The Death Of The Derivatives Monster & It’s Impact On The Precious Metals

The values of gold and silver would be substantially higher if it wasn’t for the massive derivatives market.  Americans have no idea that the Derivatives Monster destroyed the ability for the market to properly value physical assets, commodities and the precious metals.

I would imagine very few people could state the total value of derivatives in the U.S. Banking Industry in 1990.  Actually, I had no idea until I did the research.  Of course, I knew it was much lower than hundreds of trillions in Dollars held by the banks today.

If we look at the table below, we can see the total notional value of derivatives in the top 25 U.S. Banks.  This data came from a paper by the BostonFed.org in 1996 titled Derivatives Activity At Troubled Banks:

Top 25 Banks Derivatives 1990

Adding up these 25 U.S. Banks derivatives holdings, we arrive at a paltry $3.28 Trillion in 1990.  The bank with the largest derivatives holdings during the first quarter of 1990 was Citibank with $767 billion.  Amazing aye?  The number one bank in 1990 didn’t even hold a $trillion in derivatives.

Let’s compare this table to the Office of the Comptroller of the Currency Q4 2013 Report on U.S. Bank Trading and Derivatives Activity:

U.S. Bank Derivatives Q4 2013

So, from 1990 total derivatives at the top 25 banks increased from $3.28 trillion to $45 trillion in 1998.  As we can see, total derivatives picked up significantly to reach a total $237 trillion by the end of 2013.

The majority of these derivatives (in red) are interest rate swaps.  Thus, the U.S. Banking industry utilized the Interest Rate Swap Market to destroy the REAL MARKET RATE OF INTEREST.  By the banks artificially controlling the market rate of interest, they also manipulate the REAL VALUE of goods, services, commodities and yes… the precious metals.

Let’s go back to 1980, when derivatives had a negligible impact on the market.  In 1980, the price of gold and silver hit new highs.  In January of 1980, silver hit a high of $49 and gold reached $873, while the Dow Jones Average topped 893.

The chart below shows the Dow-Gold Ratio from this same time period.  You will notice that in Jan 1980, the Dow-Gold Ratio was nearly 1/1.  The price of gold hit $873 and the Dow Jones was 893.

Dow-Gold Ratio 1980 to present

The Dow-Gold Ratio increased substantially until it peaked in 1999 at 44/1.  In Jan 2000, the Dow Jones hit a new record high of 11,750.  Here was the net result in the change from Jan 1980 to Jan 2000.

January 1980 Highs

Silver = $49

Gold = $873

Dow = 893

January 2000 Highs

Silver = $5.47

Gold = $291

Dow = 11,750

So, as the total of U.S. Bank Derivatives increased 1,150% ($3 trillion to $40 trillion) from 1990 to 2000, the majority of investors were flocking into paper assets of all kinds.  This had a profound impact on the markets.  From 1980 to 2000, the Dow Jones increased 1,200%, while the price of gold declined 67% and silver fell 89%.

Even though the Fed and Central Banks can control paper prices, they can’t print barrels of oil.  When global oil production started to peak , oil prices shot up substantially as competition increased.

Gold vs Oil Price & Ratio 2000-2014

The price of Brent crude increased from $25 in 2002 to $111 in 2011.  The quadrupling of the price of oil severely impacted the prices of all goods and services in the markets.  As we can see from the chart, the price of gold increased with the price of oil, until it was BUSHWHACKED by the Fed and Cartel Banks raid starting at the beginning of 2013.

This can be clearly seen by the Dow-Gold Ratio increasing from a low of 5.8 /1 at the end of 2011 to the nearly 14/1 currently.

Dow-Gold Ratio 1980 to present

The chart shows what the Dow-Gold Ratio would be using the 1980 1/1 ratio at the different Dow Jones Averages.  I doubt the Dow-Gold Ratio will ever reach 1/1 at the current valuation of the Dow Jones.  However, it will when the broader markets finally POP and head back down into the toilet.

We must remember, the Fed and Western Central Banks along with the Financial Industry have totally distorted the interest rate market.  Just look at the change in interest rates in the following countries since 2011.  This is an excerpt from the article, Fraud By Any Other Name Is Still A Fraud:

SOVEREIGN BONDS

• US, EU Bond markets rates were effectively dictated by central banks…

o During this massive rotation, US 10yr Treasury yield fell 55% from 3.67% in Jan to 1.67% in August ‘11 (currently 2.36%)
o June ’11 Irish 10yr peaked 14.5%…fell 87% til present (currently 1.78%)
o Oct ’11 Italian 10yr peaked @ 7.5%…fell 68% til present (currently 2.39%)
o Dec ’11 Greece 10yr debt peaked @ 42%…fell 86% til present (currently 5.62%)
o Dec ’11 Portugal 10yr peaked @ 17.5%…fell 83% til present (currently 3.02%)
o Jun ’12 Spanish 10yr peaked @ 7.75%…fell 71% (currently 2.14%)

• However, BRICS interest rates were generally unchanged Jan ’11 – present

o Brazil 12.4% to 11.6%
o Russia 7.8% to 9.3%
o India 8.15% to 8.5%
o China 3.9% to 4.26%
o S. Africa 8.6% to 7.8%

The evidence is clear, the Western Central Banks created the GREATEST FINANCIAL SHOW ON EARTH by totally manipulating the real market rate of interest.  Many of the European countries that were ready to see a collapse of their bond markets, are now enjoying 10 year bonds at substantially lower rates.

How on earth did the Irish 10 year bond fall from a peak of 14.5% in June 2011, to 1.78% currently (at publish date of article)??  If we compare the change in 10 year bond rates from 2011 (and 2012), the U.S.-European rates MAGICALLY all went down, while most of the BRIC countries went higher.

This SLIGHT OF HAND by the Western Central Banks to manipulate their bond markets is not a sustainable business model.  When the collapse of the GRAND U.S. TREASURY MARKET finally arrives… the value of gold and silver will skyrocket.

We have already seen the different prices of gold valued at the historic Dow-Jones Ratio of 1/1, so let’s look at silver:

Dow-Silver Ratio 1980 to Present

How many investors realized the Dow-Silver Ratio hit 22/1 in 1980?  Even when silver hit a high of $49 in April 2011, the Dow-Silver Ratio was nearly ten times higher at 248/1.  I posted the different prices of silver compared to different levels of the Dow using the 1980 22/1 ratio.

Just when the price of gold and silver were about to BREAK-OUT at the end of 2012, after QE3 was announced, the Fed and Cartel banks embarked on the policy of CRUSHING the precious metals.

The RED ARROW denotes the direction of the Dow-Silver Ratio if Western Central Bank manipulation of the markets did not occur.  Without the Fed & Cartel Bank market rigging, a Dow Jones of 6,000 would mean gold would hit $6,000 (at 1980 Dow-Gold 1/1 ratio) and silver would reach $272 (at 1980 Dow-Silver 22/1 ratio).

The financial markets today are riding on FUMES.  There is no way telling how long the FACADE can go on, but with tensions between the West & East increasing significantly, we may see fireworks sooner than later.

Why should the BRIC countries that are experiencing higher (normal) rates of interest in their bond markets continue to allow the West to get away with ultra-low rates?  In addition, many of the BRIC and South American countries produce the lions share of the world’s metals and commodities only to see their values plummet due to the manipulation of the paper markets by the West.

Lastly, the majority of Americans are totally DELUDED by the euphoria in the U.S. Treasury and Stock Markets.  At some point, the BRICS will pull the plug on the GREATEST PAPER PONZI SCHEME in history, making gold and silver some of the best assets to own.

