As Brent Crude, and West Texas Intermediate (WTI) – oil, falls below $60 a barrel, this is having, and is likely to have, a devastating effect on economies the world over.
Russia’s currency today (16th Dec) went into free-fall, even as on Monday, the Central Bank of Russia raised interest rates to 17.5%.
The last time that I remember any country doing that, was in 1992, as then Chancellor of the UK Exchequer – Norman Lamont raised interest rates to 15% in an attempt at keeping the British Pound in line with its commitment to the European ERM (Exchange Rate Mechanism).
On that particular day, one George Soros reputedly made a billion dollars as he bet against the pound, as it plunged on international currency exchanges.
Britain, spent a fortune trying to defend the currency against the speculators. But, all to no avail. And as a result, house prices went into freefall, and the economy followed, finally emerging in 1998 as spending on technology which was forced spending to replace all computers, operating systems and application software before December 31st 1999 with 32bit versions, to enable 4digit years to be processed correctly, created a mini-boom in the tech sector, and ultimately led to the tech-crash that ushered in the new millennium.
The only other time, that anyone raised interest rates that high, was in 1980, as the incoming Chairman of the Federal Reserve in the Reagan administration – Paul Volcker, raised interest rates to 15% to choke off inflation which had peaked for a second time in a decade at over 20%, after oil prices climbed to $40 on the back of the Iranian Revolution led by an islamic cleric who returned home to Iran from Paris, after the Shah, was chased out of Dodge.
The cleric, was none other than Ayatollah Khomeini, and his religious fervour, and biased interpretation of religious texts, ultimately led to much of the unrest in middle-eastern politics in the decades that have followed.
But we’re here to talk of politics, finance and economics, not theology.
However, as oil prices have fallen, the economic fall-out is spreading far and wide.
America has invested heavily in shale oil and gas extraction. To many commentators, much of the country is like a pin-cushion as numerous holes have been drilled almost leading America to be number one supplier in the world, by 2017. But much of the investment capital has been borrowed at historically low interest rates as the Fed has fought deflation, and the investment, has been premised on oil at over $90/barrel.
If oil prices continue at these low levels for any length of time, the economics of this oil extraction will be turned on its head, as shale wells, tend to peak in output and fall to nominal levels within one year, requiring a constant flow of new cheap capital, and expensive oil to make it all work.
With OPEC agreeing to not cut output, one has to wonder if this was at the request of the U.S., to punish Russia, or whether the fact that the U.S. has recently been cosying up to Iran, who have been selected by the White House’s residents as the regional hegemon and perhaps ruffled the feathers of the Saudi Kingdom and who have turned on their historical protectors.
We can only speculate.
And if oil prices remain in the doldrums, those American Corporations who are more higly leveraged, will succumb first, leading to lay-offs.
As many of those people are highly skilled and highly paid, this will have a knock on affect in local economies where these businesses operate, meaning hotels, restaurants, gas-stations, and service providers such as cleaning, food, hairdressers, bars, brewers and the like all suffer. This will mean fewer car sales, and fewer vehicles manufactured in already stressed American, and European manufacturing centres.
The ripples are like those on a pond, when a pebble is tossed into the water. Each ripple spreads and affects all those suppliers of goods and services in their turn.
Once Xmas is out of the way, the downturn will perhaps resume in earnest. Just as rumour has it, that the Fed at the FOMC (Federal Open Market Commitee) will meet to discuss interest rate rises at the end of January.
But they may be forced to raise rates, as reports arrive of an impending COMEX default surface, as precious metals head east into the land of the rising superpower – China.
And don’t forget, you can protect yourself and learn a lot more about the reasons for the current crisis HERE…
And if you get a yearning to buy some VAT free silver – either coins or bullion, you can get it HERE…
And if you want to learn more about crypto-currencies, and maybe get started for free, then you can for the price of an e-mail address get daily deposits – HERE…
Before I go, I’d like to tell you about a junior oil producer, that has an agreement with the national oil company – PETROTRIN (Petroleum of Trinidad and Tobago) to supply oil at certain royalty rates on a sliding scale as WTI prices vary.
The Company LGO Energy, took over some oil fields in south-western and south-eastern Trinidad and Tobago, in 2011, with the intention to use the exploration as a way to gain experience of the area, which had not been drilled since the 1980s. The agreement was to drill and clean up circa 90 existing wells, and to drill 30 new ones. The company ordered and installed a series of pump-jacks – Affectionately called “nodding donkeys”, and this had a dramatic affect.
