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Betting On The 'Other' Oil Black Swan
With oil prices plunging to 5-year lows, perhaps it is time to consider the cheapness of betting on the other oil black swan...
Via BofA's Jake Greenberg,
In my base case, I remain structurally bearish oil. The world is making huge productivity and efficiency gains (lighter vehicles, new technology, etc.), and we are starting to see real substitution (e.g. to LNG and CNG). On the supply side, oil is not resource constrained (i.e. at the right price, you get more shale coming to market + Libya + KRG + North Sea’s Buzzard + Arctic, etc) and OPEC is a dysfunctional oligopoly. Francisco Blanch thinks we could see Brent drop below $60/bbl in the next six months.
Interestingly, lower oil prices may not incentive increased demand as both China and India are taking advantage of the drop to raise taxes on fuel consumption. Lower crude prices are not being passed on to the end consumers in the markets that matter most for demand growth. See the WSJ here: India raises taxes on fuels. And the Australian here: China lifts fuel tax
Oil’s black swan...
That said, if oil prices go “too low”, there are some very powerful State actors who could become incentivized to precipitate a geopolitical crisis in order to get oil prices back up. E.g. a Saudi Arabian spring, or an attack on a major pipeline? The ISIS-sponsored attack in November in Saudi Arabia’s oil-rich Al Ahsa region did not get a lot of air time, but this is definitely an article worth reading...again from the WSJ: ISIS urging attacks on Saudi
Given this tail risk, I would want to own some long-dated, out of the money call options on Brent within my portfolio.
You can buy the DEC 16 $100/bbl call options (COZ6) for ~$2.50, ~21.5vol.
That doesn’t seem expensive for two years of insurance against a supply side shock. Plus, assuming we see a curtailment of investment, oil could just rise naturally to this price level over the next two years...
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Conspiracy Fact: UN reports confirm Israel aiding ‘rebels’, Al-Qaeda groups fighting in Syria
yes......you got it right......
Will Putin now stage a false flag attack on Saudi oil facilities and blame it on ISIS?
If I were Putin, that is exactly what I would do.
That or find some faction in SA that "loves democracy" and "support them" with explosives that could be attached to oil infrastructures....
For freedom, of course.
Putin is already doing what he needs to do.
Don't be so sure... nearly 35% drop in the Ruble vs the Dollar since July that's twice as bad as the Yen yet ZH doesn't talk about it as much.
Is he really a mastermind or is he in over his head? These Western Bankers have been around centuries... there's unitended consequences to every plan, including his.
There are positive, not just negative, effects of a ruble drop against the dollar.
Major Domestic Benefits with Plunging Ruble
Also, at:
Grandmaster Putin's Golden Trap
...No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold...
In this brilliantly played by Putin economic combination the physical gold is rapidly flowing to Russia, China, Brazil, Kazakhstan and India, the BRICS countries, from the reserves of the West. At the current rate of reduction of reserves of physical gold, the West simply does not have the time to do anything against ...Russia until the collapse of the entire Western petrodollar world.
…Putin sells Russian energy resources in exchange for…US dollars, artificially propped by the efforts of the West. With which he immediately buys gold, artificially devalued against the U.S. dollar by the efforts of the West itself...
ChiangMai
I don’t think Putin is too worried in selling Russia’s oil for gold. Putin, make that the world, wants to sell within their domestic currencies.
Anyway, these acts will be seeing by the US as an attack in the US because the dollar would default, thus triggering all the derivatives and so on and so forth. It would bankrupt US banks and US insurances because of credit defaults insurance.
Hope this post made sense.
Yes, it did.
And I suspect you'd agree, the "so on and so forth" in "the dollar would default, thus triggering all the derivatives and so on and so forth..." might just as likely trigger World War III as a major NATO attack on Russia would.
More than once I've seen the point made credibly that the most challenging task of Russia — and, perhaps to a lesser extent, China, the SCO (Shanghai Cooperation Organization), BRICS, and the non-aligned nations (about 100 in all, if I recall correctly) — is to manage the imploding US empire in such a way that that implosion doesn't start WWIII, due to the fact that the clowns, criminals, and psychopaths running the US might at some point have nothing left to lose.
Exactly!
These nations would never attack the US; and they are very worried in how not to upset the US, as the US goes down.
I will say this with 99.99% certainty: These nations will fail and we will have WW-3 because US won’t go down without a fight because the US has too many allies that won’t say NO.
“United States is becoming a failed state, and thus a danger to its own people and the world.” – Noam Chomsky, 2006
Hmmmm. 13 billion and counting for the first Ford Class Aircraft Carrier.
2014 Chevy "prepare for the 2015 model year" Cruze sale: $9995.
You do the math...