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71 Comments on "The Death Of The Derivatives Monster & It’s Impact On The Precious Metals"

  1. That is what I have been saying Steve. Why does Putin just sit back and take it in the ass? I’m sorry, but he is getting his ass kicked. The Russian economy is taking, their stock market is tanking, the Ruble is tanking…..

    Meanwhile, over here in the U.S., our stock market is ripping higher. Our dollar is stregthening by the day. And our bond markets sit near 300 year low yields.

    We are laughing all the way to the bank while Russia is taking it in the ass. And Putin just sits there with a tinker here and a tinker there but that is it. We’re killing Russia. While we Americans get to pay ultra cheap prices for oil, goods and services.

    Did you see how Total, Exxon, and Chevron have over a 1 million, at least, in new production coming online in the next couple years? Meanwhile, Ric Rule says they’ve at a recovery rate on the Eagle Ford of only 7% and indeed we are in the early days of the Shale Revolution.

    Yup, there is nothing but good times ahead for us here.

    • Jack,

      This is an excerpt from the article I provide a link to below. Russia’s weakness in defending itself is discussed.

      “When the West sees such extraordinary weakness on the part of the Russian government, Obama knows he can go to the UN and tell the most blatant lies about Russia with no cost whatsoever to the US or Europe. Russian inaction subsidizes Russia’s demonization.”

      http://www.paulcraigroberts.org/2014/09/25/will-russia-china-hold-fire-war-alternative-paul-craig-roberts/

      • Thanks David for the link. Very good stuff. That is better said than how I have been saying it. Basically, we own Russia and China. And they have no leadership to change that.

        USA is going to continue to rule the world. Never bet against America. Because at the end of the day, we are the largest threat to peace and prosperity to any country in the world–NEVER stand in our way. WE OWN THE WORLD. You see, our debt isn’t our problem–it is China’s problem. It is Japan’s problem.

        At any rate, yup, Paul Craig Roberts said what I said about calling out the CRIMEX by asking for delivery. IT WOULD BE SO SIMPLY FOR RUSSIA TO PULL THE RUG OUT FROM UNERNEATH THE WHOLE PONZI! That Russia chooses NOT to means the whole Cold War 2.0 is merely a sideshow, a distraction.

        You see, when they “come together”, Obama and Putin for the prime time pictures, you can expect STOCKS to rally across the GLOBE to the MOON! And why not? We have enough Oil in the world to support growth and paper for decades! It is no wonder that gold and silver have entered their very own nuclear freezes while everyone that HAS PLAYED ALONG with the power structure has enhanced their wealth in multiples.

        • So uhh… Jack, please allow me to respectfully disagree with you. We do not own the world. What we do own is more debt than we could ever possibly repay. I would also like to add it is ill advised to underestimate Mr. Putin. It is also unwise to dismiss China to a “also ran status”. While it is true they have problems and bubbles, the global economy being connected as they are, their problems are our problems. I wish it was as easy as waving the flag, “truth” “justice” “and the American way” but it’s not. Sadly, it is our own system that has us in trouble. To put that bluntly the Fed., the central banks, and our very own government have sold us down the river and a bill of goods. I whole heartedly agree with the gentleman that authored the article. These things,matters are his business,his bread and butter. Our debt is 127% of GDP, a tough row to hoe.

        • The words of every arrogant nation just before their downfall.

        • Brian Scrocca | October 5, 2014 at 9:10 pm |

          What if they are not ready accumulating all the physical gold? Let’s not forget in order to play in the Crimex you need to accept cash payment for all your efforts. Since when is gold ever delivered in giant quantities at the Crimex?

        • I’ve copied and pasted into this reply one of the best analysis about this:

          Far from being ‘the end of the NWO’, the ongoing decline and coming collapse of the US Empire and its Petrodollar are the Money Power’s key goal in her age old drive to World Government. The BRICS Bank is a purely Globalist institution that paves the way for a new Currency Order after the Petrodollar has been done away with.
          The endless chatter in the Alternative Media about Putin and Russia ‘fighting the New World Order’ looks a little hopeless at times. It’s not that Putin does not seem to be a fairly reasonable chap for a politician and ‘world leader’. Clearly he has the moral high ground in the sense that US/Zionist Imperialism in the Middle East and the ghoulish coup and provocations in the Ukraine are obviously purely criminal and Russia is defending legitimate interests.
          But the ongoing equation of the New World Order with the US Empire is the sand in our eyes: the reality is that the US as the hegemon is dead. Why do people believe the New World Order would be interested in the United States after decades of horrendous domestic policies that have destroyed the health of the population with GMO and Big Pharma? After letting its once world class infrastructure crumble away before our very eyes? After outsourcing its manufacturing base to China, its supposed ‘strategic rival’? Do people think the Bankers are stupid? That they don’t know how to run a country properly? That they would destroy the goose laying the golden eggs without a plan?
          The United States has been eaten from within and its bloated military and overvalued Petrodollar are the only things keeping its emaciated corpse still looking somewhat frightening. But both are totally overextended and antiquated and will without any doubt meet their doom within the foreseeable future.
          The debate is far too much about people. Barack Obama golfing while the heroic Putin is doing so much good. This is not the kind of analysis that is very troubling for the Bankers. We need to focus on the larger picture. The who behind the scenes, instead of the puppets in the limelight. And, even much more important, understanding their strategies, their methodology, their main gun being Banking, institutionalized Usury.
          Obviously a usurious BRICS Bank, that will undoubtedly be ready for a key role for Gold once the Petrodollar is resetted out of existence, is not in any way ‘threatening’ to the Globalist Bankers on their road to World Currency. No, it’s just the next step in an age old plan.
          The Money Power
          The Money Power is the group of age old Banking Families that rule the world from behind the scenes. They are the Princes and High Priests of Mammon’s Empire. Jewish Trillionaires are at its core, but many old European ‘noble’ families are also very highly placed.
          God only knows where they came from or where they learned their tortuous tricks. Perhaps the old God Kings that used to rule the planet before the Great Flood put us back into the stone age left a copy of their handbook in Babylon, where the Jewish Pharisees and Money Changers and some others seem to have learned the trade.
          The core of their Empire is the Capitalist Monopoly: all the major banks own each other, and are ultimately owned by said families. Not only that, they also own 80% of all Transnationals, plus associated patents: their technology is undoubtedly very advanced. They also control most land and related resources.
          They have built this Empire through Usury: compound interest makes it inevitable that the very richest own everything within generations.
          Not only do they own everything, they also own everybody. We are totally enslaved through Usury, taxation and artificial scarcity.
          Our chains are invisible. Usury is the main issue and it’s invisible because most of what we lose to it is in the prices we pay for normal day to day goods and services: producers incur costs for capital during production and must pass these costs on to the consumer. These costs compound in the supply chain and it transpires that about 40% of prices we pay are Usury passed on to us.
          Not only that, the State is also owned by the Plutocracy. Always has been: there is no precedent in history of a State that was not outright controlled by the Powers that Be behind the scenes. This is very important to understand, because it is quite common to look at the State for salvation against Plutocracy. But the State has, besides Usury, always been their main method of control! As the Protocols put it: “In the beginnings of the structure of society they were subjected to brutal and blind force; afterwards — to Law, which is the same force, only disguised.”
          Taxation is up to 50% Usury passed on to the taxpayer, what remains is directly controlled by the Plutocracy also through its asset, the State.
          The Transnational Cartel (Oil, Automotive Industry, Telecom, Big Pharma, etc) operates through monopoly and artificial scarcity. In a healthy economy, mass production crushes prices, but the Cartel keeps prices inflated by buying up or crushing all competition. Through inflated prices, they suck away most of what remains of our life force after we have paid all the Usury and taxation.
          This is what looks so desperate about people worrying about the coming New World Order. It’s not a ‘new’ world order, it’s a very old world order, that is just externalizing the Hierarchy in World Government: we are already totally, utterly, completely enslaved.
          Oil and the rise of Russia, Iran and China
          It’s well known that Empire has traditionally built up ‘enemies’. Either to crush them, or because they are needed for dialectical struggles that can be exploited. The Money Power is a global Empire, that has the nations battle it out amongst each other. Warring is profitable, it traumatizes people so they are more easily controlled and ritual sacrifice is pleasing to their ‘god’.
          A good example was Saddam Hussein, who they provided with know how and arms, so he could offer a good excuse for invading the Middle East. Enemy du jour is ISIS, which is well known to have been built up from scratch by the US through its Saudi Arabia and Gulf State proxies. Now that it is strong enough, they can start fighting it. The real war is of course against the peoples of Iraq and Syria, but a bogey man is needed to hide the resource grabs behind it all.
          The same has been going on with the Sino-Russian axis and Iran.
          China has been built up by handing it the Money Power’s manufacturing base. This is a disaster for both the US Empire and the American people. Two wholly different entities, mortal enemies, although the gullible masses tend to enjoy the ego aggrandizement associated with being part of a big Empire, overlooking that this comes at the price of subjugation.
          Is Washington stupid? Does it not know that its power was built on the thrift of its people? Of course they’re not stupid. Washington is a tool of another power, that’s why this is happening.
          Russia is a different story: it has long been controlled through its dependence on Oil exports.
          In the eighties Reagan started an arms race against the Soviet Union and he has been credited for bringing down that ‘evil Empire’. The real story, however, was that the Money Power institution that actually rules America (the Federal Reserve Bank and its owners), crashed Oil prices by restoring the Dollar, that had been inflating badly in the seventies. This was the key reason that the Soviet economy finally crumbled and could no longer maintain a ‘threatening’ facade.
          In the nineties, when the Money Power was plundering the ex-Soviet economy through its Jewish Oligarch proxies, Oil prices remained very low and Russia on its knees.
          Then in the early 2000’s, just after Putin came to power, they started raising Oil prices again, both by US military adventurism in the Middle East and by massive speculation by Wall Street. The Money Power controls all major resources and can halve, double or quadruple all prices at a moment’s notice. Oil prices actually went up tenfold: at its peak it stood at about $150 for a barrel, up from $15 only a few years earlier.
          These insane (and totally unnecessary) prices have provided Russia with an enormous windfall. Russia? Well, the Russian State and the Oligarchs, Putin included, anyway. The common man saw little of it and wealth inequality in Russia is at US levels.
          The Russian State under Putin used the money to pay off the National Debt and particularly to reinvigorate the Russian military. The same can be said of Iran, which has been heavily investing in its military, which would have been impossible without the massive Oil boom.
          All this is absolutely totally typical of long term Money Power scenario based planning.

