Baltic Dry Index. 1317 -07 Brent Crude 79.61
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
Is OPEC going to cut its production target on Thursday. The Bloomberg
article below suggests that they might. Without a cut, some experts are
suggesting that the price of Brent crude might fall below $60, with the oil
bust lasting into 2017. But even if they cut production, will they actually
follow through, or will most just cheat in the expectation that America will
just use any price increase as an opportunity to flood their domestic market
with yet more “fracked” tight oil? My guess is that OPEC won’t cut, but I don’t
have a position in crude oil. While Americans celebrate Thanksgiving on
Thursday, half a world away in the EUSSR, at OPEC everyone is trying to figure
out how to steal Saudi Arabia’s lunch. I doubt that the Saudis will let them.
If I’m right and oil is about to enter a new oil war, the plunge may be fast
and deep on the days when Americans are celebrating and famously shopping for
foreign made tat.
Below, a good trading case for fully paid up put options or for the more
timid, the case for synthetic double options.
OPEC Said to Consider Sparing Three Nations From Oil Cuts
Nov 25, 2014 4:00 AM GMT
OPEC is considering exemptions for three nations from any potential oil-production
cuts, two people with knowledge of the proposal said. Saudi
Arabia’s oil minister said he doesn’t anticipate a difficult meeting
when the group meets on Nov. 27 to decide its response to slumping crude. Iraq, Iran and Libya wouldn’t have to reduce supplies should the Organization of Petroleum Exporting Countries agree to cut output at its gathering in Vienna, according to the people, who asked not to be identified in line with their national policies. Ali Al-Naimi, Saudi Arabia’s oil minister, told reporters in the Austrian capital yesterday that it’s not the first time the oil market has been oversupplied.
Crude prices plunged into a bear market this year amid the highest U.S. oil production in more than three decades and speculation that Saudi Arabia wouldn’t cut output in response to a surplus. Oil-market analysts are perfectly divided on whether OPEC will cut output when it meets, or leave it unchanged.
“It makes sense that these three countries shouldn’t have to make further cuts” because they are already pumping less than they’re able to, Abhishek Deshpande, oil markets analyst at London-based Natixis, said by phone yesterday. Saudi Arabia would probably want assurances from Iran, Iraq and Libya that they won’t increase output, he said.
More
Oil Seen Dropping Another $30 by ICAP on Commodity, Dollar Cycle
Nov 24, 2014 4:45 PM GMT
New York-traded crude oil will probably drop another $30 in the next two
years as long-term cycles in commodities and currencies converge, no matter
what happens at this week’s OPEC meeting and Iran nuclear talks, according to
brokerage United-ICAP. West Texas Intermediate crude, the U.S. benchmark, has collapsed five times since the contract’s introduction in 1983, said Walter Zimmerman, chief technical strategist for United-ICAP in Jersey City, New Jersey.
The plunges in 1986, 1991, 1998, 2001 and 2008 coincided with an OPEC price war, recessions and financial crises, and were also tied to cycles in commodities or the dollar, said Zimmerman, who was calling for a drop in oil prices as early as April. “This time we have both.”
“Crude is heading lower, with the high $40s or low $50s being touched by 2017,” Zimmerman said. The long-term cycle points to the dollar moving higher and the euro declining into 2016, while commodities move lower through 2016 and 2017, he said.
The average drop during the previous five major declines was about 62 percent, according to Zimmerman.
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Oil at $75 Won’t Shut in Much U.S. Shale, Dow’s Liveris Says
Nov 24, 2014 10:24 AM GMT
Oil at $75 a barrel won’t affect U.S. output from shale much because
investments in wells and production have already been made, said Andrew
Liveris, chairman and chief executive officer of Dow Chemical Co. (DOW) Some U.S. shale producers are already hurt by the drop in oil prices, though Dow, based in Midland, Michigan, sells enough different products that it can withstand lower crude, Liveris, the head of the largest U.S. chemical maker, said at a conference in Dubai.