When LGO took over the fields, the existing wells were producing in the region of 5 barrels of oil per day, and LGO expected to achieve circa 30-60 bopd (barrels of oil per day) after cleanup. LGO were surprised to learn that after clean up, many of these wells far exceeded expectations.
The company also began its new drilling campaign, and after drilling from new pads (A pad is a cluster of wells drilled from one location on a concrete base, but deviated so that they access different oil patches) After two pads, LGO were achieving 200+ bopd from each well, but restricted flow rates so that they didn’t damage the field, and flow would continue for longer.
However, a recent drilling campaign on Pad 3, blew away expectations by flowing at an unrestricted rate in excess of 6,000bopd. But, in order to minimize well damage, and because of limited storage capacity, flow has been restricted to circa 1,000bopd. The Chief Executive – Neil Ritson, hinted in an interview also, that the 2 other wells drilled from the same pad, had similar characteristics, suggesting that when they officially release newsflow in an RNS (Reuters News Service) this will be a game-changer for this tiny oil company.
At less than 4p for a share of this company, on the UK, AIM index, this could be an opportunity to make a considerable contribution to your pension fund. The CEO, has serious plans to expand on and build a mid-tier oil production company. I have no problem with seeing potential prices in the 20-30p range within 2yrs, and more within 5yrs.
This is not a solicitation to buy, but merely information to begin your research and for education purposes.
After posting this, I came across a video on line, that discussed the recent fall in oil prices, and the likely outcomes by people who have either a history of discussing such events, or in the case of Dr. Paul Craig Roberts, who was Assistant Treasury Secretary in the Reagan Administration.
I hope you like it.
Have a great Christmas, it may be a while before you have another.
The piece below was published just one year ago, but developments suggest that China is now in a position to takeover the Fed, as most of the Fed’s Gold has made an exit, stage left… and headed, via Swiss refineries to be re-cast into .9999 1Kg bars to the Shanghai Commodities Exchange.
Almost 4,000 metric tonnes in a little less than two years…
Information recently released suggests that over the last ten years the Chinese have imported close to 8,000 tonnes of Gold and have been the world’s biggest producer with circa 300-400 million ounces in the last five years.
In the background, The politics at the IMF, mean that the Chinese who have $4trillion in reserves are in a position to assume the mantle that the Fed has hitherto carried.
We shall see.
In the New Year, the COMEX will possibly default as the longs overwhelm the shorts, and the position may be as little as four weeks away.
I’ve been giving quite some thought to events in the political, and financial sphere and Gold and other precious metals markets of late, and trying to figure out what the true goals of the global elite are really upto.
Gold for centuries has been the backing for currencies, and the last time we had a global economic and military crisis, in the period from 1914 to 1946, Gold was eventually taken out of the hands of the American population at the princely sum of $25.00 an ounce by Presidential decree, in executive order 6102 in 1933 – just before it was revalued to $35.00.
Some semblance of order was gained when the Bretton Woods agreement was ratified after 1945. The dollar would be backed by Gold, and exchangeable for Gold and the other world currencies would be fixed to the dollar.
This stood the test of time, until the 1960s when the world’s major economies began growing at different paces, and a war in Vietnam, forced the U.S. to spend more on munitions and men trying to hold back the tide of communism than its economy could comfortably afford.
This led countries such as Spain, France and Britain to exchange some of their foreign U.S. currency reserves for Gold in the Fed’s vaults. The final straw was when Britain told its U.S. ambassador to exchange $3billion for Gold, on 11th August 1971.
Just 4 days later, Richard Milhous Nixon – President, made a direct announcement to the people of America on television, that he was “temporarily” suspending the right to exchange dollars for gold.
The ‘Gold Window’, as it was called has remained firmly shut ever since. The reason? Because they were running out of gold. And we know from our history that – “He who owns the gold, makes the rules.” and the last full audit of the Fed, was conducted… in 1954.
At the time, Gold could be exchanged for $35.00 per troy ounce (ozt) by countries only. Over the ten years after 1971, the Gold price would rise spectacularly as people worried about inflation, which rose to 26.9% in Britain, and 25%+ in America, in 1974, as the world oil price rose, in large part to events in the middle-east, but also the number of dollars being emitted to pay for the oil – until Henry Kissinger had a cunning plan.
So, given the recent events in the middle-east, and the number of dollars that have recently been printed, apparently $4 trillion and counting. Then of course there is the Bank of Japan’s recent pronouncement that it would double down on Quantitative Easing (QE) with its own printing presses, and of course not forgetting the decision to: “Do whatever it takes” by European Central Banker in Chief – Mario Draghi.