    • Silver Curious | September 27, 2014 at 1:20 am |

      If the Chinese wanna keep selling that “made in China” junk in the thousands of Walmart stores across the US – they know they have to play by US rules.

  2. “When the collapse of the GRAND U.S. TREASURY MARKET finally arrives… the value of gold and silver will skyrocket.”

    You are going to be waiting a long, long time for this. Just look at Japan! But we are in way better shape with our energy revolution, technology powerhouse, and a young population.

    Like Japan, you are going to be waiting and waiting and waiting for a bond blow up that just NEVER happens.

    And the derivatives market will NEVER blow. TPTB learned their lesson when Lehman failed.

    It’s all roses here in the U.S. Indeed, about as good to Unicorns and Skittles as it gets.

    Meanwhile, the BRICS are so slow, dumb, and flatfooted that if I lived anywhere near those countries I’d board a flight to the U.S. immediately where one can still make something of themselves……heck, just move to North Dakota where folks are going to be getting rich for DECADES. Even Ric Rule says so…..the smartest resource analyst on the planet (according to him–lol).

    Jack

    • I’m glad you have such faith in the economic system. I think the issue at hand it that so long as everyone is willing to stay in the system it won’t fail.

      I know a lot of countries are doing currency swaps so they can bypass the dollar and even though it’s occurring at a slow pace, it will reach a tipping point eventually.

      I don’t think Russia and China are stupid enough to take on the USA directly. The US army is very powerful… They would loose more than they would gain…

      I think the most crazy thing about the us dollar system is the vast amount of money that has been created into the system over the last decade or so. At the height of QE the Fed was creating about 1trillion a year.

      Countries like China and Russia and other countries need to produce in order to have access to money like that. I believe Russia recently found a new oil field up north that could be about 900billion barrels of oil or about 1 trillion US at current prices.

      How is it a fair system where a country has access to unlimited credit they will never need to pay back to purchase things while other countries can’t. A system like that cannot go on especially if BRIC nations want to improve their standard of living.

      As a result I don’t think the derivatives system will be held together indefinitely. It will implode, and when it starts to unwind, it might be hard to grasp how quick the contagion will spread.

      I once read that humans are not good at understanding logarithmic systems. The way they work is that things exponential grow and once they hit their apex they collapse in a blink on an eye. I have a feeling derivatives/credit market went into exponential territory already, so unless the Fed/Central planners know a way to control the laws of nature/mathematics I think there is a good chance the derivative market will crash.

      No matter what you say about PM’s, if you buy 10-20% of your portfolio, the price going down is good for physical purchases as you can get more. If you plan on waiting to buy and do it before things unwind — you will need to try and front run everyone who will also be rushing from the equity/bond side of the boat into physical PM purchases.(good luck with that)

      Also, I think China and Russia are looking out for their countries best interest and Dr. Paul Roberts is off base IMO. China cannot take on the USA directly unless they want their domestic manufacturing to implode and have riots in the streets. They are trying to shift their economy to a domestic consumption model as opposed to export based. They are also trying to unload as much of their US reserves on physical purchases and infrastructure upgrades as possible in the quickest amount of time possible. Russia also has shifted away from a communist to capitalist economy, and I think they want to have an economic system in place that rewards their country for producing and selling the raw materials that take so much effort to extract/refine.

      We live in interesting times where people in the West have access to cheap/easy credit and I think there is a possibility I will wake up one day and the economic system will have collapsed and markets will have re-priced overnight.

      I can’t afford a house without a 50yr mortgage, so PM’s are a cheap alternative with my extra “rainy day” money fund.

    • Brian Scrocca | October 5, 2014 at 9:13 pm |

      What makes you think those bonds have any value? In essence they have collapsed. I can still buy your house or one share of the DOW for less ounces of Gold today than the year 2000.

  3. Oh…..and even Platinum is tanking. According to the biggest pompous resource guru in the world–Ric Rule–the companies that produce this precious element cannot earn their cost of capital at these prices…….and that there is a supply deficit! And that it is ONLY mined in three places in the world–Russia being one of THEM!

    YET, Russia sits back and does absolutely NOTHING. This is why I don’t believe the Cold War 2.0 bullshit. I think Putin and Obama are best friends! I actually think they might be working together……cause the conflict, then reaction, then answer. And that answer will be a NWO.

    Yup, I think you see the world a very narrow lens.

    • I think anyone who truly believes he/she knows what is happening behind the curtains, are a fool in their own wisdom.

      I think things are NOT what they seem
      And I think the reverse of what they would seem, is not what is happening either

      The surface is never the truth, I yield you that
      The opposite then would appear to be the truth, but any chess player knows one must think a minimum of 3 steps ahead/deep; and 7 preferrably. When you have “time” to make plans, those plans run VERY deep indeed.