Chemical companies such as Dow use oil products and natural gas to make finished goods, which they sell at prices linked to crude.
“They’re not shutting in because that’s all ’sunk costs,’” he said of U.S. shale producers. “So you’re not going to get a lot of producers stopping at 75-buck oil.”
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Russia Hasn’t Decided to Cut Oil Output in Preparation for OPEC
Nov 24, 2014 5:25 PM GMT
Russia’s
energy minister said his country hasn’t decided to cut oil production as he
prepares to meet with OPEC ministers to discuss the crude market. Russia is already helping to balance the oil market by keeping output steady, Alexander Novak said today in an interview with state TV channel Rossiya 24. There’s only a small chance the Organization of Petroleum Exporting Countries will agree to reduce output at a meeting this week, he said.
“We are not Saudi Arabia, which has the ability to reduce production quickly, ramp up quickly,” Novak said. It’s open question whether an agreement would affect prices, he said.
His comments run counter to a report in Kommersant newspaper today that Russia may cut production by 300,000 barrels a day next year to support OPEC reductions of more than 1 million barrels. The group is considering action to boost prices after oil plunged more than $30 a barrel since July.
----“Russia will produce as much oil as it can, any cuts are possible only because of natural reasons, not on purpose to influence the market,” said Alexander Kornilov, an Alfa Bank energy analyst in Moscow. “Any statement beyond this is bravado.”
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"The history of paper money is an account of abuse, mismanagement, and financial disaster."
Richard M. Ebeling
At the Comex silver
depositories Monday final figures were: Registered 64.90 Moz, Eligible 112.45
Moz, Total 177.35 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
Zhou’s PBOC Past Shows Multiple Moves as More Cuts Seen: Economy
Nov 25, 2014 12:30 AM GMT
In his 12 years as People’s Bank of China Governor, Zhou
Xiaochuan has never stopped at a single shift to benchmark interest
rates once prompted into action. Zhou, who took office in 2002 when Alan Greenspan was still chairman of the Federal Reserve, has overseen two tightening and two easing cycles for a total of 22 moves to the one-year lending rate and 20 to the one-year deposit rate. Simple math suggests his latest cut is unlikely to be a one-off.
By joining Mario Draghi and Haruhiko Kuroda in the global stimulus camp, Zhou signaled deeper concern over China’s outlook and recognition that targeted measures alone weren’t going to be enough to revive growth. A Bloomberg survey conducted late Nov. 21 through yesterday showed economists forecast further monetary loosening by the middle of next year.
More
German bond yields to trump Japan as ECB battles deflation
"Be very bullish. The huge elephant in the room is ready to roar again," RBS advises clients
German bond yields are to fall
below Japanese levels and plumb depths never seen before in history as Europe
becomes the epicentre of global deflationary forces, according to new forecast
from the Royal Bank of Scotland.
“We are seeing `Japanification’
setting in across Europe,” said Andrew Roberts, the bank’s credit strategist.
“We expect 10-year Bund yields to cross the 10-year Japanese government bond
and we are amply positioned for such an outcome.”
Mr Roberts said it is a “weighty
win-win” situation for investors. If the European Central Bank launches
full-blown quantitative easing, it will almost certainly have to buy large
amounts of German Bunds, and these are becoming scarce.
“Net supply in Germany is zero
since they are in budget surplus this year and next, and they have written a
balanced-budget amendment into their constitution. There are simply fewer and
fewer Bunds to buy, and everybody wants them,” he said.
It is assumed that if the ECB
buys sovereign bonds, it will have to buy them evenly in accordance with its capital
“key”. This implies that 28pc would have to be German debt.
Yet if the ECB
fails to deliver on hints that it will expand its balance sheet by €1 trillion,
the damage would be so enormous that Europe would be sucked into a
depressionary vortex, according to the bank. Bund yields would fall for
different reasons, as debt markets began to reflect a Japanese-style deflation
trap.
More
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
The monthly Coppock Indicators finished October.
DJIA: +137 Down. NASDAQ: +275 Down. SP500: +210 Down.
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