The Leveraged Economy BLOWS UP In 2018

Enjoy the good times while you can because when the economy BLOWS UP this next time, there is no plan B.  Sure, we could see massive monetary printing by Central Banks to continue the madness a bit longer after the market crashes, but this won’t be a long-term solution.  Rather, the U.S. and global economies will contract to a level we have never experienced before.  We are most certainly in uncharted territory.

Before I get into my analysis and the reasons we are heading towards the Seneca Cliff, I wanted to share the following information.  I haven’t posted much material over the past week because I decided to spend a bit of quality time with family.  Furthermore, a good friend of mine past away which put me in a state of reflection.  This close friend was also very knowledgeable about our current economic predicament and was a big believer in owning gold and silver.  So, it was a quite a shame to lose someone close by who I could chat with about these issues.

While some of my family members know about my work, I don’t really discuss it with them.  If they ever have a question, I will try to answer it, but I found out years ago that it was a waste of time to try and impose my knowledge upon them.  Which is the very reason I started my SRSrocco Report website… LOL.  So, now I have a venue to get my analysis out to the public.  I don’t care about reaching everyone, but rather to provide important information to those who are OPEN to it.

As I have stated before, I receive communications from individuals all across the world and from all different occupations.  The common theme I receive from these individuals, who stumbled upon my website, is that they say, “IT’S MUCH WORSE THAN YOU REALIZE.”  Unfortunately, I cannot share publically the information that they have provided, but I can tell you that the GRAND FACADE will come crashing down to the shock and surprise by the masses.

However, I can tell you one individual has contacted me with data suggesting that one of the largest shale oil companies in the United States has been fudging its numbers for the past several years.  I have had nearly a half a dozen phone conversations with this individual and the evidence points to serious fraudulent activity.  And let me tell you this individual is no conspiracy nut, he was a Senior-Level person in the company.  When this information becomes public, it could be the next ENRON.  If so, that will destroy the investor trust in the U.S. Shale Energy Industry.  Virtually overnight, we could see a collapse of capital investment in an industry that hasn’t really made any profits since it started producing shale oil and gas nearly a decade ago.

Unfortunately, I continue to read articles and receive emails from individuals who believe that the vast U.S. shale energy resources will make the U.S. energy independent.  I am completely surprised by the lack of wisdom of supposedly highly intelligent individuals who should know better.  Furthermore, it seems to be that the debate is not about discussing facts and reason, but rather between the TRUTH & LIES.

Thus, there is a big disconnect between individuals with CHARACTER, INTEGRITY, and TRUTH versus those who don’t care about increasing the debt to produce shale energy.  According to these individuals, they don’t care if someone gets stuck with the debt if it allowed them to make money or for Americans to enjoy low-priced gasoline.  This is exactly what is wrong with the world today.  The world has become so big; we don’t care about screwing someone else in order to make a buck.  If it isn’t our money, then the hell with them.

So, to debate someone with that sort of mentality, it’s a total waste of time.  You cannot debate an individual based on facts and truth if they come from a position of fraudulent activity and lies.  Just like oil and water, they don’t mix.  I can tell you; I see this all over the internet… even in the alternative media community.  Of course, these individuals will reply that they are correct.  However, their position is flawed because their ideology is also flawed.

Here is a piece of advice.  Don’t waste time debating individuals who don’t base their ideas on truth and sound data.  The only reason I do it via my articles is to prove why their analysis is flawed because people are still making up their minds.  I don’t do it to change the mindset of the analysts, (example, CPM Group’s Jeff Christian), but to provide information that helps individuals understand the reality of dire energy predicament we are facing because it all comes down to the energy.

That being said, I haven’t received a reply from Jeff Christian in regards to my article, CPM Group’s Jeff Christian Responds “NEGATIVELY” To The SRSrocco Report On Silver Investment Demand.  After my first article, Jeff left some choice words in a comment, which motivated me to reply.  Of course, Jeff didn’t reply to the second article because I gather he realizes that the FACTS & DATA prove their gold and silver price analysis has been flawed for 40 years.  So, it’s better for Jeff Christian and the CPM Group to keep quiet as they want to continue selling their Gold and Silver Yearbooks to the industry.

The Fundamentals Point To The GREAT DELEVERAGING Of The Economy… Dead Ahead

While the mainstream media and financial networks suggest that THIS TIME IS DIFFERENT for the markets…. it isn’t.  The fundamentals of the markets are so out-of-whack, I am amazed people can’t see it.  This is also true for the Bitcoin and cryptocurrency market.  While a small group of crypto-investors have made a killing, it’s mostly digital wealth.  While I don’t have a problem with someone making profits investing in cryptocurrencies, I do have a problem when they believe this technology is the wave of the future.  For some strange reason, they must believe in the ENERGY TOOTH FAIRY.

While some of these cryptocurrency analysts (or supposed analysts) believe that we are heading into a new high-tech world where we no longer have to work, just live phat on our Billions in Bitcoin profits, the Falling EROI – Energy Returned On Investment never sleeps.  That’s correct; it continues to erode our modern way of living each passing day.  Unfortunately, adding more technology does not solve our energy predicament, it just makes it worse.

