, and that means that war is ubiquitous. Second, geopolitics assumes that the character of a nation is determined to a great extent by geography, as is the relationship between nations. We use the term geography broadly. It includes the physical characteristics of a location, but it goes beyond that to look at the effects of a place on individuals and communities. In antiquity, the difference between Sparta and Athens was the difference between a landlocked city and a maritime empire. Athens was wealthy and cosmopolitan, while Sparta was poor, provincial, and very tough. A Spartan was very different from an Athenian in both culture and politics.

If you understand those assumptions, then it is possible to think about large numbers of human beings, linked together through natural human bonds, constrained by geography, acting in certain ways. The United States is the United States and therefore must behave in a certain way. The same goes for Japan or Turkey or Mexico. When you drill down and see the forces that are shaping nations, you can see that the menu from which they choose is limited.

The twenty-first century will be like all other centuries. There will be wars, there will be poverty, there will be triumphs and defeats. There will be tragedy and good luck. People will go to work, make money, have children, fall in love, and come to hate. That is the one thing that is not cyclical. It is the permanent human condition. But the twenty-first century will be extraordinary in two senses: it will be the beginning of a new age, and it will see a new global power astride the world. That doesn't happen very often. We are now in an America-centric age. To understand this age, we must understand the United States, not only because it is so powerful but because its culture will permeate the world and define it. Just as French culture and British culture were definitive during their times of power, so American culture, as young and barbaric as it is, will define the way the world thinks and lives. So studying the twenty-first century means studying the United States.

If there were only one argument I could make about the twenty-first century, it would be that the European Age has ended and that the North American Age has begun, and that North America will be dominated by the United States for the next hundred years. The events of the twenty-first century will pivot around the United States. That doesn't guarantee that the United States is necessarily a just or moral regime. It certainly does not mean that America has yet developed a mature civilization. It does mean that in many ways the history of the United States will be the history of the twenty-first century.

<IMG height=1 width=31 border=0><IMG height=2 width=607 border=0><IMG height=1 width=29 border=0><IMG height=1 width=15 border=0>George Friedman -- Stratfor

[gregb]

In the twenty-first century, any nation located on both oceans has a tremendous advantage.

This is an interesting theory I haven't heard before. Unfortunately, the author seems to completely ignore the fact that it is only through extremely cheap energy that those Pacific trade routes have become available. The end of cheap energy will also necessarily diminish the importance of this position in the world, thus, defeating his argument.

As you said though, fun to guess at.

I believe the Roman Empire is a much closer analog of what we can expect to see in the future. They declined due to over reaching complexity, and resource depletion. In their case, wood. I think it makes more sense to expect a new Middle Ages springing up where localization and low energy ventures plays a much more pivotal role in human events. The original Middle Ages were terminated when the Age of Enlightenment began which catalyzed the Industrial Revolution, and the Age of Enlightenment in turn was created by the invention of banks and credit, which was itself in turn made possible by the adoption of Arabic numerals that were brought to Italy through trade routes, replacing the egregiously complex Roman system used until that time. An anachronism of the old Roman empire.

New technologies not built around oil will end the new Middle Ages in my story. This new Middle Ages will probably last several centuries while a new, non liquid fuels based infrastructure is built. Only after that period may the author's belief in the dominance of the US due to its geography come to pass. Assuming that is, that the United States doesn't break up into several countries before that time, as many suggest.

Of course, we'll all be long dead before any of this comes to pass, so absent the invention of the flux capacitor, we'll never be able to know who got it right. My immediate concerns are, how do I keep myself and my family from starving so we can give birth to the future generations who will be able to answer these questions. I intend for my DNA to be around during that period, even if I can't.

[flying]

I've been in Lao for 3 weeks so really haven't tracked the board. Anyway I said "if it hasn't topped already (at 892) Dec. 27, I thought it might within the week. Until today that high held. With all due respect, please don't associate anything I may have to say with vegas vic.

I try to stay on ther right side of the trade, and when evidence shows I'm not any longer I change my view. FWIW I'm not trading it one way or the other. Perhaps you missed my calling the cyclical gold top to the hour, but the mid six figures that trade produced says it was the right call. Most are, some aren't.

Hey LB

I m sorry I somehow missed this post.

Ok I retract & did in fact misread your post!

Also will not lump you in with VV

Were has Vegas gone to? I see he still reads & is here even today

Anyway I saw this posted by that cyclist I quoted before....

Thought it might interest Nouf

An important breakout that could spell for gold making a new high.

The product of the USD index and gold posted a breakout on Friday to a new all time high of 770 since last year's March high was 735.This is a very significant development and could spur gold to make a new high in dollar terms possibly next week or in the first week of February.

As I said I also do not invest/trade (hold physical PM's only )& only read these as they are very interesting as to how accurate he has been since 06.

Edited January 26, 2009 by flying

[Naam]

The problem here is, in economic terms, the USD is simply "too big to fail". However, geology and physics tells us it MUST fail, despite what economists would wish. And the geology has the trump card. So how will this come about?

So I give you a thought experiment. You pride yourself on being an expert, or at least more experienced than most of us, in economics. Put all your experience to work, and explain to all of us in your view exactly what would happen in the event that hyperinflation is triggered in the US. Say that in the past month people have realized that the US economy is encountering massive inflation. USD start coming out of hiding, Treasuries are being sold off and Bernacke is creating digital dollars as fast as he can type to buy them up, making the situation worse. The central bankers of the world recognize the game is up.

i am not an expert in economics Greg. correct is that have gathered quite some knowledge in economics due to my long years of experience as an investor. nevertheless, the main reason for my rather successful career as an investor was my own pragmatic approach and not a dogmatic one which is still lectured at universities and business schools.

economics, finance and investing have no rules chiseled in stone (as opposed to my professional background physics) although the learned eggheads, especially those who represent the doom&gloom party try hard to make us believe that there are. your question (in bold above) is presently a hypothetical one and i refrain to give a comprehensive hypothetical answer because i have no idea what other -very important- factors would prevail which would influence my answer.

by the way, i have no idea why geology and physics tell us that the USD must fail although i share the pessimistic view that the USD will drastically diminish long term. on the other hand i cannot define the expression "long term" i have used and admit that i have no idea whether it will be in a couple of years or some time during the period left till my statistical demise.