      I myself, tend to lean more towards a deeper rooted plot. One which the Brics seem to be fearful in reacting, but plan a crushing action behind the scenes when opportunity presents itself- one with an advantageous response, which must be prepared before the carpet is pulled. AND THEN, within that plan, I feel there are traitors, whom will betray those BRIC members at the HINT of failure with a “Plan C” (if you will), one which enables them to “cozy” up to/with the enemy, and sell out their partners at a LARGE price; crushing the opposition once and for all and making them ultra rich in the process.
      The traitor I’m talking about….. is China.
      (See, I’m better than an author, you don’t have to read to the end to find the villain!) 😉

      • P.S. – attempting to remove myself from the “fools list” (lmao!) I would like to say that this is just my gut instinct, I don’t hedge my investments off of this feeling… I merely have my private opinion, which I have never shared until now.

        Feel free to disagree… one opinion is as good as the next! 😉

  4. “In addition, many of the BRIC and South American countries produce the lions share of the world’s metals and commodities only to see their values plummet due to the manipulation of the paper markets by the West.”

    EXACTLY! And Russia sits back and does NOTHING. Honestly, Steve, I think your only hope is that it is Russia draining the silver Shanghai exchange, creating proxies on the COMEX, and will ask for SILVER settlement in total of around 5 billion ounces. Because that is all it would take to expose the entire system as naked

    And if Russia doesn’t do this within the next 6 months (remember their economy is TANKING right now) then you know Cold War 2.0 is a pleasant distraction……and you will wait until your dead just like Ted Butler without every seeing real price discovery.

    Any comments to this post at all?

    • Jack,

      Nice to see you back. I knew you wouldn’t keep your word… the one where you said THIS WOULD BE MY LAST COMMENT (LOL). Maybe that says something about your character.

      Anyhow, feel free to continue as I know you will. I enjoy your comments. It keeps the BLOG LIVELY.

      steve

  5. Steve,

    I have learned a couple things from you. So thank you. But you never answer me: Total, Exxon, and Chevron all have over 1 million in additional barrels per day coming online in the next 2-3 years from their massive cap-ex plans over the last couple years (hence the cash flow drain until the oil gushes), do you not see that hurting your thesis? And what about what Ric Rule says about the Shale just getting started with recovery rates at 7% like at Eagle Ford?

    And secondly, what do you think Russia will do other than just nothing?

    Jack

    • Very interesting comments thanks jack. Steve’s hypothesis is probabaly correct, but timing may be off yet again. I feel paralysed as i may be hedging for something that may not yet be on the cards, causing me to not take risks and remain stagnant with my choices. I really wish i knew what was up

  6. Jack:

    Anecdotal comments we may get anywhere. Meaningless. As Steve’s article displays facts, figures, analysis and thoughtful conclusions, following intelligent introspection, your meaningless, unfounded, empty, troll like rants are a joke. Please move on. You are a moron, buffoon, who posts nothing but ‘twattle’ hoping for just such a comment as this. Congratulations! You got it.

    Last one. I shall no longer read, nor comment on such silliness. Goodbye.

    • P.S. Thank you Steve for the article. Enjoyed it immensely.

    • Oh jeeez, I see. You don’t want to do ANY homework yourself Outlookingin, and you prefer to just take everything in as gospel if it has a couple charts.

      This is why you are the moron. Just READ Total’s recent 10k, Exxon’s, and Chevrons. Add up what they believe they are going to be producing after having just invested 10s of billions collectively in NEW oil projects. Do a little work jackass–sorry I don’t provide silver spoons

      Furthermore, what about Putin seemingly doing nothing to hurt us don’t you get?

      Jack

      • Jack,

        I allow a certain amount of leeway with FOUR LETTER words, but let’s remain adults here. I had to EDIT your childish remark. Funny you should mention the MAJOR OIL COMPANIES getting ready to ramp up production. That’s hilarious when this chart shows the REAL PICTURE:

        Let’s see if you can explain that chart.

        steve

        • Thanks Steve I will try to keep my language in check. But I still can’t figure out why Putin is such an @ss!

          Okay, per your chart. Big Oil in that of BP and Shell is a disaster. BP for the obvious reasons of having to sell off assets for the deep sea fines of Macondo and capital spending plans that won’t lay out a single dollar unless the projects can have good margins at 80 a barrel. The only big project BP really has going for it is a pipleline of about 2.5 bilion of cubic feet of natural gas into Europe.

          Shell is very similar to BP. Not many good projects in the works.

          BUT, Total, Exxon, and Chevron are vastly different beasts for Big Oil. Between the three, we’re talking an ADDITIONAL 1 million plus per day of oil equivalent in JUST the next three years, which includes the big decline rates of Exxon.

          On the chart, it deeply bothers me as per the U.S. Energy Information chart you used awhile ago showing negative free cash flow over the last 3 years of the industry. In this chart the first bullet point says:

          “Oil production has faltered,, even as capex has soared.”

          This is absolute non–sense in regards to Big Oil. Especially in regards to Total, Exxon, and Chevron, all three having spent roughly 150 billion in cap-ex in the last three years! So sure, there cap-ex has soared….but THAT CAP EX HAS BEEN MOSTLY FOR PRODUCTION THAT HASN’T COME ONLINE YET! Expecting production to soar before the spigots open on the projects that will come online that cost 10s of billions of dollars in putting the cart before the horse. In fact, when I see these lines in regards to what is happening to these Big Oil producers I THINK IT IS JUST TO GET THE AUTHOR some attention.

          Total is a great example. By 2017, they have modeled for 750,000 INCREASE in oil equivalent production after having spent billions in the last couple years (they have yet to see a return on that cap-ex thus far). While it is true this is the biggest production ramp of the Big Three Oil, it is neverthe less very significant. Read that again: 750,000 in ADDITIONAL production by 2017! (It is all in their 10k by the way). and Total believes that their cash margins on this NEW production is around 50 a barrel! Yeah right: Oil production is faltering on cap-ex soaring. You can completely reverse that sentence in the next couple years in regards to Total, Exxon, and Chevron!

          I don’t have time to go into complete detail right now on the others…..but let’s just say that is is going to be raining Oil in the coming years.

          Jack

          So, BP, as a listed oil major doesn’t fit well on the chart above. And Shell is doing the same things as BP–selling off assets and not investing in projects.

          • Jack,

            It will be interesting to see if the projected increases take place in these oil majors. I did say the Bakken would peak in the next year or so, and then the Eagle Ford soon afterwards. I still hold by that forecast.

            That being said, let me explain some DECLINE RATE MATH.

            The United States oil industry suffered an annual decline rate of approximately 5% prior to shale oil coming onto the market. Now that shale is a much larger percentage of overall production, the annual decline rate is now at least 10%…some say 12-15%.

            But, let’s use the conservative 10%. If we consider that the U.S is now producing 8.8 mbd – million barrels a day, that turns out to be a 880,000 barrels a day lost each year due to the 10% annual decline rate.

            Thus, the U.S. Oil Industry will need to REPLACE ALL CURRENT OIL PRODUCTION within the next decade.

            For a frame of reference… the U.S. would need to add 10+ new Alaska Prudhoe Bay Oil Fields which peaked at 722,440 barrels a day in 1988. Prudhoe Bay’s production fell to 182,488 barrels per day in 2013.

            Do you honestly believe this will happen??

            steve

          • Steve,

            Sorry i didn’t this comment before. The projected increases will be close. One thing I’ve learned with the majors–they are typically really close to production projections, but off by multiples on the cap-ex often. Which I concede makes the oil seem harder and harder to get to…..

            I know decline rate math. To be an expert on this all you need to do is become an expert on Exxon. The amount of oil they need to replace a year is indeed staggering…..but they have been very successful and are going to be successful over the next 5 years as well.