Also, individuals who believe in FREE ENERGY technology or supposed advanced ALIEN ENERGY technology hand-me-downs, to save the day… you are grasping at straws.  Now, I am not trying to change anyone’s mind who believes in free energy or alien technology, but all I ask is that you stay alive for another 5-10 years to see the mistake of your ways.   Yes, that may sound a bit confident or arrogant, but empires have come and gone in the past.  The current one is no different.

Let’s first look at the NYSE margin debt.  According to the chart by the Advisor Perspectives, the New York Stock Exchange margin debt is at new record high:

As we can see, the NYSE margin debt (by traders) is nearly $600 billion versus $400 billion in 1999 and $450 billion in 2007.  Which means the NYSE margin debt is 33% higher than the level it was right before the 2008 U.S. Housing and Banking collapse.  If we look at the 1999 and 2007 NYSE margin debt graph lines (RED), we can spot a huge spike right before they both peaked.  If this is the way it will happen in the current trend, then we will likely see a huge spike and stock market MELT-UP before it peaks and collapses.

You know…. the last chance for the really stupid traders to get SUCKED in.

So, as the NYSE margin debt reaches new record territory, so has the VIX Index and the stock market.  Yesterday, the VIX Index (measures volatility in the markets) closed at a new record low of “9”, while the Dow Jones Index ended the day at a record high of 24,922 points:

Today, the Dow Jones Index has reached another record at 25,100.  Just like the cryptocurrency market, the only direction is HIGHER.  Who knows how low the VIX Index will go and how high the Dow Jones will reach, but my gut tells me that this will be the year that the fun finally ends.

Of course, if we have new record highs in the stock markets, we should see the same with the U.S. Retirement Market:

According to the ICI – Investment Company Institute, the U.S. Retirement Market hit a new record at $27.2 trillion in the third quarter of 2017.  I would imagine the U.S. Retirement Market will surpass the $28 trillion mark in 2018.  When Americans feel rich via their investments, it makes them also feel good about buying more crap they don’t really need or can afford.

You see, frugality has been totally erased from Americans’ mindset.  By being frugal, I am talking about being extremely wise and cautious about spending ones fiat currency.  Being frugal is one of the most important aspects of a successful household.  However, if frugality were reintroduced to Americans, then the entire economy would collapse overnight.  Why?  Because, the U.S. economic model is based on buying as much as we can on debt and credit.  If we moved back to being frugal or buying only with cash, then 95-98% of the U.S. economy would disintegrate.

What is quite interesting about the U.S. stock and retirement market is that their values have skyrocketed while our energy consumption has remained flat since 2000.  This wasn’t the case from the 1950-2000 period.  As U.S. energy consumption increased, so did the value of the stock market.  This was also true for world GDP:

Global GDP growth increased in percentage in line with world oil production growth.  However, it was different for the United States.  While total U.S. energy consumption remained flat since 2000, the value of stock and retirement markets skyrocketed higher:

This chart shows total U.S. energy consumption in Quadrillion BTUs.  As we can see, total U.S. energy consumption tripled from 35 Quad BTUs in 1950 to 99 Quad BTUs in 2000.  However, total energy consumption has been virtually flat ever since 2000 while the value of the U.S. Retirement Market has increased from $11.6 trillion to $27.2 trillion and the Dow Jones Index has surged from 11,000 to 25,000 points currently.  Both markets are up approximately 130% since 2000 while energy consumption is flat.

That is most certainly a neat trick by the Fed and Wall Street Banks.  Of course, there will be individuals who say the value of STOCKS, BONDS, and REAL ESTATE can rise on flat energy consumption.  They can say that because they are completely FOS… FULL OF SHITE.  Pardon my French.

When we look at the world in digital values instead of energy data, we can come up with virtually anything.  The value of stocks, bonds, and real estate have been wildly inflated due to Central Bank money printing and the tremendous increase in debt.  If an individual stayed awake during their economic classes in high school or college, NET WORTH comes from subtracting DEBTS from ASSETS.  However, today… we don’t worry about the debts.  We only look at the assets.  This is like eating all the junk food during the holidays and not worrying about the way it comes out the other end.

Americans have deluded themselves into believing that crap that is put on our dinner plate is good for us.  So, why should we blame them if they forget about debts and only look at assets?  It makes perfect sense when LIES and FRAUDULENT activity are the predominant ideology in society.

When The Markets Crack, So Will The Price Of Oil… and with it, The Economy

If you have been reading my analysis on energy, you would understand that oil is the KEY FACTOR to the health of our economy.  It doesn’t matter if we were to come up with some new energy technology like cold fusion or thorium energy reactors, they don’t solve our LIQUID ENERGY PREDICAMENT.  The world doesn’t run on electricity; it runs on liquid oil.  If you remember anything, that is one not to forget.

Regardless, I have looked over cold fusion and thorium reactors (along with many other “silver-bullet” energy-saving technologies), and they just don’t work.  Yes, I would imagine some individuals will send me information to the contrary, but the fact remains… our retail markets are based on the just-in-time inventory system.  That system needs liquid fuels to function, not electricity.  So, when liquid energy runs into trouble, the world economy runs into trouble.

