Baltic Dry Index. 1332 +26 Brent Crude 79.60
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money; as the commodity providing the most stable and desirable monetary medium."
Murray N. Rothbard.
Next week OPEC meets in Vienna to make or break the oil sector. It’s a
50:50 even bet which way they’ll go, think the “experts.” I don’t think OPEC
will cut production, and that all will
cheat, even if they say they will. I suspect that our new lawless age is about
to undergo a reverse oil shock to 1973. Following the botched American coup in
Kiev, I think our world has entered a new highly unstable phase. Is Azerbaijan next
in line for an American War Party coup?
Below the real world far from the western central banksters market
rigging club.
Confused OPEC Watchers Are More Divided Than Ever
Nov 21, 2014 4:30 AM GMT
To understand just how contentious next week’s OPEC meeting will be, take a
look at the confusion it’s created among professionals paid to predict the
outcome. The 20 analysts surveyed this week by Bloomberg are perfectly divided, with half forecasting the Organization of Petroleum Exporting Countries will cut supply on Nov. 27 in Vienna to stem a plunge in prices while the other half expect no change. In the seven years since the surveys began, it’s the first time participants were evenly split. The only episode that created a similar debate was the OPEC meeting in late 2007, when crude was soaring to a record.
The split now reflects the difficult choice OPEC nations have to make. They could cut output to revive crude prices from a four-year low, at the risk of losing more market share to rival suppliers, including U.S. shale drillers. Or they could do nothing and allow prices to fall low enough to deter growth in U.S. output, a move that would also squeeze the finances of poorer members like Venezuela and Nigeria. With half the analysts in the market headed for a surprise, prices will be volatile after the meeting, according to BNP Paribas SA.
“It’s going to be a critical day,” Doug King, chief investment officer of the $200 million Merchant Commodity Fund, said by phone from London Nov. 14. “If there’s no action from the meeting, one of the most important OPEC meetings in the last 10 to 15 years, then the market will test them on the downside. If they cut 1.5 million barrels a day, you could get the Brent market back up into the $80 to $90 range.”
Oil collapsed into a bear market last month as U.S. drillers pumped at the fastest pace in more than three decades and global demand growth slowed. OPEC, responsible for about 40 percent of global oil output, needs to reduce production by 1 million to 1.5 million barrels a day to better balance supply and demand, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, said by e-mail from London on Nov. 11.
The group faced the opposite situation when analysts were at odds about OPEC’s intentions seven years ago. Brent futures had climbed about 55 percent in the 11 months up to the December 2007 meeting, putting pressure on the group to increase its production target. At the same time, the U.S. economy was on the verge of its worst recession since the 1930s, following a collapse in the housing market.
Before the meeting on Dec. 5, 2007, 23 of 42 people surveyed by Bloomberg predicted OPEC would maintain its production target, while the others forecast an increase of between 500,000 and 750,000 barrels a day. On the day that the group decided to maintain output, Brent crude futures slumped as much as 1.9 percent, before settling 1.2 percent higher.
“If OPEC does nothing, I think we’re seeing this market get really trashed, another $10 from where it is,” Hakan Kocayusufpasaoglu, chief investment officer at Archbridge Capital AG, a Zug, Switzerland-based hedge fund, said by phone Nov. 14.
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Ukraine Clash Shows Azeris Who’s Boss as Russia Ties Bind
Nov 21, 2014 12:00 AM GMT
Peeling away former Soviet republics from their U.S. and European allies is
getting easier for Russia after its show of force in Ukraine. Azerbaijan is changing tack after months of steering clear of the showdown 1,500 kilometers (900 miles) away. First Deputy Premier Yaqub Eyyubov broke the silence in September, calling Russia his country’s “closest, most fraternal” ally. As a sign of the warming ties, Russian warships last month docked at in the capital, Baku, for the first time in more than a year.
The nation, which provides the only westward route for central Asian oil bypassing Russia, has grown alarmed that Ukraine was left to fend for itself as President Vladimir Putin had his way in Europe’s biggest crisis since the Iron Curtain fell 25 years ago. That was a “very bad” signal, according to Elnur Soltanov, head of the Caspian Center for Energy and Environment, a research group focused on foreign policy in Baku.
“It told everybody who is the real boss in the region, who is the real hegemon,” he said. “Ukraine is the biggest jewel among the post-Soviet states and if Russia comes in broad daylight and occupies Ukraine and the Western world shows this limited reaction -- it tells us that if something goes wrong with Russia, we shouldn’t trust anybody to come and save us.”
