Thoughts on the Dollar Carry Trade

Over at Blog O'Stuff.

Incoming Train Wreck and Gold Prices

Found on PrudentBear, via Clayton Cramer:

The rise in the gold price above $1,100 per ounce last week is a pretty good indicator that something has changed. For 18 months, the gold price had been in a trading range topping out around $1,000. It has now broken out decisively from that range. The opportunity for the world's central banks to change policy and affect the economic outcome has been lost. The world economy is now locked on to an undeviating track towards another train wreck.

At most times, the gold price is not an economically significant indicator. In 1980-2000, it declined irregularly from $850 to around $280, and movements in it seemed to have had little or no effect on the global economy. That's what you'd expect; even at $1,000 per ounce, the global production of gold is only around $100 billion annually, which would put the entire world's gold extraction industry only 17th on the Fortune 500. When Gordon Brown sold Britain's entire gold reserves in 1999, at a price below $300 per ounce, it seemed a defensible decision. I went to a meeting in 2001 hosted by a diverse group which believed that the U.S. Treasury was conspiring to suppress the gold price, and my main thought was: why would Treasury bother?

However, in relatively few periods, gold becomes of immense importance. When investors lose trust in conventional currencies, because monetary policy appears set to debauch them, gold is the immediately available safe haven. During such periods, gold's former importance as a store of value becomes uppermost in the public mind, and its price becomes a major economic indicator.

The entire article is worth reading.  In a related vein:

NEW YORK (CNNMoney.com) -- Gold prices surged to record highs yet again Monday, topping $1,139 an ounce, as investors continue to favor the precious metal over currencies like the U.S. dollar.

Gold for December delivery jumped $22.50, or 2%, to settle at a record $1,139.20 a troy ounce Monday. That easily trounces the closing price for Friday, when gold settled at its previous record of $1,116.70 an ounce.

After the close, the price continued to move even higher in electronic trading.

Link.

I don't consider myself a "gold bug."  However, a couple things caused me to revise my thinking about gold and other precious metals:

1. Comments by Fernando "FerFAL" Aguirre, author of the Surviving in Argentina blog.  He does have real-life experience with this, after all.
   
2. Second-hand comments by someone high up the food chain at a major Wall Street investment firm, relayed to me through my accountant back in the Spring.

In my opinion PMs are worth serious consideration as a prep, not necessarily as an "investment" in the sense that they'll increase in value, but rather as a hedge against inflation and/or the drop of the dollar's value against other currencies, which will cause the cost of imported goods to rise.

Edit 11/18/09 at 12:38: I should clarify number 2, above.  The discussion was not about investment advice.  Rather it was about the state of the economy then and where we thought it was heading.

"Us and Them" in a Societal Collapse

Over on Survivalblog, JWR posted a letter from a retired US Army warrant officer with experience in several real-world SHTF situations.

Having worked for the Army for 27 years in a number of different failed countries I may have a unique perspective on survival that I would like to share with your readers. I believe most of the "survivalist community" is vastly underestimating the impact that other humans are going to have on their plans. Hunkering down and waiting for everyone to die off is a simplistic plan and I believe has almost no chance of working. You may be able to hide your retreat, but you can't hide the land it sits on. That land itself may become a scarce commodity if the US transitions to an agrarian economy.

Food is the key resource. Most communities are at risk because they simply don't have enough calories stored to get them through any kind of crisis. But, storage is no more than limited capital to allow people time to grow more food. Food production requires land....if your retreat is sitting on farmable land, it will be a scarce resource.

Carrying capacity of the US using non-petroleum farming techniques is far lower than most of your readers probably think. Also, most areas of the US, especially cities, don't have anywhere near enough farm-able land to go back to some kind of agrarian pattern. Without public infrastructure and modern transportation, we are going to experience a huge die-off caused mostly by starvation. In a total collapse scenario without immediate restoration of the economy, basically everyone who lives in a city is doomed unless they can take over some kind of farm land.

Go read the whole thing.

Eotac Operator Field Jacket Review

Last Saturday I attended the Second Annual Zombie Shoot at Langhorne Rod and Gun Club.  One of the shoot sponsors was Rogue Elite, owned by my friend JY.  He gave me an Eotac Model 502 Field Jacket in Lizard camo to T&E.  The jacket is also available in OD, coyote brown, and black.