While I have presented a lot of articles and analysis on the Great U.S. Shale Energy Ponzi Scheme, I am not going to focus on that today.  Rather, let’s look at the oil price and its dynamics going forward.  As I have mentioned, I believe the price of oil will trend lower even though we may experience price spikes.  My realization of the continued falling oil price came from the Thermodynamic work of Bedford Hill (TheHillsGroup.org) and Louis Arnoux.  While some do not agree with the findings of The Hill’s Group or Louis Arnoux, the only error I can see in their work is the timing of the Thermodynamic Oil Collapse.  And that is really not an error as they stated their calculations are based on the “Average Barrel of oil.”  Thus, there is room for improvement of their model as well as a degree of accuracy… but not much.

If we look at the current oil price chart, it seems as if it is heading back towards $65 (200-month moving average-BLUE LINE) and then up to $100:

However, the COT Report (Commitment of Traders) shows a much different setup.  The amount of commercial short positions in the oil market is the highest going back 23 years.  Furthermore, the current 644,000 commercial short positions are even higher right before the price fell from $105 in 2014:

You will notice when the price of oil was at $105 in 2014, the commercial shorts (hedgers positions) were approximately 500,000 contracts.  Today at $62, the current commercial short positions are 644,000 (the chart above is two weeks old).  Furthermore, when the price of oil fell from $105 down to a low of $26 at the beginning of 2016, the commercial short positions fell to a low of 180,000 contacts.  So, it looks like the oil price is being set up for one hell of a fall.

Now, the interesting part of the equation is this… will the oil price fall when the markets crack, or before?  Regardless, if we look at all the indicators (VIX Index record low, Stock Market Record High, NYSE margin debt record high or commercial short positions on oil at a record high), we can plainly see that the LEVERAGE is getting out of hand.

These indicators and others give me the impression that the economy and markets are going to BLOW UP in 2018.

Moreover, this setup already took place in the market back in 1987.  While I have written about this in a previous article, I wanted to show it using the oil price from 1984-1988.  Very few people knew that the oil price dropped like a rock from $31 in 1985 to a low of $10 in 1986:

The decline in the price of oil from $31 to $10 was quite similar to what happened in 2014 when the price fell from $105 to a low of $26 in 2016.  Also, the oil price recovery in both periods was quite similar as well.  From July 1986 to August 1987 and from January 2016 to January 2018, the oil price (and economy) recovered.  The oil price more than doubled from its low in 1986 ($10-$22) and 2016 ($26 to $62).

However, a few months before the infamous BLACK MONDAY Stock Market Crash on Oct 19, 1987, the oil price peaked and declined by nearly 20% ($22 down to $18).  So, are we going to see a similar pattern this time around?  Will the warning shot be the peak and decline of the oil price as it’s currently being set up by the record amount of commercial short positions?  These are all very good questions in which I have no answer, but clearly, history does repeat itself.

Either way, the indicators are pointing to one hell of a deleveraging of the markets.  Investors need to understand when the oil price heads south once again; it will likely be the death-knell for the already weakened U.S. Shale Oil Industry.  We must remember, when the markets were collapsing in 2008, the U.S. oil industry was still in relatively good shape.  Today, most of the shale companies have debt up to their eyeballs.  Once again, here is the chart of the coming ENERGY DEBT WALL:

The tactic used by the Shale Energy Industry was to take investor money and push back the PAYBACK as far as possible.  The intent was to BAMBOOZLE as many SUCKERS as possible before anyone realized just how unprofitable it was to produce shale oil and gas.  A perfect example of this is the poster child of what’s wrong with the shale oil industry… Continental Resources.

Before Continental Resources embarked on the Great U.S. Shale Ponzi Scheme, the company only had $165 million in debt (2007) and was paying an annual interest payment (on their debt) of $13 million.  Fast forward to today, Continental now has over $6.6 billion in long-term debt and will likely pay over $300 million in their interest expense this year.

This is precisely why Continental Resources announced the issuance of $1 billion in new Bonds so they could pay off existing ones that were coming due.  And get this.  The SUCKERS who purchased the $1 billion of new bonds, will not be paid back until 2028… LOL.

The POOR SLOBS that purchased those Continental bonds need to read about the Fiasco that happened to BHP Billiton when they blew over $50 billion of their investment in the wonderful U.S. Shale Ponzi Scheme.

I would like to remind investors that the definition of a PONZI SCHEME is to use new investor money to pay off existing ones.  This is exactly what is taking place in the U.S. Shale Energy Industry.  Because Continental has pushed back the payback period for ten years, they have received additional funds to continue the facade a bit longer.  It is quite likely that Continental Resources will no longer be around in ten years to pay back that debt.

But why should that matter?  Why should the CEO care about the debt if he made $millions and was able to sell most of his stock before the public realized what a worthless PIECE OF GARBAGE shale oil and gas have been??  Again, this is the fabric of our society.  As long as some other SMUCK get’s stuck with the bill…… who gives a RATS AZZ??

