In my opinion there is not really a peak in most things at the moment.

I guess I should clarify what I meant by that. The case for oil has pretty much been made I think. The fact that we're drilling in deep water and digging up tar sand speaks to that. In mining, the effect is a little different. There will always be concentrations of minerals - the question is at what grade and price. To me, a three mile long, mile deep open pit at >2% is already telling a story. How much low grade rock can you afford to move with oil prices in triple digits? You need a much higher price of metal to do that. At some point the cost of metal becomes the limiting factor in the products you can sell. The fly in the ointment is that the classic substitution - plastic - is an oil based product.

There are however a whole lot of places where the various governments of the world have prohibited mining, exploration and drilling activity or made it prohibitively expensive so this effectively does the same thing. The difference being that with a change of politics it can change.

I'm not so sure on this point. Once you've built a mine, you are effectively a sitting duck. With governments increasingly strapped for cash, any change in favor of mining could be too short-lived to make a difference. Look at the brouhaha in Australia for example, and that's as mining friendly as it gets. The fact they'd even think of it gives you a hint of what to expect elsewhere.

I do agree with you that the more speculative mining plays are more risky at the moment and I still prefer the emerging producers in the PM sector in safer jurisdictions only because I see gold holding up better than the other commodities during the deflationary scare of the next few months.

I agree. Gold is the one possible exception to my scenario.

Then I see Ben coming to the rescue with QE2.

In my mind we're already up to QE 4 or 5. Anyone remember 1987? 1998? 2000?

I have raised cash in other investment but have kept the physical gold and the gold/silver producers most of which do not reflect the profits they will be making with $1200.00 gold.

The one thing that scares me in this sector is rapacious governments that are short of cash looking for something else to tax (recently in Australia as an example).

We certainly live in interesting times and volatility will continue to increase as money rushes around looking for temporary safety. I do not believe that US bonds are all that safe at the moment and do expect eventually that money will rush out of them as well. When that happens where does it go?

Maybe at that point it goes back into real estate...LOL! Prices should be low enough by then.

ebear