GET READY FOR TURBULENT MARKETS IN 2019: Gold & Silver To Outperform Most Assets

Investors should prepare for crazy and turbulent markets in 2019.  As the correction in the broader markets picks up speed and heads much lower, investor worry will start to turn into fear.  At this point, the precious metals will likely disconnect from the markets and move higher as investors move into gold and silver to protect wealth.

I discuss this in my newest video update: DOW, GOLD & SILVER:  Markets Disconnect In 2019.  In the video, I show how gold and silver rallied over the past month while the broader markets, copper, and energy sold off.  I believe the precious metals will continue to disconnect even further from the markets in 2019 and 2020.

In the video, I also describe the image below and why the U.S. Shale Oil Industry continues to lose money:

This shows the typical slick water shale frac completion layout and the massive amount of equipment and energy it takes to produce shale oil and gas.  The drilling rig has been removed, and the wellheads (in RED) receive an enormous amount of water, frac sand, and chemicals under high pressure from the 20 pressure pumping truck rigs.

Furthermore, I explain the following chart and why the gold price will continue to disconnect from the Dow Jones Index in 2019:

While I explain more technical analysis in the video, the fundamentals will still play a leading role in guiding the economy and markets over the next several years.  However, the technicals provide us with a crystal ball in how the prices will trade over this period.

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40 Comments on "GET READY FOR TURBULENT MARKETS IN 2019: Gold & Silver To Outperform Most Assets"

  1. People need to see more pics of Shale operations to get the idea that it’s a money losing proposition. The only reason it still works is because of low or zero interest rates…….and most importantly because we are way into Oil’s Retirement Party. Gone are the days you could stick a pipe in the ground and oil shot out.

    • Rodster,
      Where is the zero or low interest rate loans idea come from? What’s the average interest rate on the shale industry overall? Last I heard it was around 5.5%-6%. I read a couple of days ago about a shale company (don’t remember the name) that just refinanced its loans at the rate in “higher 6s”.

      • DisappearingCulture | January 14, 2019 at 2:25 pm | Reply

        I’m not an expert on it, but I think a lot of the shale industry loans are roughly half of that. Not loans in the last year, but the ones made a few years ago.

    • I guess so. I was flying from West Coast to East Coast, and looking down, I saw vast areas of holes in the ground where pads used to be. They literally punctured HUGE open areas of the middle united States of America, a bit sad that so much water might be polluted and we have not seen the future consequences of this, yet.

  2. Great Pics and tutorial on shale oil production. It is no wonder they are losing so much money.

    Thanks

  3. Mexico is by far the largest producer of silver. Mexico produces roughly 5600 tons of annual silver supply which equates to around 30% of global silver. Note that the 3rd and 4th largest silvers producers are China and Russia. I bring this up because Mexico is experiencing a pronounced gasoline crises. https://mexiconewsdaily.com/news/gasoline-imports-significantly-reduced/
    https://mexiconewsdaily.com/

    If there are fuel shortages throughout Mexico…then how do you mine silver? What happens when silver production from a major exporter like Mexico falls? Will silver prices be forced up? I guess we will find out.

    • “What happens when silver production from a major exporter like Mexico falls?”

      heh. the G/S ratio of above-ground metal is 4.5 to 1.

      that’s 4.5 ounces of gold to 1 ounce of silver.

      could get interesting ….

    • Ugo Bardi,

      Great! Good to see you. Looks like 2019 will be quite interesting.

      steve

    • I am slowly getting through your book “EXTRACTED” Ugo, very interesting, I am enjoying the read.

      Talking about “Cement”; you would have to add to that “Construction Sand”, as well.

      “VANADIUM” might also be an example of; “A get out of Jail card”; in the short term, for some small mining companies by revisiting their “TAILINGS”.

  4. Hi Steve,

    I have a question that I’ve been asking on various forums but never got a definitive answer and I’m hoping you can clarify it. My question is regarding the high amount of shale industry debt. In your previous articles you stated that this debt will bankrupt the shale industry which in turn will lead to decreased shale oil production. But I’m wondering if it has to be that way. Isn’t it possible that if a shale company can’t pay its loans they can just declare bankruptcy, write off the loans and continue their business? Or, another company comes in, buys the bankrupted company’s equipment on the cheap and continues pumping the oil but this time without all that debt burden.