I would doubt that Putin would try to fabricate or start any kind of false flag attacks on anything.
Why should he? For one, he's already seen how the West's false flag attacks against him have back-fired. If he pulled the same shit his current popularity would go down faster than obama in a gay club.
He already knows that he's winning and by keeping up what he's doing he's actually forcing the West to create stupid and obvious false flags against him that aren't working.
It's also forcing the West to force sanctions against Russia which directly affects his trading partners (namely Germany and China) who are increasingly distancing themselves from the Western fiat of the U.S. dollar and the Euro. Germany is soon to exit the Euro...believe it. They aren't going to take much more of this bullshit from the Euro Union and America.
I don't konw what oil's gonna do price-wise, but Putin already knows as well that America's sanctions are also hurting America's own shale oil prices and destroying those oil companies...that can't go on much longer either before they go bankrupt and then guess what??? Prices will rise on lower output from America. And Putin is creating tons of new business for Russia's oil in China and elsewhere, so Russia may make up for lack of high price by pumping out serious quantity with their new trading partners....all outside the petro-dollar system as well!
Putin can wait it out. Russia and China are building huge pipleline deals and China and Russia can finance the construction of those deals by using their huge surplus of U.S T-Bonds.
That's what the big deal is about...they can divest in their immense U.S. T-Bond holdings by using them to finance the construction of their oil and gas deals.
Once that's complete they will conduct business between each other and the rest of the BRIICS via gold or other currencies that just might also then be backed by some amounts of gold.
No matter what this shift is all about divesting from U.S. dollars at the expense of America and once they've flushed all those dollar T-Bonds down the drain that will be when the new world monetary reset takes place.
Bye-bye U.S. petro-dollar and world reserve currency status.
Russia and China and those who are partnering with them now are going to win the day while the treasonous scumbags in D.C. carry on with the destruction of America.
It's all by design...there are no countries or borders. Just banksters fighting over the world like one big Stratego game. They win no matter what even if they lose something within the "game".
Best thing we can do is just keep stackin' phyzz silver and gold and other essential supplies: land, food, water, guns, ammo, hunting/fishing/camping medical gear, etc.
There's still time if you haven't started already...collapse isn't planned just yet. Could be a year or 10.
But get out of the banking system as soon as you can. They'll wipe everyone out during the collapse. Get your dollars out now.
Soon it will be illegal to withdraw your own money in the bank. One day you won't even be allowed to have cash or to save cash...it will be illegal to do so. Banking laws will be created to force everyone to spend everything they have on something without being able to have cash on hand or a savings accounts. It's the only way to eliminate cash before they try to force us to a purely plastic and digital system.
I hope we don't allow this shit to happen, but I'm 99% skeptical that we won't be able to stop it. Not unless we have a serious fucking civil war in America and then once we win that war we tell the rest of the world they're next if they don't fucking wake up and get right.
I won't go down without a fight. Hope you are all of like mind.
Stack on. Silver is seriously still on sale. Don't overlook it or wait for another drop. Who cares about another drop. Maybe it will or maybe not. But who cars. If there's still supply to be had at these relatively low premiums then fit a good amount of it into your budget a chunk at a time every payday if that's what it takes. But don't sit around waiting for 14, 13, 12, 11, 10, 9, 8 or whatever...fuck it. Get it now. There are no guarantees of supply, delivery, decent premiums, or even anything for sale at those prices. So don't fuck around waiting.
Take a walk on the wild side...on BI
http://www.businessinsider.com/why-an-oil-crash-is-exactly-what-obama-ne...
Why An Oil Crash Is Exactly What Obama Needs
"It's hard to imagine a single development that carries so many upsides and so few downsides. The domestic economic benefits are obvious," Seib wrote.
But with 93% of all jobs created since 2007 in Shale Oil states (at $80 bbl) how will that work out for those states and black swans ?
Weird red (Matrix) pills out there.
Hmmmm. 13 billion and counting for the first Ford Class Aircraft Carrier.
2014 Chevy "prepare for the 2015 model year" Cruze sale: $9995.
You do the math...
Bad news: We're well past that point. The clowns, criminals and psychopaths running the US currently have nothing left to lose.
Do you really think they expect anything to get better?
SilverIsMoney
Putin, or if not Putin, his advisors, knew that oil prices would be attacked. How low we will find out in a near term. I don’t think it’s going to work like in the 1980’s.
Anyway, I am not worry about oil price war so much as I am worried if, or when Israel move troops north, close to Syria.
That will trigger a high alert in Europe, thus pushing Putin to act. Then, the chit is about to hit the fan, I believe.
WWIII will spell the end of humanity.
500 nuclear reactors in the northern hemisphere.
500 strategic targets for enemies of said nations with nuclear power plants.