            What I totally believe will happen, and one thing I agree with you 100% on, is that it is the United States that the cheap and easy oil is long, long G o n e!

            I think between the U.S. losing its reserve status over the next 10 years, and then suddenly having to import most of our oil again, that you will end up being right about our house of cards blowing up.

            But I disagree still wholeheartedly about no cheap oil coming. It is coming.. But it is not coming in the U.S.

            Unless something magical happens here in the U.S. it is going to be rough sailing. Buying the RSX with a long-term view is the way to play it. Shorting U.S. markets using options is another way to play it.

            But unitl Russia and China really formulate and execute their de-dollariization plans, expect a lot of pain.

            Jack

      • Jack, please be kind enough to allow me to respond to your comment. Regarding Mr. Putin, he is a patient man. While here in the U.S.A. we look to instant gratification,quick action,immediate responses,the other side of the world takes their time,weighs things from many angles and waits for a further sign of weakness or perhaps a better,more metered course of action. Mr.Putin is no chump,nor is he ignorant. The fact that he hasn’t taken the actions that you,Jack,would have,does not mean he isn’t taking any. The freezing of westeren assets is no small thing. Drilling rigs,billions of dollars of equipment confiscated is nothing to sneeze at. That’s just the beginning. Contracts negotiated bypassing the dollar,dumping of U.S. Treasuries along with China and the BRICS. No Jack, to say Mr. Putin is doing nothing is erroneous. Remember “rope a dope” I am no fan of Mr. Putin, please don’t misconstrue. However, he is a formidable adversary, and his methods and the man must be respected.Shale oil has as yet to turn a profit,and is a waste of fresh water,which we have precious little remaining. The rumor,the promise of shale return was responsible for the up trade. More B.S. to keep up the illusion that the entire system is broke and a farce.

        • HYMN, thank you for your thoughts. Did you read Dr. Paul Craig Roberts thoughts that David posted? I’m re-posting part of his essay that I TOTALLY AGREE with and have been conveying in my crazy ways:

          As far as I can tell, neither the Russian nor Chinese governments understand the seriousness of the threat that Washington represents. Washington’s claim to world hegemony seems too farfetched to Russia and China to be real. But it is very real.

          By refusing to take the threat seriously, Russia and China have not responded in ways that would bring an end to the threat without the necessity of war.

          For example, the Russian government could most likely destroy NATO by responding to sanctions imposed by Washington and the EU by informing European governments that Russia does not sell natural gas to members of NATO. Instead of using this power, Russia has foolishly allowed the EU to accumulate record amounts of stored natural gas to see homes and industry through the coming winter.

          Has Russia sold out its national interests for money?

          Much of Washington’s power and financial hegemony rests on the role of the US dollar as world reserve currency. Russia and China have been slow, even negligent from the standpoint of defending their sovereignty, to take advantage of opportunities to undermine this pillar of Washington’s power. For example, the BRICS’ talk of abandoning the dollar payments system has been more talk than action. Russia doesn’t even require Washington’s European puppet states to pay for Russian natural gas in rubles.

          One might think that a country such as Russia experiencing such extreme hostility and demonization from the West would at least use the gas sales to support its own currency instead of Washington’s dollar. If the Russian government is going to continue to support the economies of European countries hostile to Russia and to prevent the European peoples from freezing during the coming winter, shouldn’t Russia in exchange for this extraordinary subsidy to its enemies at least arrange to support its own currency by demanding payment in rubles? Unfortunately for Russia, Russia is infected with Western trained neoliberal economists who represent Western, not Russian, interests.

          When the West sees such extraordinary weakness on the part of the Russian government, Obama knows he can go to the UN and tell the most blatant lies about Russia with no cost whatsoever to the US or Europe. Russian inaction subsidizes Russia’s demonization.

          China has been no more successful than Russia in using its opportunities to destabilize Washington. For example, it is a known fact, as Dave Kranzler and I have repeatedly demonstrated, that the Federal Reserve uses its bullion bank agents to knock down the gold price in order to protect the dollar’s value from the Federal Reserve’s policies. The method used is for the bullion banks to drive down the gold price with enormous amounts of naked shorts during periods of low or nonexistent volume.

          China or Russia or both could take advantage of this tactic by purchasing every naked short sold plus all covered shorts, if any, and demanding delivery instead of settling the contracts in cash. Neither New York Comex nor the London market could make delivery, and the system would implode. The consequence of the failure to deliver possibly could be catastrophic for the Western financial system, but in the least it would demonstrate the corrupt nature of Western financial institutions.

          Or China could deal a more lethal blow. Choosing a time of heightened concern or disruptions in US financial markets, China could dump its trillion dollar plus holdings of US treasuries, or indeed all its holdings of US financial instruments, on the market. The Federal Reserve and the US Treasury could try to stabilize the prices of US financial instruments by creating money with which to purchase the bonds and other instruments. This money creation would increase concern about the dollar’s value, and at that point China could dump the trillion dollars plus it receives from its bond sales on the exchange market. The Federal Reserve cannot print foreign currencies with which to buy up the dollars. The dollar’s exchange value would collapse and with it the dollar’s use as world reserve currency. The US would become just another broke country unable to pay for its imports.

          • MY THOUGHTS: China and Russia really don’t get it. They don’t get the Wolfowitz Doctrine. The Chines and Russia are slow footed and WAY behind the curve. As a matter of fact I think they just don’t want to rock the boat. Anyhow, Craig Robers summary was awesome and sums up the state of the markets very similar to Steve’s article:

            “The bond market is rigged by the Federal Reserve which necessitates rigging the bullion markets in order to protect the dollar. The stock market is rigged by the outpouring of money from the Federal Reserve, by the Plunge Protection Team, and by corporations repurchasing their own stock. The dollar is supported by tradition, habit, and currency swaps.

            The American House of Cards continues to stand only as a result of the tolerance of the world for vast corruption and disinformation and because greed is satisfied by the money made from a rigged system.

            Russia and/or China could pull down this House of Cards whenever either country or both had leadership capable of it.”

  7. “and some built their house upon the paper,,,uuuhhh sand”

  8. Thanks for the Silver:DOW ratio analysis Steve.

    While I am here anyone got any thoughts on ebola and its potential to cause disruptions to platinum mining in South Africa?

    http://www.discreetbullion.com/blog/ebola-and-platinum

  9. So my question is…

    Which US Banks today have the highest exposure to the Derivative bomb? Citi? Chase?

    Jd

  10. Glad you are enjoying the J*** show.Me, not so much,spoils this site/comments.

  11. @jack

    To answer your repeated questions on why Putin is keeping quiet…Put yourself in his shoes. He’s watching the US (NATO) bang the war drums all over eastern Europe and the Middle East. We (the US) have been trying to pick a fight for well over a year now but no one is taking the bait. If Putin engages us militarily or starts overtly dumping treasuries (financial warfare), the US can declare an act of war and now we have a justification for a fight and bad guy to pin it on. Why would Putin want to give the US a common enemy to rally around when we’re going to self-destruct on our own from our crushing debt?

  12. @Chuck,

    Thank you for your thoughtful reply. FWIW, Russia has been dumping their U.S. Treasuries in a big way…..and buying gold. That hasn’t enabled the U.S. to declare war on Russia in public but between Russia resource expansion plans to try to establish for power and Russia dumping treasuries this is indeed why we continue to poke the bear with a stick.

    You could be right. Dr. Paul Craig Robers and Steve are right: it is a financial house of cards. And eventually it will fall on its own weight whether Russia or China do something to pull a card or two or not. And that could be their plan against American World hegemon: patience. Because castles made of sand do eventually slip into the sea…..