    • thor,

      Even if shale companies declare bankruptcy or write their loans off, who is going to invest in an industry that LOSES MONEY?? Would you take $50,000 of your money to get back maybe $35-40,000 in a few years?

      The Shale Industry continues to receive investor funds, but that will likely end when the market realizes its nothing more than a Ponzi Scheme.

      Again, why would anyone buy a company for PENNIES ON THE DOLLAR just to lose money running the company???

      steve

  5. Hi Steve,

    I have a question that I’ve been asking on various forums but never got a definitive answer and I’m hoping you can clarify it. My question is regarding the high amount of shale industry debt. In your previous articles you stated that this debt will bankrupt the shale industry which in turn will lead to decreased shale oil production. But I’m wondering if it has to be that way. Isn’t it possible that if a shale company can’t pay its loans they can just declare bankruptcy, write off the loans and continue their business? Or, another company comes in, buys the bankrupted company’s equipment on the cheap and continues pumping the oil but this time without all that debt burden.

  6. To me, the Srsroccoreport is one of the Big 5 in my daily readings. We need helicopter view (Ourfiniteworld), we need tech (Peakoilbarrel), we need finance (Zerohedge, downgraded however), we need data & numbers (Surplus Energy Economics) and we need a bridge between the monetary and physical plane (SrsRocco).

    Adding some philosophy every now and then and you know a whole lot more.

    Whether you’re the lion or the rhino, dear Steve, is open for discussion.

  7. Gold and Paper Wealth

    The globally complex financial system has so detached itself from the underlying economic reality, that it simply cannot continue without a catastrophic discontinuity.
    Money must continue to flow into the financial system faster than the demand for it expands, because the maintenance of asset values is key for the present system of debt to continue.
    When money resets and price discovery returns, many paper assets will cease to exist.

    Gold is nobody’s liability and can’t be printed. It dominated the international monetary framework until 1971 as a stable anchor. This changed not because gold lost it’s value, but because the US found the role of the all mighty dollar threatened by gold.
    The future global monetary reset (which is nearer than many think) will include physical gold. The US dollars days as global reserve currency is slowly diminishing. Each year that passes by is seeing its influence dwindle. This process of late, has been gathering momentum.

    • Some people still claim cryptocurrencies will replace fiat currency backed by debt. But cryptocurrencies have a lot of energy demands, both to mine new currencies and to verify transactions.

      As Steve has eloquently stated, when the energy crunch comes (peak energy) this weakness of cryptocurrencies will be exposed.

  8. Michael Kohlhaas | January 15, 2019 at 3:22 am | Reply

    Ok. I get it. The EROI story is getting boring. Let’s do some technical analysis. Doesn’t matter that we have no frigging clue about it. One of the last having his credibility lost.

    • LOL, I’m no fan of technical analysis myself. Because it’s a bit mindless & empty number crunching activity. (And I’m not referring in financial terms of making fiat day trading profits or losses.)

      But what are we to do in the current rigged algorithmic world? EROI story is NOT boring. The macro timeline on which it shows up can’t compare w/ the micro timeline on which algorithms dominate the noise. So while algorithms rule the roost in the short term, stating EROI story again & again becomes repetitive.

      Do you want Steve to shut down this blog until the laws of physics & EROI actually manifest in full glory (after all algorithm manipulations that prevent their manifestation in financial terms breaks down)?

    • Michael Kohlhaas

      Boring? Really?
      What is boring, is your continually sarcastic commentary here. Without any, repeat any, constructive input that most come here to participate in.
      It must suck to be you. Such a depressive and angry mindset.

    • Hes trying to keep you entertained. The less assholes at the PM Dealer, the better

  9. Hey everybody.
    Thor
    here is some old article from 2016 on ZH. talk about how fed meet with banks who are exposed to oil companys. https://www.zerohedge.com/news/2016-01-16/exclusive-dallas-fed-quietly-suspends-energy-mark-market-tells-banks-not-force-shale
    and after that Fed respond. (With all the BS article on the www this must be thru). https://www.zerohedge.com/news/2016-01-18/fed-responds-zero-hedge-here-are-some-follow-questions

    Steve. cool vid, the first chart u got. Gold and Dow. put fibo retracement on. use gold bottom in year 2000 and high 2011. but i like it better on a weekly and i put silver to. just saying not being smart.