500 Fukushima melt-downs, melt-throughs and melt-outs.
500 reasons humanity is finished this time.
The first shots fired in any war is when the National Treasury is used as the Gun with Money being used as the ammunition.
ALL WARS ARE ECONOMIC. Whether or not this escalates to a Hot War remains to be seen.
It does not look too promising that escalation will be ceased at this time.
Yet on the next World War if it happens...You will not be reading about it on ZH or, most likely, anywhere else. That is a certainty that you can bank on.
Oh well, they're all east and south of me.
I should hang in there a couple days longer than most.
The Boys at Dollar inc are pretty smart, given that Satan is their CEO. They've built their franchise over the last 2oo years. They're not going to just throw it away over night.
Ummmm, they have been throwing it away for the last 200 years.
Ummmm, they have been throwing it away for the last 200 years.
[duplicate - not removed]
[duplicate removed]
I'm with Escrava.
I'm not aware of post-1999 Russia (i.e. "Putin") ever needing to emulate western clowns and criminals by resorting to war crimes and criminal tactics (and I am sincerely interested in being corrected on this, with one or more well-documented examples).
Exterminating Chechnya? Invading and taking over Crimea?
Well there was that apartment building and the destruction of Grozny but only something like 50,000 dirty Chechens died so nobody cares.
You both might want to do some research on Chechnya before again parroting the NYT-CNN-AP-WaPo-ABC-CBS-MSNBC-Fox-HuffPo-Reuters-BBC-NPR-PBS… version of what Chechnya was about.
Regarding "Invading and taking over Crimea":
That's so braindead and delusional it doesn't even merit a response.
Ignorant post
media dumb you down much?
Maybe US shale oil companies, or their bankers, fund ISIS to attack Saudi Arabia's oil pipelines?
You mean a "failed false flag" attack, don't you? And not Putin's.
ISIS and Saudi are two sides of the same coin. Much praise for the Good Beheaders and their mock victory over the Bad Beheaders.
This is the 3rd time you posted this today.
Most of us got it the first time.
As for me, I just got here & am seeing it 4 the 1st time... But I'm like, MEH
You don't like him thread-jacking and shamelessly plugging his own blog?
Below $60 in six months? It's 62 and change now !
http://www.infomine.com/investment/metal-prices/crude-oil/all/
When was that spike and crash again? 2007-2008? My memory is a bit rusty but wasn't it up to $147 then crash to $40? I never did find out what caused it. Anyone else know?
When oil started going down recently, all I could think of was the reverse of that spike. Won't it just crash and then spike high before reverting to its normal path?
Yes, it's true. I really am clueless about such matters so do not bet money on my funny ideas unless you have a better source confirming them. Is there anyone out there who can enlighten me? Why am I wrong? I mean, apart from my dodgy logic - last time it spiked and crashed then reverted to "normal" therefore this time it will crash and spike and then revert to normal - why else am I wrong?
PT
Because its different this time.
He meant to say six minutes.
"Maybe even seconds." Fire sale on British Petroleum.
That would be the whole company...
last time, other stuff were bubble-popping with oil. There was correlation.
this time, other stuff are well-levitated, nothing else is falling, economies are doing great. No correlation.
I always suspected that it coincided with the closing of the Enron Loophole. Bush vetoed it several times, until finally he couldn't. Then oil was in a nearly linear descent until roughly the bottom of the great recession.
There are at least 15 of you who do not the difference between WTI & Brent ffs
There are many grades of crude oil. West Texas Intermediate, Brent North Sea, Louisiana Light Sweet, Canadian Syncrude, Maya, etc., etc. Each grade has its own pricing due to regional factors affecting the ability of producers to get that oil to market. The shale boom and Helicopter Ben's money bomb paved the way for massive production from North Dakota Bakken and West Texas Eagle Ford shale developments. Since the pipeline network was designed to carry oil from the coast into the interior of the US, in the last 6 years there hasn't been enough pipeline capacity to carry off the oil from those areas to refiners causing a consistent 10-15$/bbl spread between WTI and Brent North Sea. For Canadian Syncrude, the discount has been as much as $40/bbl between Brent. Midwest domestic refiners have been minting money on the differential for the last 6 years. Now that the Fed money bomb has slowed and the pipeline capacity has turned the flow around, the price difference is shrinking. Events are conspiring to create a squeeze. I'm sure there's more fun ahead.
Catch a fallng chain saw? Ooooo, sighed the daring masochist. Let me try?
The great thing about tunnel vision is that it does not require a worldview.