To tell you the truth, when the markets finally crack, and the real carnage rips through the U.S. economy, we only have ourselves to blame.  There are no pointing fingers when we are all involved.  Especially the Bitcoin and cryptocurrency fanatics.  I hate to say it, but those who believe they are going to get rich on CRYPTOS so they don’t have to work anymore…… let me provide you with my famous saying.

GOD HATH A SENSE OF HUMOR…..

Currently, the cryptocurrency that is now stealing the show is Ripple.  Anyone who bought Ripple a year ago for $0.005 a piece is salivating on the profits they have in their account.  I would imagine the BOOZE and MONEY SPENDING are really flowing.  However, if you look at Ripple’s chart and you don’t see a problem…. you might want to check yourself in and get an MRI brain scan:

There’s a lot more that I can say about Ripple and the other cryptocurrencies, but either you get it, or you don’t.  Those that don’t get it now… will likely get it shortly.  Unfortunately, the cryptos won’t be the new technology that will change our world for the better.  Rather, they will be another Tulip Mania that we can add to the growing list.

In conclusion, the U.S. and world economies are heading towards one heck of a crash.  What happens when this occurs, it’s anyone’s guess.  Likely, the Central Banks will step in with their magic and print money like crazy.  However, this is not a long-term solution.  If you haven’t bought some physical gold and silver insurance yet and are waiting to time the markets, GOOD LUCK WITH THAT.

Lastly, I wanted to personally thank all those who have supported and continue to support the SRSrocco Report site.  Your generous support allows me the opportunity to continue putting out the analysis and articles.  As I have mentioned, I will be soon putting out new Youtube Videos that I believe will help explain some of these concepts better.

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62 Comments on "The Leveraged Economy BLOWS UP In 2018"

  1. Thank you once more Steve.
    Again facts that are telling.
    As you say, it seems that the end of this big lie is closer. 2018 will be interesting.
    A question: when the markets crash, I guess that for some time PM’s (I mean the paper price) will also suffer to cover the margin calls and that the physical will be hard to find?
    Serge

  2. Steve,

    Your articles get better and better. You are one of the best investment ever.

    Thanks,

    SteveW

  3. A Picasso with a spreadsheet can tear down paradigms. Following Steve all these years has left me sitting on a small fortune and driving a 10yr old 4 cylinder economy car. A/C works good.
    I’ve learned that poor people watch TV and pull 6 axle travel trailers and everyone else is spending they’re time reading free leading edge common sense analysis like this. Bravo brother. Bravo.

  4. The Great Depression 1929-1940 US Economic Growth GDP (1%)
    https://en.wikipedia.org/wiki/Great_Depression

    The Great Recession 2006-2017 US Economic Growth GDP (1.5%)
    https://www.statista.com/statistics/188165/annual-gdp-growth-of-the-united-states-since-1990/

    The Great Recession 2006-2017 US Economic Growth GDP Per Capita (0.4%)
    https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?locations=US

    Global Economic Growth GDP Per Capita (1.3%)
    https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG

    OCED Economic Growth GDP Per Capita 1970-2015 (0.5%)
    https://imgur.com/a/HXBkr#Bv4I4AF

    World Governments Gross Debt to GDP (330%)
    https://imgur.com/a/3usX7

    Non Partisan CBO Office Forecast Less Than 2% US Economic Growth GDP Through 2027
    https://www.cbo.gov/publication/52801

    *Note: 20% GDP Includes (FIRE) finance, insurance and real estate

  5. As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
    https://imgur.com/a/6dEDt

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Aramco CEO sees oil shortage coming despite shale boom as investments, discoveries drop
    https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR

    Peak Oil Vindicated by the IEA and Saudi Arabia

    • I was just watching disc. channel ,it showed a pic. from space of the bakkan oil field. At night it is glowing with gas being flaired off at the rate of $1mill. a day ;If that oil field is loseing so mutch money why are they allowed to waist our natural gas in this manner?

  6. A very truth FULL article Steve. Thank you.

    Global debt has increased from $150 trillion in 2007 to over $220 trillion today. An increase of over $70 trillion in one decade! The total amount of consumer subprime debt is now in excess of the amount of subprime mortgage debt ($650 billion) at the peak of the mid 2000’s credit bubble.
    The US asset inflation is now 36% above the 2007 peak. The inflated paper wealth is the same asset, just at ever higher prices. The phantom wealth that has been created since the 2008 financial crisis is going to basically evaporate. What is coming is nothing less than a drastic downward reset of financial asset prices.
    Complicated by the fact of the aging baby boomer’s becoming dependents, rather than supporters of the system. The greatest monetary/fiscal collision in recorded history will take place at ground zero – WALL STREET.

  7. What are these things called ‘markets’ of which you speak?

  8. Great article Steve! Thank you very much for all the analysis you do!
    Mike

  9. Excellent article – Am already planning for low power usage and close by food production. It is going to get lean.

  10. In Tulip Mania, just about everyone was into tulips at the end. In Cryptocurrency Mania, probably only 1-2% so far are into it. So it probably has a long way to go still. Mind you, I’m not into it, but this was a response I read from someone that is happily into it.