I've had a couple different kinds of field jackets/combat smocks over the years -- a couple American M-65s and a replica of a British WW2 Second Pattern Denison Smock from What Price Glory.

The M-65 field jacket design draws its roots from the M-43 field jacket that GIs wore during WW2.  It's a cotton shell with an insulating liner that buttons in.  From WW2 through the 1980s it was issued in OD green, then in woodland camo. (Commercial copies have been made in other colors and camo patterns, like black, navy, and desert camo.) It's a pretty good Winter coat, but even with the Quarpel treatment, only water repellent, not waterproof.  The M-65 has four pockets and a hood which rolls up into the collar.

The Denison smock was originally intended as a garment which could fit over a paratrooper's clothing and web gear during a drop.  It provided camo, extra pockets, and was intended to prevent the web gear from getting caught in the parachute's lines.  It also became popular with the Commandos and some officers wore them as status symbols.

The Denison has four external pockets and two internal.  WW2 Denisons have only a half zip and are thus pullover garments.  They are a shell only.  A notable feature of the Denison smocks is the "tail," which hangs down from the back and can be snapped between the wearer's legs so to prevet it from riding up during a jump.  They do not have a hood and are made from cotton twill.

The Eotac field jacket was based on a 1950s European (I believe it was French) design.  Like the Denison, it's made from 9 oz. cotton twill and is therefore somewhat wind resistant.  The fabric is preshrunk has been given a DuPont Teflon treatment to add water and stain resistance.  This won't make it waterproof but should extend the life of the fabric.  I may spray it down with Scotchguard to add a little more water repellency.

Like the Denison, the Eotac has a half zip for the top half of the front, while the lower half can be secured via snaps.  Unlike the Denison it's not a pullover, which makes donning or doffing it much easier.

What I really like about the Eotac field jacket is the number and arrangement of pockets.  There are no less than seven pockets on just the front of the jacket:

• Two cargo pockets near the bottom.
• Two more on the chest,
• Zippered Napolean pockets behind the chest bellows pockets, and
• A pen pocket sewn to the front of the left chest cargo pocket.
  

There is also a small zippered pocket with a pen slot on the top of the left sleeve.  This might be a good place for a bandage or a space blanket.  All four cargo pockets have elastic loops sewn in, which can be used for securing flashlights, pistol magazines, knives with pocket clips, etc.  The cargo pockets can be secured shut with snaps; there are two rows of snaps per pocket which you can use according to how full each pocket is.

Aside from the exterior pockets, there are also four pockets on the inside, two near the bottom and two on the chest.  These can be securely shut with Velcro straps and also have the elastic loops.


All the snaps on the cargo pockets are covered with rubber, so they don't click when they bang against something.

The cargo pockets are perfectly sized to hold a S&W J-Frame revolver in a pocket holster.  My Springfield XD-9 with a 4" barrel will fit in the cargo pockets without flopping around.  A 5" M1911 is a little too big to fit in the pockets but it looks like a Commander would fit.  The elastic loops in the pockets can be used to secure revolver reloads in a Bianchi Speed Strip.  If you're packing an autoloader, the elastic loops are sized to properly fit a double column 9mm or .40 S&W magazine or single column .45 mag.

With all these pockets one could lose track of gear you're carrying.  That said, if you keep things organized, for some who is in a situation where full "rattle battle" gear is overkill, a properly setup Eotac Field Jacket could act as a form of load bearing equipment in lieu of a combat vest.  If a situation develops where you need to investigate something around the home or farm in a hurry, a properly setup Eotac FJ would allow you to get ready quickly with a sidearm, reloads, flashlight, battle dressing, etc.

Other features of the jacket include a Mandarin collar, epaulets, a drawstring around the bottom, and elastic cuffs with adjustable snaps.

Like the Denison smock, the Eotac FJ lacks both a hood and a means of adding an insulating liner.  Of course, one can still layer, and if you have the proper size FJ, wearing it on top of a fleece jacket or vest would be a good combination down to around 30 degrees, possibly a bit colder.