And this is what passes for investment advice these days. Noticed he let slip the word betting, which is exactly what his recommendation is, a long shot gamble. Buying calls two years out $40 dollars out of the money on almost anything is relatively cheap for a reason. In two years almost anything could happen and trying to say that oil would be $100 then is pure speculation. Most long datede calls expire as what they are worthless paper.
priced in pre collapse dollars
or the new and improved dollar 2.0
Are we all driving Tesla's (that are charged from sunlight)? No? Yeah, keep crushing oil.
Thank you.
Teslas are powered by the grid which is majority coal. No unicorn tears like Elon would have you believe.
Thanks, I am closing my unicorn position now.
lol awesome reply +1
long maidens
seeking unicorns...
The grid is mainly powered by coal? Yeah, that's true if you're living in the 1980s. When is the last time you read anything about the O & G mkts? Ever hear of Natural Gas???
Perhaps you should travel to PA, W.V., etc and ask them
Reading is fundamental:
http://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3
Not to pick a fight but ~10 years ago coal was almost 60% of this make up. Just saying.
BandGap
And let’s not forget all the embedded oil in all of them.
that was before the al gore bonanza
Is hot air considered a gas? And what about "breaking wind"?
@ Karlus
"Teslas are powered by the grid which is majority coal"
Since when is 39% considered a Majority??
Seems like in this case, using your own posted figures,
61% of the grid is Non-Coal powered . . . .
Just sayin'
Admit it - you're an attorney for the ______ industry.
If not, you should get on it.
Good post... All do-gooder Prius and Tesla owners should read the list you linked to so they can understand where the FK the "clean" electricity that powers their enviro-weenie mobiles comes from. Of course, one has to assume that most of the dweebs who drive these things are capable of reading something other than a Starbruck's menu and labels at Whole Foods stores.
Prius runs on petrol...not from the grid. Just does it efficiently.
prius drivers suck... bad drivers
not so much bad as...SLOW.
or, energy efficient, if you like.
Do not forget Kentucky. They are making our powerplants covert from coal.
Elon is brilliantly solving the wrong problem for the wrong reasons. Which of course means he stands to make a lot of money in todays world.
I knew I would get some red arrows from the model S owners. Bonus points for red arrows from people waiting for either model X or Elon's D
Nuubee and Karlus and et al...
No sarc. I keep seeing anti-Tesla remarks on this forum. Never seen the argument fully articulated though. I just googled such and found this, and it is not that pursuasive against an electric car such as Tesla. I live in a rural area two hours from the city, with a large solar backed local grid. The Telsa is the only feasible electric car for us due to the distances. If I had a spare 70-100K I would snap one up immediately.
Note: I am not red arrowing you. I honestly would like to hear your reasoning against Tesla/electic vehicles.
Commenting against Musk is not necessailycommenting against electric cars
http://www.zerohedge.com/news/2013-05-08/elon-musks-solarcity-sues-government-more-subsidies
Thanx hornet.
Buying opportunity, but not yet. Blood hasn't been spilled yet until bond defaults and bankruptcies.
"Francisco Blanch thinks we could see Brent drop below $60/bbl in the next six months."
or this/next week ...
"China and India are taking advantage of the drop to raise taxes on fuel consumption. Lower crude prices are not being passed on to the end consumers in the markets that matter most for demand growth."
Oh, that's happening here, too. I live in PA and our Governor recently raised gasoline tax 18 CENTS PER GALLON to help finance the cost of dredging the port of Philadelphia 5 feet deeper. We thanked him for that by making him the only Republican governor in the country to NOT be reelected to office this election year.
Our gasoline: $2.80. New Jersey: $2.40. And the tax hasn't even taken effect yet.
Enjoy the cheap gas while you can, guys, because the government is going to come in and take ALL of the savings from lower oil prices. NO WAY is the government going to allow the boot to be taken off the neck of the middle class for very long, no matter how small and infrequent the windfalls may be. And when oil goes back up, don't expect a repeal of the taxes, obviously.
Didn't take long for the libs to think of this:
http://www.delawareonline.com/story/opinion/editorials/2014/11/16/time-r...
'Libs'???? Get real. There is no such thing as 'Libs' or 'Cons' any more.
There are only slightly different types of 'Sociopaths'.
I am with you on the libs and cons; but please share your definition of "slightly different"?
One flushes money down the toilet of war, and one flushes money down the toilet of social programs.
One loudly flushes money down the toilet of war, and quietly flushes money down the toilet of social programs. And the other one loudly flushes money down the toilet of social programs, and quietly flushes money down the toilet of war.
"We thanked him for that by making him the only Republican governor in the country to NOT be reelected to office this election year."
LOL. They say SS is the 3rd rail of US politics. Gasoline prices are a close second.
Hey politicos, raise the gas tax in a recession if you have the cajones.