  11. That was a good read, Steve.

    • Dana Webb,

      Thanks for the kudos and also for your generous support of the SRSrocco Report site. I believe 2018 will turn out to be one interesting year.

      steve

      • Dear Mr Angelo,
        Thanks for your great work. I really do appreciate your work.
        i have posted a comment to the guy of CPM. Shame on him to give you such names. Such a gentleman should not behave and comment like this towards you.
        One last comment: why do you bother that the rest is unable or unwilling to understand? Let them be!!! Steve just enjoy the ride. As for your familly, stack for your self and for them. They will need you.
        Take care. Cheers!!!

  12. We were visiting my our millenial son & daughter-in law over the New Years Holiday in Reno, NV. My son knows I’ve been day trading for years & that I’m knowledgable about investing & charting, so he asked my opinion about the cryptocurrency markets. He also told me he had invested in Litecoin because his IT guy at work recommended it to him. I said “well let’s see…let me bring up a chart & show you.”. I brought up the BTC Bitcoin Futures daily chart on my TradeStation Platform & said “check this out…almost $20,000 on 12/18 & just over $12,000 on 12/22. So an almost $8,000 dollar drop in 4 days. That’s what you call insane volatility. Litecoin, Bitcoin, Crapcoin, it’s all based on the same fundamentals of nothing.
    He looked at me and said “I knew you’d discourage me Dad”. So why the F did you ask me then? He wanted me to tell him what he wanted to hear. On the way to nice profits but unfortunately I don’t forsee that & in fact just the opposite. My last words were “remember 2009?”. Unfortunately back then was insignificant to him because he didn’t have a house & a family yet.

    I’ve been telling people for years that the worlds economies are nothing more than a House of Cards ready to collapse at any time. A gigantic Ponzi Scheme of epic proportions. They always give me that look like dude I’d rather believe your full of shit than ponder you might be right. At least I’ll have the self satisfaction of saying some day, man I told you so but you refused to do your own due dilligence – to pull your head out of the sand & see it for yourself.

    Btw, I really enjoy the excellent articles. We need more people telling it like it is in a very un-transparent world we live in full of deceit, lies & fraud.

    Thanks
    DD

    • DD,
      Your son might not be entirely wrong, on the long term, though;

      Bitcoin [et al], with its limited design number, needs to rise in value, sensibly high enough, to be the primary currency for future Energy tradings, and crude oil supplies, in particular.

      This would avoid the US dollar entering an endless cycle where more utilisation of it might always return in less and less useful work done – if it remains the Petrodollar, especially if the old model of audited-oil supplies vanishes and we enter an era where the market will be based on militias-exported/smuggled oil, instead.

      i.e. If the people in Zimbabwe, Iraq, Syria, Iran, Saudi, Russia, etc are all giving up their local collapsing currencies, owing to sanctions, armed conflicts, hyper inflation, corruption, etc, and resort to the US dollar – creating the need for endless supply, which would weaken the currency, even threatening it with wide and organised counter fitting.

      This assumption might be found related to a newly published thesis in thermodynamics that hints on a relationship where energy produced by an energy-generating device wouldn’t exceed the total energy expended in constructing it, i.e. the oil at origin must be sold for Zero-return, as it will mainly be used to keep an old ‘engine’, beyond-physics, beyond-repair, running.

      Cryptos may virtualise and perform that objective very neatly and they might be promoted higher and higher until they get their fractional fine-tuned to the price of a barrel of oil.

      An example on UN Energy-less refugee camps barter with the only currency allowed: bitcoin. Iris technology, too (18+):
      https://www.youtube.com/watch?v=kOTgAp_Kd0c

  13. I find it interesting that all the oil shipping stocks like Frontline, DHT, Scorpio Tankers,Tsakos Energy have been beaten down for the last year and making new lows. This seemingly speaks of diminished growth and anemic global demand. More writing on the wall?

  14. Great article Steve!
    I think after 2008 USA moved away from making money from production to total manipulation of the markets. Big Banks making huge money without oil. Time is changed.They only care about money however the Perfect storm is coming.

  15. The more we read these type of articles, the more markets melt up 🙂

  16. Steve-
    Thanks so very, very much for the great writing, insight and honest info you provide to all the people on this site. Keep up the good fight for truth. Folks, get out of as much debt as you can as fast as you can and start buying some physical gold and silver. The shit storm coming doesn’t care if you are republican, democrat, indie, black, white or a fucking Indian chief the pain will be long and hard. A safety wall of PM’s will ease some of that pain. C Tyner

  17. robert sinclair | January 5, 2018 at 1:34 am | Reply

    Great article steve. Im sorry to hear about your loss

  18. Frank Zappa
    “The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”

  19. Can i support you and send you some ripples.

  20. Crypto Tulip mania? Probably, but hey what isn’t? Stock mkt based on companies who only product is social interaction? Or some internet co who makes a buck by helping folks increase credit card debt in exchange for things? Bond mkt based on the full faith and credit of some govt neck deep in debt?
    In today’s investing world long term value from production is out the window, everything is pure speculation on price.
    Everything but PM’s is tulip mania. I get rather amused when someone who is depending on a retirement acct vested in stk mkt says something should be avoided because it is tulip mania.
    The trick in all other mkts (stock mkt) is to reconize the exit points and that is usually after a high percent of public is involved.
    I got into cryptos when I noticed the online PM dealers would accept BTC as payment.