So why in this age of modern fabrics like softshells would you want an old fashioned cotton field jacket?  Ruggedness, for one.  Softshells are nice (AAMOF, I have an expensive Mountain Hardware softshell), water and wind resistant.  But if you think you'll be going prone, busting through brush, or other activities which similarly abuse your clothing, it's hard to beat the tough wearing appeal of cotton.  Additionaly, compared with syntehtics, cotton breathes much better.  For example, at the aforementioned LRGC Zombie shoot where I got the Eotac FJ it rained all day, with temps in the 60s F.  I wore a set of German surplus rain gear (parka and pants).  They kept the rain off but I sweated quite a bit, so by lunchtime I was soaked anyway.  I would not have been much wetter had I worn my Denison to the shoot.

Also, it's my understanding that as long as you don't wash a cotton garment with detergent that has brightners in it, it'll be less visible through night vision gear than nylon.  One could layer the Eotac FJ over a modern technical fleece or softshell for the best of both worlds.

Finally, compared with synthetic hardshells, a cotton jacket is quite a bit quieter when you brush against foliage.

There are a couple things which would improve the Eotac FJ, in my opinion:

1. As mentioned above, a full-length, two-way zipper.  I understand the rationale behind the current half-zip, but I prefer a full length two way zipper.  I may take mine to a tailor and have it replaced.

2. A roll-up hood similar to the one on the M-65 FJ would be nice.  At least some of the current British combat smocks, descendents of the WW2 Denison smock feature this.

With those two nit-picks aside, the Eotac Field Jacket is a really nice piece of kit with excellent attention to detail.  The quality of workmanship is top-notch.  The fabric is high quality and the sewing is excellent.

Zombie Shoot and Lessons Learned

Over on Blog O'Stuff I posted an after action report for Langhorne Rod & Gun Club's Second Annual Zombie Shoot.  I posted it there since we all know zombies aren't real (Oh really?).  After my description of the stages, though, I've included some observations about gear and shooting which are relevant to preps, so check it out.

Money in War-Ravaged Iraq

I found this article from Mises.org interesting, in light of the possibble collapse of the US dollar due to government mismanagement of the economy:

There has been much ado concerning the Federal Reserve's doubling of the monetary base this past year. Many believe a currency crisis or hyperinflation of the dollar is imminent. Some go as far as to say that this crisis will destroy America.

...

In the villages, houses and boats needed to be repaired or rebuilt, roads needed attention, and parents wanted to get their children back in school. In order to do all these wonderful things, a medium of exchange was needed. Unfortunately, or fortunately, depending onhow you look at it, the villagers did not put much faith in the paper money printed by the government in Baghdad.
As this was an agrarian society the villagers turned to a time-tested medium of exchange: livestock. In the villages all households had some sheep, and the more affluent houses had very large herds. Goods were exchanged, debts repaid, and business contracts agreed upon all using sheep as money.

...

The river water, while great for crops and livestock, was not ideal for human consumption, and therefore clean drinking water became a very valuable commodity. The bottled water brought in from the larger cities was one of the most sought-after commodities in the village, and I soon noticed villagers pricing items in not only sheep, but bottles of drinking water as well.

Then there was the standard wartime medium of exchange: cigarettes. The villagers smoked cigarettes every evening with chai tea. They were bought in the cities and brought back by the truck load. As a result they were not as valuable as sheep or bottled water; however they served as small change for the villagers.

Full article.

Adapt and Improvise

(Originally posted on Blog O'Stuff.)

When law abiding people are subjected to oppressive gun laws which make it difficult to obtain weapons, accessories, and ammo, they improvise.  Over at the Firearm Blog there are a couple of posts describing how a gun enthusiast in Nigeria is making the best of a bad situation.

According to the first post, Nigeria's gun control laws are very strict and civilians are pretty much limited to shotguns.  Unfortunately, Emmanuel was only able to obtain a Turkish made shotgun with a pistol grip stock, sans butt stock.  Pistol grip only (AKA "PGO") shotguns have very limited use.  Compared with a shotgun having a conventional stock, a PGO shotgun is much harder to shoot well.  Improvising with a piece of steel rod and a walking stick, Emmanuel made a butt stock so that he can more effectively use his shotgun.

In the second post, Emmanuel recounts how the only ammunition available is birdshot.  Birdshot is fine for birds and small game but a poor choice for self defense.  It doesn't offer enough penetration to reliably reach vital organs and stop a determined aggressor.

Once again, Emmauel improvised.  Using a metal plate, a nut and a bolt, to make a mold, he extracts the birdshot from shells, melts them, and casts his own slugs.

Go check out the links, they are worth your time.

10 Commandments of Concealed Carry

From Mas Ayoob.  Read it.