The Tribe has spoken , we might get "other oil black swan..." hmmmm
One can say the same on 2 year year GDX calls, or some individual names in the gold space. Will these companies go out of business?
I think the only possible way to trade gold miners now is to stay the hell away until only the best of the best remain standing. Then it'd be time to go in boots-and-all. When that exactly is though is anyone guess. Do you wait until 10% of gold miners go bust, 20%, 50%, 90%. Timing always is a bitch.
Oil was $20 not too long ago. Supply is rising, demand is falling like a hot knife through butter. A world in the midst of a deflationary collaspe doesn't need oil. It needs bankruptcy lawyers. And canned food, bullets and big dogs.
Bonus points - this will destroy 95% of all the capital that is been invested in "alternative energy."
Time to prepare for a future without desk jobs or grocery stores.
"A world in the midst of a currency collapse" -- fixed it for you. BIG fucking difference. As you point out, 7+ billion (and growing) still need to eat. As to maintaining the status quo, the world still runs on oil, nothing more than agriculture.
"As to maintaining the status quo, the world still runs on oil, nothing more than agriculture."
Not to even try to negate your premise (because I believe you to be accurate in spirit & in aggregate)
But ~ I grow just about most of what I need to survive on less than an acre of land & I can truly say that, for myself & the few mouths that get BONUS fed from the crop yields I can produce, I can do with or without oil. (without getting into the argument of 'already in place' infrastructure, which means to say "From this point on I can do with or without oil but I did need oil to get me to this point")
So let's say you're correct in saying THE WORLD still runds on oil. Enteprising individuals ~ not so much.
Ahoy Polloi
So, check the post below. I think you will find it interesting.
By Walter Haugen:
Check out Joseph Tainter’s “The Collapse of Complex Societies” or my book “The Laws of Physics Are On My Side.” Tainter introduces marginal returns as the basis of his argument and it is relevant to your own. If the marginal returns fall below 1:1, it doesn’t matter if you have a high throughput (American empire today) or a relatively low throughput (Rome circa 100 AD). It is still relative to your input/output.
Per my book, what we are doing now is replacing cultural behavior with massive doses of fossil fuel energy. Once we run short of cheap oil energy (either by price or supply) we have to constrict our energy use. If we don’t we get dieoff.
Your solar business is still dependent on cheap oil, whether in the embedded energy of the infrastructure or just getting the workers to the jobsite and factory. My farming is also slightly dependent on fossil fuel energy, as I use 10 gallons of gasoline and my labor to grow 10,000 pounds of food per year. However, in my case I am 25-35 times more efficient than industrial agriculture, measured by input/output analysis.
I am no fan of Greer, as I find him arrogant and wordy. However, he did hit on a winner with catabolic collapse. As for Diamond, he is the only one I have heard who understands the role of the 1st and 2nd derivative in plotting the inflection point where marginal returns change sign. Tainter alludes to this but doesn’t even use the term “inflection point” in his analysis.
As for Kunstler, he has looked at the problem in depth and his “World Made by Hand” books look at the sociological effects – and are a good read too.
http://blog.p2pfoundation.net/when-ephemeralization-is-hard-to-tell-from-catabolic-collapse/2013/09/19
"I am no fan of Greer, as I find him arrogant and wordy."
Your very best sentence of the post.
Have you ever examined the Greek Chorus of FanBoyz that comment on his blog every single week?
Sychophants Anonymous charter members, all.
Sorry. I have No clue of what you are talking about.
First: I did not write the post above.
Second: I was complementing the post of someone that grows his own food, above it.
So, can you please clarify?
Thanks.
Sorry, I was commenting directly to the quote in your post about Greer being arrogant and wordy,
and stating that the observation is entirely correct.
Nothing more, and nothing less.
Oil was $20 not too many trillions ago,
Fixed that too
HOW ABOUT A HOT CHAIN SAW THROUGH FLESH!
Actually, it was $10 in March of 1999, and the Economist had a famous cover and article predicting $5 Oil. That turned out to be the bottom.
Check out the articles -
http://www.economist.com/node/188181
http://www.economist.com/node/188131?story_id=188131
And gold was 283/oz. Was oil expensive at 10 or was gold cheap?
Ticker anyone?
We don't know real oil price because all markets are smoke by the FED.....
The only thing one can predict is unprectability.
This is not meant to be a play on words
It is becoming exceedingly difficult to plan just about anything due to so much volatility across a whole range of factors.
I think next year is going to get very interesting as soon as the fighting season comes in.
"The world is making huge productivity and efficiency gains (lighter vehicles, new technology, etc.), and we are starting to see real substitution (e.g. to LNG and CNG). "
The "productivity" and other gains barely make a dent in world oil demand. Productivity gains in transportation ex Trains, Planes, and Ships is not hugely significant compared to total consumption. Said consumption would include use of petro-chem in production of agricultural fertilizers, plastics, rubber, et al.