  21. You do know that “phat” is an acronym refering to women?

  22. Hi Steve,

    I read your articles for years. Now I been working years in exploration of oil and gas on and offshore and the giant elephant fields most of them already been discovered. Now still
    there is a unknown fact that I am sure you never thought about but it is really one which will impact future exploration.

    As you are are aware all offshore exploration operations are being commenced close to all countries in the world which have boundaries with the oceans etc.
    https://en.wikipedia.org/wiki/Territorial_waters

    This means that most oceans are never been explored as there is no agreement among the world nations whom would be the owner. I can assure you there are many many giant elephant oilfield awaiting to be explored in the future. You are aware most of the world consists of oceans the surface is just immense.

    Just wanted to provide you with this info for your future analysis as it will sure impact the price of oil and the economies globally.

    For this reason the cheap oil is in middle east and therefore we are watching all these wars happening there, Iran is the next as they can produce really cheap oil and gas on their huge land masses. What you think would happen if a few countries would reduce the export of their crude like we see in the uranium industry such as Cameco?

    best wishes for 2018

    • Even though international waters is 12 miles from the coastline, the U.S. government has dominance in the Gulf of Mexico. You can’t drill there unless you get their approval.

    • Diogenes Shrugged | January 5, 2018 at 11:38 am | Reply

      “You are aware most of the world consists of oceans the surface is just immense.”

      Less than 8% of the oceans’ surface is underlain by the continental shelves where oil is found. It’s quite doubtful that much oil will ever be found beneath 92% of the oceans’ surface, and it’s even more doubtful that future exploration dollars will be committed to drilling into the thin sediments on the vast ocean floors.

      “I can assure you there are many many giant elephant oilfield awaiting to be explored in the future.” And you base your assurance on what evidence? Please provide links.

      • &Diogenes Shrugged the russians are very active in the artic and already shipped first Lng to the Uk. For example along the coast of east and west africa are many known oilfield but still the international boundaries prevent these from developping. Siberia is another huge area where the usa fits in easy and this area is hardly explored. The technology is improving rapidly as we speak. It takes for example much less time to complete a well now as in the past. A company blackbird energy has a patented technology for this. We are not running out of oil so fast.

    • Pieter, for the last 300 years, we’ve been awash with the fossil fuels that allowed us building infrastructure from a spanner, bridge to communication, educational and political systems.

      This energy structure, including its dominant political system, is subject to entropy internal to matter, the wear and tear, if you like, every moment. To keep it intact, extra energy is required.

      By 2022, another new stream of crude oil supplies in the magnitude of Saudi Arabia’s 2015 daily exports, is required to be added to the 2013’s level world daily oil supplies, just to keep the show going. And this doesn’t assume/cover for any depletion.

      Now practically, Iraq, Syria, Yemen, Libya, Venezuela, Nigeria and few others are already brought off of oil in their domestic energy consumption. If no new Saudi is found, who is the next to take off of oil to offset the variance?

      when/If a new Saudi is found in the middle of the ocean, would it be covering growth, offsetting depletion or making above nations return back to the industrial age?

      Would it be allocated to sustain the hyped ‘forth technological revolution’ starting with mountains of useless AI, autonomous driving applications, brand new IT systems for Cryptos, fake EV semis, defected solar systems, non-rotating wind turbines, useless software cloud platforms, waste-of-time energy projects, seas of junk Chinese made goods, manufacturing and running energy-intensive shale oil drilling machinery, creating endless, very fossil fuel energy-intensive, green energy projects, or it will be allocated to sustain what is already running?

      If Iraq is allowed peace and prosperity, it will become another high-fly California in 15 years, consuming all its own oil, rather than letting it go exported. Is this permissible when another Saudi or two are found in the middle of the Pacific, Indian or Atlantic oceans, or not?

      If we are heading to a Two Worlds configuration, one awash with endless fossil fuels energy (call it Smart City), the other is energy-deprived (call it Sanctuary City), where to find the list of nation names standing in the queue? Iraq, Syria, and now Saudi, Kuwait, Iran, Russia, Mexico, UK, Norway, China, Canada, US?

      Iran has started its own accelerated transformation into another Iraq and Syria in the last two weeks, which will stop Iranians from consuming more and more of their own oil, sparing that for export/smuggling.

      The Iranian regime might be allowed to stay alive in its own ‘Smart City’ to deal with US sanctions, enter wars with neighbours and conform to UN directives, but the rest of the population will be forced into a Sanctuary energy-less camp.

      Forget about how crude oil is priced up and down (the money in the pocket of the Trueman Show is always synthetic and cannot be real, anyway), but research and find out the order of nation names heading to be another Syria*! This is the ultimate Investment advice you give to the ones you love 🙂

      *The video doesn’t mention how the Russian Air Force has also brought other densely populated Syrian cities, to the level of destruction of Dresden.