    Jack

  13. Link for Jack regarding Russia’s apparent passivity. It explains the much, much bigger picture very well I think:
    http://www.vineyardsaker.blogspot.mx/2014/09/the-russian-response-to-double.html

    • Brian,

      Thanks for the link. Excellent commentary on Putin and Russia’s mid and long term plans… a lot more detailed than the SILLY PUTIN WIMP put forth by those who don’t have all the facts.

      steve

  14. Hi Steve,

    Nice piece again, thanx. One small typo you might want to correct (beginning of the piece)

    ”As we can see, total derivatives picked up significantly to reach a total $237 million by the end of 2013.”

    That should read 237 TRILLION and not million.

    To make sure you see this piece….. via ZH ”Russia Discovers Massive Arctic Oil Field Which May Be Larger Than Gulf Of Mexico”
    http://www.zerohedge.com/news/2014-09-27/russia-discovers-massive-arctic-oil-field-which-may-be-larger-gulf-mexico

    This is the first Major new oil field found since I started following this mess and likely longer.

    regards Hugo

    • Brian,

      That was an excellent summary. Thank you for sharing the article. I learn new stuff everyday and defiantly puts into a perspective I can understand. There is so much tug and pull going on it is unreal.

      “Appear to be generally available and willing to do business with the AngoZionist Empire while at the same time building an alternative international systems not centered on the USA or the Dollar.”

      I have suspected all along Russia and China are willing to be very patient in theri DE-dollarization plans. Mostly that they still need to build the infrastructure to do so and so the do-dollarization is really a slow, long-term process. This also explains what appears to be their lack of forward motion.

      It also explains why they probably have no problem with gold and silver sitting on the bottom–and well as platinum because they don’t want to show their cards anytime soon as this plays out over a multi-year time frame.

      Jack

    • Anyone who seriously knows oil knows all about the Arctic Oil and the enormous oil that will be coming out of there. Of course, anyone wiling to take a look at the other two companies I mentioned in regards to Exxon and Chevron!

      Of course, Steve WILL NEVER COMMENT on this because it doesn’t forward his peak oil thesis as I’ve been discrediting much to the cry of the blind followers.

      Jack

      • Hi Jack,

        I do not believe in peak oil at $100 now, but peak oil at $14 an barrel we had. If you read the piece I linked u see that oil from there requires over $100 an barrel to extract, unlike the $80 (if I recall well) for tar oil fields. Fossile energy getting more expensive, human energy (labour) cheaper…. where will they meet?

    • Hugo,

      Thanks for the typo… I changed it. Yeah, that sounds nice on PAPER the so-called MASSIVE ARCTIC OIL FIELD DISCOVERY. Now, if the U.S. Navy climate model is correct, we should see a summer time ice-free Arctic Ocean before 2020. However, there are still gigantic challenges with drilling and extracting oil in the Arctic.

      If we have to resort to drilling oil in the Arctic, we have surely reached PEAK OIL.

      steve

      • Steve,

        Do you do much individual research on Big Oil? It appears to me the answer to that is a resounding no and that you are researching top-down macro much more. Anyhoo, if you followed Big Oil you would realize that Exxon and Roseneft have been partnering jointly for massive Artic Oil production for years as their exploration efforts have merited it. The project is going to be a real doozy–we’re talking roughly $1 trillion in cap-ex in a few years. But the amount of oil Exxon is projecting is absolutely mind blowing. The quesiton isn’t whether the oil is there (feasibility studies show oil at 87 a barrel will make this venture MASSIVELY PROFITABLE even with a Trillion Outlay) but whether or not the politics get in the way of the Exxon/Roseneft partnership.

        We’ll see.

        At any rate, there are some massive finds out there. Exxon thinks they can produce oil out of the Artic with a EROI of 50 barrels to 1. The size and scope of the project is the leverage the world has been waiting for.

        Jack

      • And with a Ice free arctic summer a real climate nightmare should begin, methane will come out from the see floor in unseen amounts, unstoppable feedback loop will give us our last kick.

        Let’s see how much oil we get out from there , without digging further into it, I don’t believe it will be much.

  15. Hi Steve;

    I recently came across a new website “The Philosophyofmetrics” that promotes an eventuality which I had never considered in the past. In a particular post, “Renminbi is already a defactor currency,” the author details the back room dealings of the IMF/World Bank/BIS and the BRICS, for what will be the roll out of the new currency in the form of a SDR that includes a handful of world currencies backed by a variety of resources including a component of PM’s. This is not a new concept, but one suggested by various talking heads and downplayed by various contributors like Jim Wille. What is particularly shocking, is the collusion that “MAY” be going on between the BRICS Nations and the Western Banking Elites. Imbedded in the article is actual documentation supporting this action in the context of the G-20 Nations. In other words, TPTB are coordinating a transition from the current reserve dollar intentionally to a SDR basket (as per Jim Rickards ad nauseum) that will ensure that the bankers not only maintain control, but flourish by the transition. To me, this can explain the reason why China and Russia in particular, have not acquired the last ounce of gold and silver and even if and when they do, it won’t matter, because control of the currency will remain with the bankers and the their compatriots.
    I think, for what it’s worth, some of us in the so-called enlightened camp, should spend much more time confirming the thesis of this potential than keeping a running tab on where the ounces are. It’s possible that while we’re trying to figure out which shell the pea is under, the Elites have made off with the Mother Lode.

    • Bill,

      Yes, I’ve heard this theory before and it does make perfect sense. However, this does not factor PEAK OIL into the equation. If this was 1980, 1990 or 2000… the transition to a SDR system would make perfect sense. Unfortunately, the world doesn’t run on PAPER MONEY, it runs on energy.

      The Central Banks can print money and give the ILLUSION of growth with INFLATION, but they can’t print barrels of oil to give the REALITY of actual growth. Peak Oil will be the default mechanism that destroys any attempt for the SDR to be a long-term monetary solution, and along with it the valuations of most stocks and bonds.

      steve

  16. Steve,

    I take no issue with the Peak Oil (expensive/low EROI) future we face. As you know, I’m a proponent of the “Triangle of Doom” thesis postulated by Steve Ludlum. In time, the effects of costly fossil fuels will be obvious even to the thickest of minds. The premise of my post concerns the collusive actions by various world governments to continue the fiat currency regime by coordinating their actions and protecting the current status quo of players. The military and geopolitical machinations now in play (Ukraine/Syria et al.) are symptomatic of governments attempting to secure resources, resources that will be included in the calculations for determining value of newly created SDR’s. Peak Oil, in the current equation, is beside the point. It’s the value of the country’s current holdings that will determine the (de)valuation of their currencies. It’s the race to secure the resources so that the TPTB can assess value and divvy up accordingly.
    What’s my point? – If this is really what’s happening, then all this speculation of astronomical PM prices is simply wishful thinking. TPTB if allowed to call the shots, will determine the prices of the underlying assets and at least for the foreseeable future, keep the Ponzi Scheme going. So, unless we get to the bottom of this, all of the speculation of PM wealth potential is simply that – speculation. I cannot believe that the Western Elites would permit their gold holdings to simply wander off to the East if there wasn’t some predetermined plan on how that would impact the issuance of a new currency.
    That said, I’m a big proponent of PM’s and have been for many years, but I’m not naive enough to believe the control masters are asleep at the wheel. They’re not! And they know the inventories and the consequences better than anyone. It may or may not go their way, but I don’t believe for a minute that they’re not directly communicating with the rising powers in the East.
    Sorry for the long diatribe, but I’m concerned this is a gap in the dialogue that exposes a critical flank.

    • No Bill. That flys in the face of all logic. Why would Russia and China want to play happy with the Western Powers?