Next reason for falling demand please?
Obama's EPA czars have said natural gas doesn't meet ozone standards. It will only cost the industry billions and billions of dollars in fines and mandated capital investment, none of which will benefit the consumer or increase productivity. As we all know, solar energy is great for turning on your lights in the daytime. Geniuses. All. I look forward to his third term.
His Fourth Term is when it really kicks in.
That is when he is delared "Emporer for Life"
Look into the edison battery. It is a Nickle / Iron battery that doesn't wear out. The orginals are still taking a charge. http://nutsvolts.texterity.com/nutsvolts/201202?pg=38&search_term=edison%20nickel#pg38 The energy density is close to lead acid but they only need to be topped off with water every few years. To go off the grid with solar you must have a sizable battery pack to get you through the night. http://www.maximumpc.com/article/news/researchers_claim_new_solar_panel_can_collect_90_sunlight_from_any_angle Solar coupled with Wind seems to be a winner. Also wood gasification to run a Gasioline generator (no major modifications needed) will also produce energy and you can use just about any organic substraight to produce the "gas". http://youtu.be/tr3Y9l87UxE
.... The World is making life tough for Putin short term, because they can, short term.
So the solution to the problem of profitably investing one’s surplus funds requires more investment in derivative products??? People need more paper oil to meet problems caused in large part by too much paper oil already distorting true price discovery in that market (along with many other markets)??? More insanity from ZH.
THATS THE SOUND OF THE OIL FRACKING INDUSTRY IMPLODING!
First the oil price comes down then the stock prices drop but they are still paying those dividends (you think to yourself) so I'll just hang on!! Then they cut their dividends and the share prices really get killed (I've seen this game played before) better sell all those oil assets and buy some real investment insurance!!!
Unlike the western central banks war on the precious metals, Saudis actually have the physical oil in their war on oil!
HMMMMMMM! Lets see now- demand for gold and silver skyrocketing! Demand for oil dropping like a stone- or that guy on the pole (or so were told)! where do you think we go from here!
“Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves”
--
There are two mistakes one can make along the road to truth - not going all the way, and not starting." ... Buddha
A measure of wheat for a penny. Two measures of barley for a penny, But see that thou doest not hurt the oil or the wine.
So let it be written, so let it be done
-Pharaoh
When the price of the world's leading commodity starts swinging more than 4% in a single day, something is definitely wrong, regardless of which way it's moving.
It's like walking down a dark flight of stairs while your hair begins to stand on end. You can't quite make what it is lurking at the bottom. Suddenly without notice the stampede of panic hits you but it's too late; the exits in the market are jambed and you're trapped on a narrow stairway to hell, in a world where nothing works any more. Not governments, banks, or atm cards. Cash is trash cause the pandemic has it all toxic and anyone who touches it turns to an oozing stenchy jello overnight. Other than that the holidays are coming and you have only so many days; or do you?
I could be mistaken but an aging population drives less.
You should see some of the fossils driving beat ass cars in South Florida wearing Blue Blockers
One of them is yo Mama.
"Ve go to Wolfie's for a bagel and a schmeer."
https://www.youtube.com/watch?v=at8hZpXyykM
Yes and no. More time and money to drive but not to work. Called discretionary driving.
Crude oil is beginning to approach the global marginal cost of production.
An alternative option strategy to call buying of depressed assets is to sell naked out of the money puts on assets you would like to buy at lower levels anyway.
When "selling insurance", option theta is an advantage rather than a disadvantage.
If assigned, the put premium reduces the asset cost basis to strike - premium.
indeed....
and then... maybe, as time goes by, and IF clarity of vission (as opposed to 'uncertainty') defines a possible trend, then, buy call options (at a lower premium) becomes feasible... then again... as clarity of vision becomes reality may push call option premium higher...
Speaking of Black Swans... Russia is now openly saying that the US is seeking "Regime Change" in Russia.
Which would effectively bring back the days of Vodka & Roses, when Yeltsin was drunk and the Zio-Oligarchs ran rampant over Russia's resources and national assets. Per RT... http://rt.com/news/212395-usa-overthrow-russian-government/
“Behind the formally-declared aim to make us alter our position towards Ukraine, [we] see the [US] plan to form social and economic conditions to change leadership in Russia,” said Russian Deputy Foreign Minister Sergey Ryabkov.
... Moscow is “trying hard to stabilize relations” with Washington, but the resolution is a barometer of quite different attitude in the US towards Russia, he added.
No matter what Russia does, nothing short of complete capitulation is good enough for these Globalist Sociopaths. It is reminiscent of a wife who won't be satisfied with anything other than "What was yours is now ours, and what's ours is now mine".