  23. There are some monetary constants, specifically that all fiat eventually reverts to its intrinsic value of zero, but against the rigged and debased current worldwide coordinated financial/monetary/fiscal systems we have today, there really is no way to make any short-term predictions. Even stodgy financial planner advice such as ” a balanced portfolio of stocks, bonds, real estate, 10% in PMs, etc is meaningless in this environment. It’s like flying in instrument meteorological conditions (IMC) with a total instrument panel failure through a thunderstorm. All you can do is try to fly straight through, hold the wings level, and pray you don’t get ripped to shreds by the violent turbulence.

    It seems to me that I have overlooked oil as another commodity in addition to precious metals whose price must be smacked down by those who look to prop up the dollar.

    Just like a rising price in gold and silver, a rising price in oil, particularly when it is tied to the petrodollar, must be suppressed, as a rise in oil price is also a clarion call that the dollar is weakening,

    Theoretically, shale oil production could be needed to keep the supply adequate to keep a lid on the price, thus protecting the dollar. Even if the shale extraction is a money loser for investors, it is a life preserver for the appearance of a strong dollar as reflected by low oil prices.

    I look at shale oil reserves as the old-fashioned Sundae. When you had just one kid drinking from it from a single straw, it took a while longer for him to finish. If he invited his sweetheart to share it, then two straws emptied the Sundae in half the time. Ah, the good old Norman Rockwell days! The Seneca Sundae -like the Seneca Cliff. The more wells they drill, the faster the depletion and the sharper the drop off when one encounters the slurping sound at the bottom of the sundae.

    At this point, I would be interested in an understandable model of the debt collapse. What triggers it, the role of the alogs, what percentage of the trading volume is controlled by the machines, the impact of the derivatives, the amplifying effects of margin calls etc. It would be a most interesting graphic indeed to show how the world’s money supply, say 2 quadrillion dollars, would melt away, kind of like those infographics of the rise of the planet’s population from 200,000 to 7 billion, only the reverse.

    Simply put, financial gimmickry has covered up the underlying problem of fiat, more costly energy in terms of EROI and EROEI, population, etc.

  24. Thanks for lots of great info & your perspective. Since thew world needs liquid energy to run and energy producers need to make a profit to supply liquid energy, why doesn’t that argue for increasing liquid energy prices. If the cost to produce enough liquid energy goes up, then the price of liquid energy will go up as demand will still be there.

    I’m sure that when there’s a market crash, that will put downward pressure on oil prices but as Continental, etc. go out of business and that sector stops producing liquid energy, then oil prices must rise.

  25. Check out “A Trader of Futures” on YouTube. Ernie, who has done much work in the banking industry, blows a new a*%hole in RIPPLE in a recent video. IBM–which has much more gravitas in banking–has its own digital ledger joint venture that has a much better chance of being adopted by the industry than Ripple, which is being used in something like 100 banks. Also some good vids on the treatment of cryptos by the IRS after the new tax bill passed. Now, switches in cryptos are NOT “like kind” exchanges and each such exchange becomes a taxable transaction.

  26. Sorry about your friend Steve. We’ll see what happens this year. Cracks all over the place, visible for those who are open for it. The rest, well, no mercy!

  27. Diogenes Shrugged | January 5, 2018 at 12:09 pm | Reply

    “However, today… we don’t worry about the debts. We only look at the assets. This is like eating all the junk food during the holidays and not worrying about the way it comes out the other end.”

    Preserving the shocking image along with the food metaphor, one might involve dietary sugar (desired asset), growing insulin resistance (ignored debt), and consequential amputation (default). But the way you said it certainly had impact.

  28. To call Crypto currencies a “Tulip Bulb Mania” shows extreme ignorance. The entire sector is not even the value of one FANG stock. A mania where nobody I know is in it, LOL. I have found that those most against the crypto sector are those who are getting paid not to see it.

  29. Diogenes Shrugged | January 5, 2018 at 12:23 pm | Reply

    Steve, from the fourth paragraph, in reference to things being worse than we realize, you wrote, “… I cannot share publically (sic) the information that they have provided …”

    Steve, can you please provide a reason why you’re unable to share this information? Did you sign non-disclosure agreements? Are your sources’ lives being threatened?

    • Diogenes Shrugged,

      I cannot share the information because I received it in confidence. The reason these folks contact me is that they want to share information but do not want me to make it public with names, company information and etc. So, I have to keep it private unless they state otherwise.

      However, I did mention a bit of information about the Shale Oil Company that is fudging its figures because the person is getting ready to go public.

      steve

      • Let him go public on SRS. But be careful.

      • DisappearingCulture | January 5, 2018 at 1:48 pm | Reply

        “….because the person is getting ready to go public.”

        Going public with something other than a political theme doesn’t seem to get much attention. The public doesn’t care about economics, energy, and most other issues of substance it seems. Don’t know what way[s] he would choose to go public, but I bet it will get little coverage. Media covers & focuses on what drives ratings, or sells advertising. Even the Russian collusion, politicians corruption meme people have spent their outrage & emotions on, and they seem to be burned out their outrage.

        Further revelations may be met with lethargy and apathy.

      • Is it about Continental Resources?