And of course our own ex Goldman-Sachs executive – Mark Carney – Chief Cashier of the Bank of England has cut the government some slack with its own printing presses, so that the government could spend money it didn’t have, on things we don’t necessarily need.
And the reason they didn’t have the money is because governments, especially socialist government’s have a tendency to bribe the electorate with their own money by making promises, that the tax-payer can’t afford. And then the Bank loans them the currency and expects to be paid back with interest.
Eventually, those who pay, end up as wage slaves.
Because, of course, when the nation is paying interest on loans from years ago it has less to spend for the here and now – and in Britain we recently paid off our War Bonds – from 1914… So you can see how long that can have an affect. Central Bankers have a tendency to enslave the population by encouraging governments to spend more than they have, in the full knowledge that they will earn interest for years, possibly decades to come. And there’s nothing like a good war for Banking business.
In business, the owners will frequently look at investments through the eyes of a “Cost-Benefit” analysis, so that they can check – before they spend – whether the investment will reap financial rewards and exceed the investment.
But many governments want to invest in socially desirable investments, where it is difficult – if not impossible – to measure the costs and benefits. Of course politicians want their cut – in the form of salaries too.
Bankers also have a tendency towards centralisation – first on a national level, but increasingly on an International level. In Europe, politicians have still not had accounts signed off for several years, as they give money to their own pet projects.
So to come to the meat of this piece.
Gold has been driven down in the last 3 years since it peaked at circa $1980 in late 2011. So, with Central Banks in Venezuela, Germany, Holland, and now France either requesting their gold back from the Fed, or recommending it to the government, either by politically minded individuals, or opposition leaders.
The Swiss Gold Referendum
Switzerland’s referendum vote on Central Bank Gold, on the Sunday, 30th November, didn’t go as hoped, after the Central Bank began a campaign of fear, and Citibank released a report a couple of days ahead of time, which to be honest, smacked of fear and desperation.
Despite this, the Gold price held up quite well, after an initial dip.
Interview with the former Chief of the World Gold Council – Pierre Lassonde.
Central Banks’ Love-Hate relationship with gold and Silver.
So, why do the Banks have a love-hate relationship with Gold? The Central Banks know that money is power… And remember – “Gold is money – All else is merely credit”… – so said, John Pierrpoint Morgan, of J.P. Morgan-Chase Bank fame, and if you have been following this blog for a while now, you will know from my many posts, that ultimately we are owned by bankers, and the main protagonist of these bankers is the Federal Reserve. So their objective appears to be to get Gold out of the hands of the people, because that allows the person freedom, and liberty to do as they see fit – as long as they do no harm, nor cause any loss to others.
I’ll leave you this video clip which demonstrates this, and is perhaps instructive of where the world is going.
So, if we return to the main reason for this blog, it is to encourage the reader to become an independent thinking human being, responsible for your own actions and have the freedom, and liberty that you were born with, but your parents gave up so shortly thereafter. But you can take some of it back…
“He who owns the gold, makes the rules.” Of course, you can buy Gold with silver, or crypto-currency (or some of the paper that they print for you to use.) And at the moment silver is on Sale. As I was writing this, the price of gold is $1198.10. Silver is at $16.41. So, Silver is therefore 1/73rd as cheap as gold, though throughout most of recorded history, it was a lot more expensive – it was about 1/15th or 1/16th the price of gold, and sometime in the future, it will be circa 1/10th.
So if you buy 73 ounces of silver at the moment, for the same money you could buy 1 ounce of Gold. But if you wait a while, and silver rises to the price I expect, then your 73 ounces of silver will likely buy between 3-8 ounces of Gold and one day, I expect to be able to buy a house, for circa 30-40 ounces of Gold.
“He who owns the gold, makes the rules.”
So, are you going to get some now?
You can start your savings:
or here… —>>> Qoinpro.com
So, what is the ultimate goal that I spoke of at the start of this piece?
I believe that the Bankers (i.e. the people who are the owners of these large banks.) are using arbitrage – buying something cheap in one place, to sell it elsewhere where it is more expensive (more highly valued – and thus making a profit on the business) to send gold and Silver overseas, as the flow of wealth heads East, these Bankers (I believe) intend to establish themselves where the next world hegemon will likely be, just as these Bankers left the shores of England and Europe to go to America when they realised that England was becoming a spent force.