The US is pushing Russia into a corner, from which they can only come out swinging. America has been doing this Provocation & Just Counter-Attack for centuries. That's how they stole Indian land, and that's how they provoked Japan, Saddam, etc, etc. The US does not publicize its act of Provocation to its own public, so that they are completely "shocked and outraged" when the desperate opponent comes at them with force. This act of force is then the Provocation that gets infinite airtime and PR, which then gives the US Regime the domestic backing to go to war.
Russia and the BRIICS are RUNNING OUT OF TIME. If they think they have the time for that perfect layup shot, they are sorely mistaken. They will likely have to go for a 3-pointer: OIL/GAS FOR GOLD, YUAN and RUBLE... NOW! BTW, they'd damn well better have a few battle ships in Venezuela and set up a Naval Base IMMEDIATELY, or that country and its oil fields will be taken overnight by the DOD. Playtime's over, kiddies.
Vlad is going to have to directly address this with the Sheiks. Its been already said but here goes:
1) Putin needs to tell the Saudis "Ok, we will quit fronting the Syrians and Iranians. You made your point."
2) Putin also needs to have some commandos mess with some Saudi pipeline to send the stick part of carrot & stick.
Can't be letting the Saudis thinking he is a punk, plus it will spike the bbl/$
Last time I checked the only thing protecting the House of Saud was Uncle Sam, but I am thinking Bam would rather be buddies with the Imams in Iran and wouldnt support Saudis like presidents from the past.
Vlad = Cool Hand Luke. (At least, so far). Let's hope Vlad can keep us out of a war. Can't count on the US military industrial complex to lobby for peace.
peace? we don't need no stinking peace!
Putin said this months ago. It was mentioned due to sanctions over crimea. He said it over the youth group. It is being recycled in the news.
That said, it is correct. US wants a regime change. It wont happen though. They already warned the public that there will be pressing times like in 2008 and to prepare. Already people are doing fine (other than finding a new job is a little harder but more job security than before). They were saying to prepare for $40bbl.
"You can buy the DEC 16 $100/bbl call options (COZ6) for ~$2.50" Dear Haliburton, here's the plan, buy the options, start a war NOV 16, hey presto!
Consultancy fee; 3% of profits.
Sincerely, Tagz.
You should charge two and twenty for that advice.
We got crude on some folks!
That's how broke the banks made the whole planet of consumers. They can't even afford cheap oil. They're only able to move the savings to other bills.
"Kill them all and let Gold sort them out."
By the way, is there any correlation between the price of oil and the price of human blood.?
1:1
No problem, RUSSIA can short brent on the futures market, when it goes down they make shit loads, if by chance the price goes up they can always deliver from their own supply, isn't that what JPM has been doing with silver? One catch you need to have unlimited cash to play the game till the end ...start the presses
How can commodities be rationally priced in a climate of serial global credit/currency expansions and devaluations?
"Francisco Blanch thinks we could see Brent drop below $60/bbl in the next six months."
Or perhaps later tonight...
ZH has reported some $50 bbl desperate wellheads.
If God, assuming there is one, is so smart, why are we so stupid?
I've often thought about that. As far as I can tell, He needs a good laugh. Earth is kind of like watching America's Funniest Home Videos but at a deity-level.
I blame MTV.
But Gawd did bless us human beans with proportionately much larger peckers than all of the other primates. So it could have been worse; we could have been stupid and had micro-weenies. Indeed, there is much to be thankful for in this Holiday Season.
use translate, but read :
http://www.voltairenet.org/article186136.html
greedberg the banker wants to sell me some protection. isn't that special?
That's pretty funny, if *low* prices incentivize attacks on supply infrastructure.
Yawn... When the last of the U-hauls leaves North Dakota is when a refinery or pipeline mysteriously gets blown-up in Saudi Arabia. Game-set-match for the Towel Heads.
The response to low oil price in dollar term will be to eliminate the dollar. It is silly for those who have oil to give it up just because the reserve currency is overvalued. They will do what they have already started to do...currency swaps that leave the dollar out of the equation. They will get the goods and services they need and the savings they generate will be put into gold....just like they always have been doing.
If I was Putin... demand OIL to be paid in Gold, failing which he will warehouse bladder all current production for the forthcoming global conflict he see's as imminent and inevitable, Test loads of Nukes like a psychopath and storm into eastern Ukraine declaring all Russian predominant area's sovereign independent state, follow up with showcase scam election after annexing.. then dump all US treasuries for Gold... and watch the Zion Kings deal with the spiking Gold, Oil collapsing Rothschild created T-Bill debt bonfire and real world war detonating in the East... see how they like a scramble on all fronts...