  30. Fed. wants to raise interest rates faster. Because inflation fears are here, but also in next crash, will have to lower. If lower from here, negative rates, big time. Trying to stay as independent of the govt. and banks as possible. No debt, some cash under mistress, PM, food (& a bit of bitcoin 😁). Thanks, Steve. Let the games begin.

  31. Steve,
    I get your letter and follow it with interest. I find your analysis to be excellent. I do however have a concern about your increasing tendency toward vulgarity to express yourself. Vulgarity is the last defense of a poor vocabulary. How many times have you heard a politician or a producer use it to sell their product?
    Good clean language will not offend anyone. Vulgarity offends a significant portion of your reading audience. I know you are not intentionally offending anyone, but you are. Please consider this as constructive criticism from a friend.
    Dick Carmack

  32. Dick, may you sleep soundly knowing your vocabulary will protect you from the next financial crash. We have your word, right?

  33. Steve very interesting article and I agree with alot of your points but one thing I don’t get is if you believe cryptos are a tulip mania waiting to happen why did you start CDX ?

    • George Kosmes,

      Good question. When Peter Frohlich (founder of the Commodity Ad Network) and I started the project, we had a different opinion of the Cryptocurrency market. This was back in July 2017. After we started the Commodity Ad Network and got involved with the CDX token and all that goes along with Listing the token and etc, we began to experience a tremendous amount of fraud and negative issues in the Crypto-Market.

      After we listed the CDX token on several exchanges, HitBTC, being the largest, we received an email from a partner of one of these exchanges. They reached out to us and asked if we would like to INCREASE OUR CDX TOKEN TRADING VOLUME & LIQUIDITY. We asked what they meant by that. They replied saying that they would help increase trading if we sent them ETH or BTC. As you know, that is SO FRICKEN ILLEGAL that if you did that on the NYSE, you would go to jail for 15+ years.

      So, we asked this individual who works with the exchange, if they could tell us who was one of their clients. We did this not because we were interested, but we wanted to see what crypto this company was assisting in trading volume and liquidity. The individual responded by saying it was ADEX… or ADX.

      I have been watching the trades on many of these Cryptos and Tokens and you can clearly see this sort of ILLEGAL activity.

      That is just one example that I will share. There are many more.

      Peter and I believe the cryptocurrency market will likely crash at some point when more people realize the amount of fraud and leverage in the system.

      However, we believe the CDX Token may be one of the few that remains after the crash because the Commodity Ad Network will be a viable business.

      steve

  34. Happy New Year, and best wishes to you & your family, Steve ! Holidays really show us that it’s our bonds with loved ones that matter above all.
    Superb article again. I am skeptical (as usually:-), as the powers that be won’t want a collapse that may drastically affect the status quo. I believe the central banks will print quadrillions to prop up everything (I bet the fed is already covertly goosing the “markets”) without telling us.
    I am a fiscal conserve-ative, who prides myself on non-consumerism, as I truly believe buying crap we don’t need is terrible for us, and more importantly, the planet. The wife disagrees:-)
    Would love to see a huge crash. I’ll do cartwheels if the tar sands become a ghost town. Really. I’m ready for it. Do I believe it will happen ? No. That said, if I’m wrong, I will put my money where my mouth is.

  35. My thinking has evolved over the years and has moved beyond sites like these. You have to get rid of your binary, either/or thinking.

    The world is gray. What we are seeing is various things reaching their end of the line, their terminus, as well as scary beginnings in other areas.

    Try to see things from the point of view of the system. It needs to continue by any means possible, and prop up the dollar by any means possibly, including squashing little people like you who dabble in gold and silver.

    You won’t beat the system this time. You have read or seen far too many stories of “plucky rebels” who overturn the system and start a new one. There’s nothing like that in real life. Just the massive system itself, which preserves itself by assimilating the billions of people into it. A hive mind, which you cannot escape because you are the same species as the hive.

  36. Hi Steve,
    Are you aware of the Stephan Molyneux Podcast? I would love to see you on his show. He reaches a lot of people and always has fascinating guests from a wide variety of backgrounds. He is very much into reason and evidence which you are plentiful of. Would get the word out there to a much wider audience and help more people.

    • Dave,

      Thanks for the idea. No, I have not heard of Stefan Molyneux, but I did check out his podcasts and you are correct that I would fit right in with his followers. I will contact him and see what he says.

      thanks,

      steve

  37. Dear Steve,
    I have the same gut as you that the fun will end in 2018.
    70 years is very significant in bible.
    Zerubbabel returned in 70 years to re-build Jerusalem after Judah destroyed in 586 B.C.
    Jerusalem destroyed in 70 A.D.
    Israel re-established in May 14th,1948. 70 years later is 2018.

    I stronly believe sometimes BIG will happen in 2018. Perhaps global finacial collapses is the least impact,somethings more serious will come !

    Yours Truly!
    Edmond Yick
    Toronto,Canada

  38. Andre Schneider | January 6, 2018 at 8:07 pm | Reply

    Im losing a massive ammount of money in the silver market, when do you expect it to go higher? every year seems like it gets postponed by more buying from the FED..

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