You can read more of this Exodus of Bankers and what they did to enslave the people:
If you like this piece, then please post it to your favourite blog, like it or tweet it.
The world is transitioning. We are moving from the computer age, the PC age, to the information age, where “Big Data”, and “Cloud Storage” is being touted as the way that governments and corporations can grow their revenues.And, as old industries are dying, new ones are just beginning to emerge and grow. Research and development is going on in labs in Bio-Tech, Energy, Rare-Earths and special metallic elements, and alloys – Beryllium and Thorium, and the 17 Light and Heavy Rare earths.Where will it all take us?
I’ve been giving some thought to, Monopolies and Oligopolies and Geo-Politics recently.
Many economists will tell you that both Monopolies and Oligopolies are detrimental to the economy. Monopolies generally are not allowed to exist – and where they do exist, they are generally in state control. Mostly in countries with one-party or no-party apparatus, whether that be Fascist, or communist and for many reasons, these two regimes allow or enable them, and share one common thread.
Both state types seek to compel people to do or not to do, things that are, or are not in their own best interests – depending on the “thing” we are referring to.
Communists disallow ownership, and vest almost everything in the state, while the Fascist country vests the wealth of the country in the hands of one or a few “wise men” who own the bulk of the productive assets, and tax the rest of the society to pay for things that are generally considered in the nation’s good.
Oligopolies are a slightly different matter.
These have a tendency to become cartels, and where these organisations secretly work to protect their own interests, while apparently working for the good of the customer and the nation, it is obviously not competetive, so are not in the consumer’s interest, but governments quite like these because it makes taking policy decisions easier to implement, when they can get the heads of these half-dozen or so corporations in one room – after taking their advice of course.
Here in the UK, we have an oligopoly in the energy market, and for this reason it’s heavily regulated, though if the energy regulator wasn’t trying to get them to improve their customer service, they might be focussed on the thing, that consumers worry about more – prices.
But there’s another oligopolistic industry, and monopolistic practice that is at the root of many other problems in Western Societies.
Banking oligopolies, and Monopolistic Central Banks.
The Central Bank determines the supply of the currency, and the governments allow this, in its own self-interest. The government can pay its bills with money it doesn’t have, which it otherwise would have to tax from its taxpayers, instead it borrows from the bankers, and then has to pay interest, which steals from the citizens, silently through the process of price inflation.
But what it takes with one hand, it gives with the other, in higher stock-market values, and rising asset prices – which benefits those wealthier citizens, who own stocks, properties and other financial assets. This makes those on limited incomes fall further back in the “getting on the ladder” rungs of success.
It happens through the agents of the Central Bank, the major clearing Banks, who form an effective oligopoly linked into this nefarious practice, (also as their owners – in this case – of the Fed) while the population are enslaved by debt-slavery, as their taxes are used to pay the interest of the debts to these banks, who buy these Treasuries, using money they don’t really have, but who get it from their paymaster – the Central Bank.
Of course, for all this to work, people have to keep their wealth in cash form, or invested in things – homes, the stock-market, bank deposits etc, that can be manipulated for the ends of the Bankers.
Of course, they would deny this… As Mrs Margaret Thatcher once opined: “They would say that, wouldn’t they?”
But, once people begin saving their wealth in forms that can’t be taxed, or that the authorities – the government, and the Bankers can’t manipulate, they begin to worry.
For example: Crypto-currencies are things that Bankers fear, because they don’t control them, and aren’t taxable – at least not yet. If you have these great. If you haven’t, then perhaps you ought to check them out at Qoinpro. After all, if you can’t beat ‘em, then join ‘em. And numerous Bank employees and senior executives are buying into these – in particular – Bitcoin.
After all, for hundreds of years, the Bankers have controlled the printing presses that gave them immense power over the country and its institutions.
It was President Andrew Jackson of the United States who commented that:
“Banks of issue, are more dangerous than standing armies”
And Thomas Jefferson, who said:
“Paper is poverty. It is not money, it is the ghost of money.”
So what did they mean? As I’ve previously explained, paper currency is a receipt for money. And real money is both Gold and Silver.
So, Why do they fear them?
If we look back into history, a Bank Note once said with authority – “I promise to pay the bearer on demand the sum of …”
The missing words originally were the sum involved – ‘in Gold’, or ‘in Silver’ depending on the country of origin, or as the twenty dollar bill from the early 1900s stated: “There has been deposited twenty dollars in gold at the Federal Reserve”
And this prevented them from printing too many of them, unless they had the gold in the vaults to back that up. It meant they could only lend out “savings”.