      Think about this for a second: Russia and China have the gold. Russia has the oil. The new SUCRE system, which bypasses the dollar SWIFT system, then allows the BRICS to trade bypassing the dollar–therefore not living under the inflationary weight of fiat dollars being printed and harming their true productivity and potential.

      So think about it, Russia has Oil, they have Gold, and they WILL have a sound monetary system that will make them more prosperous than they ever have been.

      OTOH, the U.S. has a stock bubble, a bond bubble, and a fiat bubble. No gold, and 100s of billions in fiat headed back our way–that can only be monetized by our Federal Reserve. We will lack real energy independence, and our roles with the rest of the world will reverse.

      Meanwhile, Russia rich in oil and resources, with a monetary system backed by gold, now has the BRiICS (twice the population as the U.S. and Europe) flourishing for once under their new monetary system……with thriving populations all needing. more energy happily supplied by Russia and their new friends Saudi Arabia that leans into SUCrE as well.

      And that is the long term plan, slow as it may be. Meanwhile, U.S. will be sitting on piles of worthless dollars, no gold, and little oil. We’ll be the importers just like Japan with an aging population to boost. Hyperinflation then ensues.

      The END,

      Jack

  17. There will always be oil. The new discovered field by Exxon is hardly enough for a few months world consumption.

    What is sustainable to keep up the paper leveraged assets, 1:30? 1:20? It seems the world is getting in trouble with a combination of too much debt and lower eroei in fossile energy. Big trouble. My take is that ‘diminishong returns’ in the real world, including energy, in combination with a overleveraged system will take it’s course and destroy the system.

    Exceptional growth, pardon me, exponential growth, is over. The rest is smoke & mirrors. Until 2020 we have some time to prepare. You can squeeze, but you cannot print growth.

  18. Sorry Jack, but you missed something. I mentioned in my first post documentation from credible Chinese sources used during G-20 meetings, in regards to the SDR possibility. To answer your question, “Why would Russia and China want to play happy with the Western Powers?”, my response is – I DON”T KNOW! Maybe you should read the document or reread it – and then you can answer what I think was a rhetorical question.
    When you answer that question maybe we can have a rational dialogue, unless of course you’re part of the Elite Class pulling or pushing the strings of a dying financial regime.
    Then we will call it “THE END” – but not until THEN.

    • BIll, the author stated this:

      “Those who promote the storyline of a BRICS overthrow of the US dollar are directly proven wrong by the public announcements and publications of the BRICS countries and institutions themselves.”

      And then doesn’t back it up at all.

      Then the author, JC, says this which is factually TOTALLY INCORRECT and LOSES ALMOST ALL CREDIBILITY WITH ME:

      “Indirectly, those promoting baseless theories of the eastern overthrow of the dollar are proven faulty in their analysis by the fact that foreign reserves of US dollars continue to increase and gold is still flat at best, leading to the solid conclusion that the economic banking interests in the world are continuing to support the dollar system in order to facilitate the transition to the multilateral system and inclusion of the renminbi into the SDR basket.”

      Foreign reserves are in fact declining and anyone telling me gold imports to the east are “flat” is just a complete and utter joke.

      “How else would you explain the increasing expansion of the renminbi in the foreign currency reserves of central banks around the world? ”

      Maybe the author has missed the 36 bi-lateral trade agreements China has made with other sovereigns that bypasses the dollar and settles in Reminbi? The author is just joking right? What a loser.

      “In essence, the internationalization of the Chinese currency is already taking place as shown in the vast amount of currency swap agreements and trading hubs being set up around the world. There is a frantic pace to this defacto internationalization, such as the two Canadian provinces of British Columbia and Ontario working together to quickly implement the trading hub here in Canada.”

      Well…..maybe then the East IS planning on displacing the currency. LOL

      IN a nutshell, China in 2010 held 27% of U.S. treasuries. In 2014, it has declined to 21%. This is not foreign reserves of U.S. dollars increasing in China now is it! Plus, if the author had any merit at all that the international community is working to NOT collapse the dollar by increasing foreign holdings (which they are not by fact) then why is Russia IN FACT DUMPING U.S.. Treasuries!

      In fact, if the mystery buys of U.S. treasuries did not materialize from Beligium, an increase of nearly 1000%, then the U.S. dollar would have already collapsed. Of course, this perhaps is because “other” nations stepped up and used Belgium as a proxy.

      In any case, the world is in a mess and while this author of this site that Bill illicits is a factual liar or distorter, anything is possible.

      But Russia not being included, and this author JC elludes to, not being included in the basket of Special Drawing Rights make the author seem even less credible. In fact, it seems like he is dreaming.

  19. Okay, Bill. Just throwing out game theory–I will read it. But it still doesn’t seem logical to me on the surface. Why set up SUCRE then? Why the New Developmental Bank among the BRICS nations? Why would they go through THOSE motions if they were working on a NWO with SDR’s?

    Not saying it is not possible. It seems to me in a dying financial system as you note, ANYTHING is POSSIBLE.

    Jack

  20. OK Jack, I’ll be a little less coy now that you’re sincere in pursuing the thread on this issue.
    Why would these new emerging powers entertain Western alliances? Let me speculate:

    A. According to the document I referred to, the Chinese have old debts to reconcile with the West, these would offset against the enormous western debt;
    B. The Central Banking Scam benefits big time the elites who run the system and the politicians, industrialists and financiers closest to the spigot;
    C. The SDR system would be THEIR system, their power, albeit somewhat more restrained, would still be embedded in their system – think no pitchforks and lynch mobs;
    D. Elites don’t give a shit about their country if it affects their payoffs. The masters of the universe are members of the club and the people are simply considered an annoyance.

    There are many more reasons, which on the surface, smack of irrationality, but since when was any civilization rational. Show me one and I’ll get back to counting the ounces and the price of tea in China.

  21. Jack, please refer to the document not the author of the Blog.

    “China’s Goals in the G-20: Expectation, Strategy and Agenda.”

    By Alex He.
    CIGI Papers No.39 September 2014.

    You don’t need to keep on blabbering about Belgium bolt holes and common knowledge we all get from the regular MSM and AltM. Let’s stick with the document and determine if it has any voracity because it’s news to me. What you’re using to defend your position and mine for the most part, is old hat. Let’s hope we’re right and we haven’t wasted years of rational thought. In the meantime, let’s think a bit irrationally and see where it gets us. Nothing you said is news to me except maybe your response to the document in question.

    • Bill, thanks for the replies. I’m my way out the door for a baseball game ( I need some circus right now–lol) and while I started to read the document before your post I didn’t get heavy into it. I’ll try though. You are right about hoping to not having wasted some rational thought.

      Some of the SDR argument makes sense and the support for the dollar system internationally because you could almost see how they plan to try to hold it altogether with it. And it does seem based on international trading and the actual price of gold just about every sovereign seems on board with some plan or another. But what is it? And that’s what we’re indeed just trying to figure out.

      Have a great night,
      Jack

      • @ Bill Sodomsky,

        I not only have read the CIGI paper on the Role of China in the G20, I also did some D.D. on CIGI itself. While CIGI sounds like it is this incredible and important organization it is not. It’s no more influential or important than the National Football League. Actually, the NFL is significantly more important.

        And I’ll get into more of a discussion if you’d like but I’ve come to the conclusion that J.C Collins is as full of shit as anyone else. He is so dogmatic that he’s ridiculous. His big argument to anyone that takes the other side is that they “ignore what the BRICS nations are actually saying and public documentation” with one of his BIG documents that he points to being the China in the G20 paper by Alex He, as you have referred to Bill.