If you are selling what you are smoking,
I'm a buyer at $40./mg.
Contact me at the soonest available time.
Thanks.
If oil stays low in the near-term, there are some US drillers and E&P companies that would fly first class in order to stir up geopolitical trouble in the sandbox.
And if the price of crude oil continues to decline, it’s only a matter of time before the Russian Federation is once again facing the prospect of default. The last time the country suffered a major default was 1998.
Yields on Russia’s dollar-denominated debt continue to climb. The yield on the most-recently issued dollar-denominated 10-year Russian bond was around 6.2% Friday, the highest level since it was issued a year ago.
Meanwhile, the spread on Russia’s sovereign credit default swaps has hit its highest level since July 2009, when the global economy was still suffering from the fallout of the financial crisis.
At the same time, falling oil prices are dragging the ruble lower. The U.S. Dollar was worth 52.6236 rubles Friday, just below a record high reached earlier in the week.
It’s not a pretty picture.
“They’ve found themselves in a kind of Catch-22,” said Bryan Turley, managing director of the investment banking group MLV & Co. “Its economy is moving toward recession, while the cost of their debt, which they would need to stimulate the economy, is going up. So something has to give. Either they have to take a chance and spend their way out of it, or they’re going to have to institute austerity measures.”
Russia has been spending billions of its reserves at a time on futile attempts to buoy the ruble, which continues to break through record lows against the dollar. It spent nearly $13 billion in the first half of October alone, according to The Wall Street Journal.
As of Friday, the Central Bank of Russia had $393.6 billion in gross reserves. Meanwhile, its total outstanding debt was $642 billion, according to data from Credit Suisse. Russia has relied almost exclusively on profits from energy exports to pay down this debt. Now those profits are seriously threatened.
Oil and natural gas constituted about 68% of Russia’s exports last year, according to the U.S. Energy Information Administration.
If the price of oil continues to fall it could lead to a dramatic rise in unemployment as energy companies are forced to make drastic cutbacks. And with the U.S. and European Union having levied sanctions against several of the largest Russian energy firms, including Rosneft, Transneft, Gazprom and Novatek, Russia would need to move unilaterally to rescue its largest corporations from default — a move that would hurt the country’s creditworthiness, making it even more costly to pay down its debt, said Ruggero de’Rossi, senior portfolio manager for emerging market debt at Federative Investors.
Russian President Vladimir Putin has resorted to threatening speculators with retribution for driving the ruble lower, while Mikhail Fradkov, the head of Russia’s Foreign Intelligence Service, accused the West of deliberately manipulating the price of oil and the value of the ruble in an attempt to hurt the Russian economy.
For now, Russia’s fate is largely tied up in the price of oil.
“If oil prices continue to decline — if we get to $60, or $50, or $40 dollars a barrel — and Russia loses another $150 billion in the next year, then obviously we as investors should start to worry that Russia’s reserves will run out,” deRossi said.
MarketWatch is the lamest dick of the MSM.
Why are you quoting these donkey kongs?
Ad hominem attacks don't serve much purpose.
Far better to examine the facts and analysis presented, which in this case are spot on.
Ad hominem refers to attacking a person,
which, before the recent Supreme Court ruling that
gave personhood to corporations,
was
formerly known as a "human being"
I was not attacking a person,
I was attacking a Corporation -- Known as MarketWatch.
I believe your correct label should be "Ad Corporationem"
Touche
Nope. Ad hominem attacks refer to attacking the source, Bob - irrespective of whether the source is a corporation, an individual or any other entity. When you avoid the argument and instead seek to villify the source, you're not using logic or reasoning, but simply exposing your own prejudices and unwillingness to respond to the facts.
.
Aaaaah! The ironic stupidity..... it burns.....
You are the notorious "no potato for you" guy, aren't you?
Senor Pot(ato), let me introduce you to Mlle. Kettle.
Funny as a two-headed planarian. But hey, such drivel is playing at par the golf course for you Kookhrana types.
Wok calling the cooking marmit black. Somehow for either one you lack potato.
Sorry, Vern, I make no claim of not launching ad hominem attacks and am thus excused from judgment, unlike yourself. (See, I just did it again, assuming you know who Vern is) In fact, ad hominem attacks can be quite effective if done properly. I just don't cotton much to hypocrites who call out others and then do the same thing themselves.
In fairness to you, however, I will admit that I would not be very good at trying to produce arguments in Russian with the aid of an imperfect translator that makes things sound clumsy and oafish when the original may have been perfectly lucid and adept in its intended language.
So I hereby award you one complimentary potato for playing the game in the spirit in which it was intended. Long live the Grand Duchy of Evil, hurrah!
Did you manage to get some buckwheat stockpiled before the shelves emptied out?