But what they now do is lend out debt – because there is no savings, or nowhere near enough at any rate. And when that happens, we are borrowing from the future – Which is fine for investments that add to our stock of goods, but what about those debts used for holidays or other consumption services? And what if they can’t be re-paid?
It also means the taxpayers of the future – our children, and their children, will have to pay off these debts through higher taxation, and greater control of their lives by a centralising government.
All industries tend to grow towards having a few large entrants, before newer entrants change things and shake up the industry just as Tesla has shaken up the motor industry in the U.S..
As a further example: TESCO, the UK’s largest of the big 4 grocery retailers, has suffered recently in this fall-out, suffering a 50% share-price decline, as new entrant Aldi has grown its profits by 65%.
And to get to the geo-political issues, as ISIS rears its head in the middle-east, and Ukraine hots up, and once more unrest in Libya is raising its ugly head again, and now I hear two nuclear nations are on the brink of a conflagration, as Islam butts up against alternative lifestyles and religions. Many of these wars could embroil the west, and that will mean the amount of money the west needs to spend to fund its military activities, could be the straw that breaks the camel’s back. As stock markets have reeled in recent days, perhaps the market collapse that many predicted is already upon us.
And apparently the Indian and Pakistani peoples are on the verge of yet another major war between these two nuclear powers. And this is over a resource that neither can afford to lose – water.
Of course with both governments in dispute over the region of Kashmir, in the mountains of the north, the two governments came to an agreement over the Indus river many years ago, which allowed for both nations to tap into this resource which flows through the region, and they have already fought four wars over the territory.
But, since the agreement, both nation’s populations have risen exponentially. India now has a population of 1.2BILLION, and Pakistan has 178million, with senior figures in Pakistan now talking of Jihad, as India extracts more water, Pakistan has only 30days supply for the whole country.
The Indus river travels the whole length of the Pakistan, from its source in Kashmir, to emerge near the Capital Karachi, and is responsible for 90% of Pakistan’s water needs. Because it is used to generate electricity, it is also responsible for 50% of Pakistan’s employment.
And it could be used to trigger Pakistan’s “first use” policy, starting a nuclear war, given that many Pakistanis are affiliated to one of eight different radical Islamic organisations, who recently formed a joint committee of Jihad. Kashmir could well be that straw that breaks the world’s financial back, causing relations between allies triggering a new world war.
Rising tensions and a nuclear war could be hugely detrimental to world peace and financial markets, as Pakistan and India fight over this precious liquid.
Prices of stock-markets would go into free-fall, as much as 40% almost overnight, and trigger losses on derivatives, which as some highly influential, and well-informed people now believe, is as much as 10 times the notional value of the world’s economy – or some 700 TRILLION American dollars.
If that happens, then the flight to safe assets will be huge, and if you don’t physically, own either Gold or Silver, your wealth could be totally eliminated. The world’s economy could be so badly damaged, that for a time supply chains break down, and Banking organisations suffer, like Bear Sterns and Lehman Brothers, and are reduced to pennies on the dollar as their chickens come homes to roost.
Indian Gold price premiums were as high as $50+ in 2012, despite government attempts to stem Gold imports, as the populace eschewed rupees for Gold and Silver. Silver, now at prices not seen since 2009/10, could rise over its previous peak of circa $50, and take out a new all-time high.
As Warren Buffet, who has run Berkshire Hathaway since its inception, and where one share currently costs over $200,000, has been repeatedly quoted as saying in relation to markets: “Be fearful when others are greedy, and greedy when others are fearful.”
Now is the time to be greedy where silver is concerned as the world uses approximately 200 million ounces more than it produces. Sometime soon, those who cannot run their businesses without silver, will find they will have to cease operations because there isn’t any available, and the price will have to rise, to enable supply to increase.
And in 2013, not only have the Chinese and Russian Central Banks been buying Gold – But RUSSIAN Banks too bought 181.4 Tons of Gold in 2013. It was more than double that of Russia’s Central Bank additions in 2013.
The biggest buyers according to Finance Ministry include:
– Sberbank (48.5 tons),
– VTB (38.9 tons),
– Gazprombank (29.1 tons),
– Nomos Bank (19.6 tons),
– Lanta Bank (8.6 tons).
And if this has intrigued you, as to WHY? You can learn how these bankers over 2 centuries worked towards enslaving the people of Europe, Britain and America, in my book: “The Coming Battle – 2013″ and how YOU can claim back your freedom.
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