    ave

  10. Steve,
    I saw the trucks that you show in the above article for pumping water and FRAC sand. It seems like a very doable operation. So let me be a little naive here. 20 trucks with a single engine and a large pump just to make it somewhat simple. That is easily bought and delivered to a location. That technology is basically 100 years old as far as pumping goes and all the nozzles, etc. So I don’t quite see the profit sink here even though I am inclined to believe and think about your writing and also belive that, indeed, they are unprofitable. Is there another way to explain? Perhaps those trucks make 20 trips a day each for sand and water? Even once a day trip for water and sand times 365 times 20, minus some holidays would be costly. But, generally, looking at that area, your example pictures, of operation; it is very small compared to other industries like DRY bulk shipping. Everything I see in the picture is easy to manufacture and deliver, repair, and operate. No hi-tech here.

    • Slavik,

      You are missing the most important POINT. The EROI, or Energy Returned On Invested of U.S. conventional oil wells was 30/1 in 1970. They are still drilling conventional getting 20-30/1 EROI, but there aren’t that many.

      However, Shale Oil EROI comes in at a whopping 5/1. And I believe it’s actually less? Why, because we have to build, manufacture, and spend GOBS of energy to produce that LOW-QUALITY SHYTE SHALE OIL that likely as an EROI of less than 3/1.

      So, while we have plenty of technology to produce this stuff, IT AINT PROFITABLE.

      THERE LIES THE RUB.

      steve

      • Hi Steve,
        Hard to deny the sea of red as per your extensive articles. So it isn’t even about inflation,FED money prinitng nor government debt: the sine qua non is the EROI of FRAC compared to EROI of traditional oil: 5-3/1 compared to 20-30/1. Hmmm… I am seeing it more clearly.

  11. I could not have said it better myself! The following is well worth the read.

    Europe on the Brink of Collapse?

    When it comes all down to one single denominator, it’s the current western financial system that must go. It is private banking gone berserk. We are living in a financial system that has gone wild and running havoc, uncontrolled – a train of endless greed that is loosely speeding ahead and doesn’t know when it will hit an unyielding steel-enforced brick wall – but hit it will. It is a mere question of time. People are sick and tired of being milked no end by a fraudulent pyramid system – constructed by the US and her dollar hegemony and maintained by globalized private banking.

    https://journal-neo.org/2019/01/16/europe-on-the-brink-of-collapse/

  12. Martin Armstrong in his latest interview thinks the bull market in the U.S. stock market is about to resume and has a long way to go. He also sees a bull market in gold ahead but still thinks it could go below a thousand. He feels it has to break 1360 before it can really break out.

  13. Here is my argument against you people. Everything you have written could have been written in 2008. And 2009. And 2010,2011,2012,2013,2014,2015,2016,2017,2018. Many of us have been reading about this for that long, and are starting to lose interest, because here we still are, nothing has changed, and everything continues on.

    I’m not interested until something actually happens. Predictions are useless. All of you people basically need to keep quiet and to yourselves until the markets actually do something significant. That’s the least you could do after being wrong for 11 years.

    • DisappearingCulture | January 16, 2019 at 5:32 pm | Reply

      “Here is my argument against you people.”
      So it’s you versus everyone else; with you & your perspective as correct, and everyone else is less correct or wrong?
      “I’m not interested until something actually happens. All of you people basically need to keep quiet and to yourselves until the markets actually do something significant. That’s the least you could do after being wrong for 11 years.”
      I have a better idea. Why don’t you STFU and go away. That’s the least you can do after being a troll for years.
      After all you just said you are not interested until something happens.

  14. Dolph.u must be blind not too see collapse of monetary sistem is a process not a event and it did happens alot in this 11 years.
    and I’m not interested until something actually happens, u will be too late by then.

  15. Dear Steve,
    can central banks push up (or draw down) stock market prices arbitrarily by printing (or deleting) money so that the Dow Jones could be at 40 000 in 2020 in spite of a depression – when central banks for example switch silently from quantitative tightening to quantitative easing? Could the FED for example print large amounts of money secretly so that the Dow can only be measured in terms of gold or silver but not in dollars? And the dirty job of money printing would probably be given to the ECB so that the Euro looses more value than the Dollar? So, a deflationary crash would not happen – but a slide into strong inflation instead? What do you think about this?

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