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Mining Industry
Fear, Desire, Death...and the Internet
James West, www.goldworld.com
Saturday, July 21, 2007
If I were to suggest that the Mining Industry owes itscurrent robust constitution to the Internet, the image of a horse's posteriormight pop into your head. But bear with me, and see if you can't be convinced.
When I was 12, my brother, two years younger than me, toldme that one day everybody would talk to each other through computers connectedby wires.
"Why would they want to do that?", I remember thinking. Mybrother was clearly smarter than I was then, and I suspect he still is.
Today, my brother builds and restores turn-of-the-centuryera homes in and around Portland, Oregon, and I spend most of my days talkingto people around the world on computers connected by wires.
Unbeknownst tous at the time of his oracular pronouncement, the fulfillment of his prophecywas well underway.
The Internet, The Internet had its roots during the 1960s as a project ofthe United States government's Department of Defense, to create anon-centralized network designed to survive partial outages (ie. nuclear war)and still function when parts of the network were down or destroyed. Thisproject was called ARPANET (Advanced Research Projects Agency Network), createdby the Pentagon's Advanced Research Projects Agency established in 1969 toprovide a secure and survivable communications network for organizationsengaged in defense-related research.
Fast forward to 2007, and the Internet has grown itself tothe point where there are over one billion people accessing the internet on adaily basis….a sixth of the world's population.
Many people around the world harbor the misguided notionthat the promise of the Internet was overstated, and point to the bursting ofthe Internet bubble in 2002 as evidence to support their claims.
The reality of the matter is that big, and otherwise usuallysmart money rushed into the new space throwing billions of dollars ahead ofthem driven by the biggest investment driver in the human psyche, fear. (Somewill say, "What about greed?", but when you think about it, greed is just thefear of not having enough, and is therefore a form of fear.)
Fear of missing out on the astounding new technology thatwould connect everyone to each other, and manifest a collective consciousnessfor the betterment of the entire race.
The Internet was merely the beneficiary of an excess ofinvestment that went in to building out infrastructure too quickly before thereturns on such investment could be properly realized.
Certainly a collective consciousness has been established bythe Internet, but the biggest impact of this new elevated level of commonknowledge has been to supercharge the biggest driver of labour in the humanpsyche--desire.
The Internet has established the desire in countriespreviously so unencumbered for a standard of living on par with Europe andNorth America.
For people who were otherwise content, or at least resigned,to their lifestyles, it opened the door to the possibility of a better life.
And this new elevated collective desire now rampant in thepopulations of third world countries has effectively destroyed the cyclicalnature of many industries. Chief among them is the industry that makes possibleall other industries, mining.
For the sake of simplicity, let's add the populations ofEurope, North America and Oceania together, and pronounce that the population of the "Have's", or thepeople with the standard of living that the rest of the populations combinedare after.
That means that 5.4 billion citizens are all going to want the standard of livingcurrently enjoyed by only 1.2 billion. An oversimplification, perhaps, but avalid viewpoint none the less.
Only 11.3% of Asia's population, by far and away
India and China combined are commonly acknowledged as thenext two economies to be reckoned with, in terms of double digit economicgrowth. Prices for basic materials such as copper, iron, nickel and virtuallyevery other mineral used in construction are marching steadily upward.
Certain economic commentators are calling this a'super-cycle", implying that the trend will eventually reverse itself, andthese industries will contract as they have done since the industrialization ofmankind.
It is no such thing.
The cyclical nature of mining is dead, a relic of the past.
What do you think is going to happen to the demand curve forbasic materials when China, India, Africa, and Latin America's internetpenetration percentages rise to meet North America's?
How about Russia?
China is the largest consumer of copper, but the UnitedStates is second. Once a standard of living is achieved it must be maintained.
The rest of humanity's existence will now be spent inbringing the rest of the world population up to a better standard of living. Orwe shall perish in the effort.
The secret is out.
Even in the remotest African villages, people know whoBrittney Spears is. And all of the young people want to go to her concerts. Allthe adults want cars, pools, vacations, 840 thread-count sheets and chilledwhite wine in fine crystal to go with their smoked salmon.
This is the dawn of a new era, and history will likelyremember it as the "Information" Age. The homogenization of the human race isunderway, and the boom in the mining sector is merely the first harbinger ofthe coming boom in everything else.
The beneficial effect of a connected collectiveconsciousness will soon manifest itself in the form of greener energies, lesswaste, more efficient transportation modes, improved urban planning, and whoknows perhaps the colonization of distant worlds is closer than we think.
But none of this will come to pass until the human race hasexperienced a more equitable distribution of living standards.
Can our planet's resources support the Euro-North Americanlifestyle for 7 billion people? Will "resource wars" over water, energy, andfood engulf an ever broader swath of humanity? Can our ecosystem withstand theonslaught of refuse that must surely result? Will technology deliver theability to extract minerals from distant planets? Will the population ofanother planet whose ecosystem is already used up come and steal all our stuff?
These are valid and visionary questions, which my brotherand I like to discuss now on the all-too-infrequent occasions when we convenefor beer, guitar, and philosophy.
The discussion on how long the bull market will last is nowleft to second rate pundits and hacks whose perspective is drawn from a heightmeasured in inches. Say from the posterior of a horse, perhaps.
James West is the editor of www.goldworld.com , a general information site about investing in the gold sector and Natural Resources. As an independent writer who has been active in the management, finance and public relations of public companies in both the resource and technology sectors for over twenty years, James West provides insightful commentary on the inner workings of TSX Venture listed companies.. He can be reached at: Letters@canadafreepress.com