        Even Alex doesn’t claim to know exactly what is going on. For every time JC Collins retorts there is no world empire developing he stand in rebuttal is always the same: “ingoring the public documentation. But just as easly, one could say he is completely ingorring PUBLIC statements by China and Russia itself!

        At any rate, no one knows because I don’t think as this plays out the combined world leaders really know what exactly the resolve is going to be. Jim Rickards has said the new system will come through a difficult but planned transisiton (SDR’s), chaos and collapse, or a gold standard. Rickarks has spent far more time on this than dimwits like JC Collins or Alex He, and not even he professes to know exactly how it plays out–just some game theories on how it plays out.

        Jack

  22. regarding Peak Oil!

    http://www.heise.de/tp/news/Oelfoerderung-wird-teurer-2108648.html
    Ölförderung wird teurer

    Wolfgang Pomrehn 05.02.2014

    The Report is in german.Oh God i must translate.
    In the article is written that the easy conveyable oil time is over.The costs for Exploration are exploding.
    New foundings are not very economical and are located at critical places.

    Chevron, ExxonMobil und Royal Dutch must spend 90 Milliarden Euro to increase the founding of oil.

    At the Ice-ocean in the North,”kaspisches Meer” and other places you cannot move the mobile oil-plattforms.
    Because of this reason the companys gave out a win-warnings.

    Different opinions about this.What is the truth?

    Greetings from Germany.

  23. just thought this was an interesting outlook for oil

  24. Jack,

    It seems you lied when you stated you would never post on this forum anymore…

    What a pity…

    • Hey let’s welcome views that run contrary to what we think we know, and let’s ALL come here to learn, contribute, and admit we all have a lot to learn.

      Best wishes to all [as long as they aren’t harming others!].

    • Yes I changed my mind RD. But do you think YOU COULD provide A SINGLE post with some kind of SUBSTANCE?

      I mean at least I’m honestly trying to figure out this mess the world is in instead of making one trivial post after another.

      Post something RD of relevance. We’re all begging you to add SOMETHING to the discussion!

      Jack

  25. One last thought on the one world empire scenario with SDR’s as the weapon of choice. First, to pull this coup off their is going to have to be a MAJOR world-wide calamity first and foremost. Why? Because the SDR system will need to be sold to the world AS THE ANSWER to the initial collapse.

    Think about what an SDR system represents? World-wide socialism on the grandest scale known to mankind. Gold on the other hand is freedom. And WE KNOW the bankers don’t want that for the people–but that is what the people world-wide collectively hope for: FREEDOM.

    So to pull off the SDR system, the collapse BEFORE the transition will have to be the MOTHER OF ALL CRASHES. Maybe that is what they are shooting for? Think about the baton going from one central bank to another in the mother of all central bank printing? We all sit back in great wonderment where in the world will this all lead us? We all know the endless propping up of every market, everywhere world-wide, including China, will ultimately HAVE to end in one of the biggest crashes known to mankind.

    When that happens, they’ll come in with the GREAT BIG WORLD-WIDE solution. SDR’s. Pure socialism. And the bankers way of keeping them in the pay-off mode.

    It could happen. But if it does, we are going to need to see the biggest CRASH EVER first. And if that is not the plan, we are STILL going to see one of the biggest crashes KNOWN to mankind.

    Either way, the way to play it like I have said all along: buy put options on EVERYTHING. That is what will help you through the transition NO MATTER WHAT.

    As for gold’s role, we’ll know if indeed we are headed to a new SDR system and that is the OVERALL plan if GOLD continues to trade flat to DOWN every single day of every single month over the next year or two. Because if it does, it will be no doubt because CHINA and the U.S. and Europe, etc. are all INDEED WORKING together. That will be the ultimate tale tale over the next year or so.

    Buckle up friends, some serious shit is going to go down ONE WAY OR ANOTHER.

    Good luck all. We are all going to need it.

    Jack

  26. Yes Jack, that’s what happens when you start thinking (ir)rationally. It all starts to make sense.

    BTW, do your homework on the moneybags behind the CIGI that you so flippently cast out of hand. His name is Jim Ballsillie, co-founder of Research In Motion (RIM/Blackberry) a multi-billionaire Canadian Oligarch, attendee at Bilderberg, Board Member of the Canadian International Council formerly the CIIA, a branch office of the notorious RIIA (Royal institute of International Affairs) located in Chatham House also known as the Tavistock Institute. The RIIA gives marching orders to the CFR, Trilateral Commission and government leaders around the world. Dr. John Coleman of the World intelligence Review and former British Intelligence Operative (MI6) has written prolifically on the various agencies that control the western world. Ballsillie is NOT a talking head, he’s a man of influence and power with a Harvard pedigree who could buy and sell puppets like Jim Rickards multiple times over. He is deeply connected and driven. To the extent that the document in question proves to be prophetic is beside the point.

    What’s important is that it exists at all.

    Over and out.

  27. Ad hominen attacks.

    Ok, this isn’t a forum to inform, learn and debate, it’s a ONE MAN WRECKING BALL.

    Sorry Steve for intruding. My point was to alert your readership that initiatives are in place to keep the current criminals in control. Not to agree with it or support it. Unfortunately, Jack(OFF) dominates and suffocates the protocol in a way that makes the process futile.

    Keep up the great analysis and I’ll stay connected, as I have in the past, outside of the forum.

    • Bill,

      Sorry. I just read his last comment. I am tired of his childish name calling. I just Trashed his comment. If he continues, I will have him banned. I warned him already of his childish behavior.

      steve

  28. No need to ban me, Steve. No kidding–I won”t post again. Everyone has my word on this, this time. I won’t be back. But it is funny has it goes one way, people can post diatribes TOWARD me all day long, make one-offs with no meaningful contributions, and that IS OKAY BY YOU. That’s cool. It is your website. I don’t really value it anyway because as I have said many times and as the releases come out it is and will become more evidendent to every human alive that we are nowhere near peak oil in the WORLD. As I’ve said, your entire thesis rests on a faulty foundation.

    But when guys like Bill are totally and unnecessarily demeaning from my very first conversation with him, and I am not allowed to respond in kind than I don’t want to be part of also a false narrative on some message board. Why is this okay:

    “BTW, do your homework on the moneybags behind the CIGI that you so flippently cast out of hand.”

    Bill accuses me of being “flippant” when in fact I’ve done the homework. And in every post toward me, Bill starts off being the disrespectful one. I have thanked many members here for their thoughtful replies with contributions beyond their own flippant one-offs.

    It’s cool. People get heated when they put so much weight into one single and large Macro view that just never comes to pass.

    Anyhow, good luck to you. As you can see Steve and you will see this whole house of cards will indeed come crashing down, as it has already started, but it does not need and will never see peak oil for that to happen.

    Thanks for a few learning experiences. I wish all here the very best of luck and the brightest of futures as we head through the Fourth Turning.

    Jack

    P.S. No need to ban me. I won’t be back this time for real.

  29. Maybe Jack’s manner of Expression was not the finest, but don’t MAKE THE FAULT to ban controverse
    meanings.This is always a bad sign.

    Greetings from Germany.

  30. Its a timing thing. First Japan & Europe Govts will fall,then it comes to America. Our stock market and currency cause it is the biggest place to park money that won’t disrupt all the derivatives. Think about if it went into Oil or Gold more. To say that China has not hedged its dollar position is just plain stupid. Obviously one has not watched China buying up America, Africa and rich resources. Heck Smithfield the largest hog producer in US was bought by the largest in China. China has been secretly hoarding Gold for years. China was the first to make an oil deal in Iraq. China owns us to say the least. The Derivative meltdown will come on those already written sometimes called legacy assets. These can never be cleared. The world is a big pile of paper. Who will guarantee it all next time? What currency? What country? What planet?

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