As Azerbaijan redraws its foreign policy, its $74 billion economy is being buffeted by falling crude output and an oil-market selloff. Gross domestic product expanded 2.8 percent in the January-October period, slowing from 5.7 percent a year earlier. Hydrocarbons, which account for 45 percent of GDP, make up more than 90 percent of total Azeri exports, up from 60 percent in the late 1990s, according to the International Monetary Fund.
The Caspian Sea country is backtracking on its two-decade drive to forge closer ties with the U.S. and Europe as tensions escalate with Russian ally Armenia over the breakaway region of Nagorno-Karabakh.
The government has also come under greater scrutiny for its commitment to media freedoms and human rights.
Azerbaijan last week shot down what it said was an Armenian helicopter that violated its airspace, an attack that threatens to escalate the conflict. More than 20 troops were killed in August as the skirmishes turned the deadliest in 20 years.
With Russian troops already stationed in neighboring Georgia and Armenia, leaders in the nation of 9.6 million people are concerned about leaving the country’s other flanks exposed after seeing the failed efforts to counter Putin’s actions in Ukraine.
President Ilham Aliyev has visited Putin twice in the past three months and has recently hosted a range of senior officials from Moscow.
----Azerbaijan’s shift toward Russia is also straining relations with the U.S. and Europe.
U.S. President Barack Obama in September singled out Azerbaijan as a country where “laws make it incredibly difficult for NGOs even to operate.” The Organization for Security and Cooperation in Europe this month urged the government to end its “ongoing and increasing number of repressive actions against independent media and advocates of freedom of expression,” according to a statement.
More
We end for the week with more on
our rapidly changing world. As Uncle Scam plots to take over the Steppes, China
looks to project its version of the Monroe Doctrine. Tomorrow will not be like
today which was like yesterday, even if our market rigging central banksters
can’t see it.
Ascendant China Cited by U.S. Panel as Pentagon Pivots to Asia
Nov 21, 2014 7:04 AM GMT
China’s
advancing military capabilities will challenge the U.S.’s ability to deter
conflicts, defend partners and maintain freedom of the seas and airways in the
Asia-Pacific region, according to a commission mandated by Congress. “While the United States currently has the world’s most capable navy, its surface firepower is concentrated in aircraft carrier task forces,” the U.S. Economic and Security Review Commission said in its annual report. “China is pursuing a missile-centric strategy with the purpose of holding U.S. aircraft carriers at high risk if they operate in China’s near seas and thereby hinder their access to those waters in the event of a crisis.”
“Given China’s growing navy and the U.S. Navy’s planned decline in the size of its fleet, the balance of power and presence in the region is shifting in China’s direction,” the panel found. That will give China an “increasing number of opportunities to provoke incidents at sea and in the air that could lead to a crisis or conflict.”
Chinese nationalism, increasing regional assertiveness and the “relatively nascent state” of U.S.-Sino channels for defusing a crisis means “the potential for security miscalculations in the region is rising,” the commission said.
Last week in Beijing, U.S. President Barack Obama and Chinese President Xi Jinping agreed to increase cooperation and communication between their armed forces to reduce the risk of a mistake that might cause local disputes to mushroom into a military conflict. Xi said military-to-military relations will be bolstered by the “confidence-building” measures.
Addressing Australia’s Parliament in Canberra this week, Xi said, “Neither turbulence nor war serves the fundamental interests of the Chinese people.”
China’s military modernization is out of necessity to secure its territory, Defense Minister Chang Wanquan said today in a speech in Beijing
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"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver
depositories Thursday final figures were: Registered 64.82 Moz, Eligible 112.88
Moz, Total 177.70 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on the rapidly worsening oil bust.
While lower prices are temporarily good for consumers, a debt laden oil sector
is headed deep into trouble. Without an unlikely miracle from the coming OPEC
meeting, today’s lower oil prices plus an eventual end to ZIRP, make most of
the oil patch an untenable folly.
Oil industry risks trillions of 'stranded assets' on US-China climate deal
Petrobas' hopes of becoming the world's first trillion dollar company have deflated brutally
Brazil's Petrobras is the most
indebted company in the world, a perfect barometer of the crisis enveloping the
global oil and fossil nexus on multiple fronts at once.
PwC has refused to sign off on
the books of this state-controlled behemoth, now under sweeping police probes
for alleged graft, and rapidly crashing from hero to zero in the Brazilian press.
The state oil company says funding from the capital markets has dried up, at
least until auditors send a "comfort letter".
The stock price has dropped 87pc
from the peak. Hopes of becoming the world's first trillion dollar company have
deflated brutally. What it still has is the debt.
Moody's has cut its credit rating
to Baa1. This is still above junk but not by much. Debt has jumped by $25bn in
less than a year to $170bn, reaching 5.3 times earnings (EBITDA). Roughly $52bn
of this has been raised on the global bond markets over the last five years
from the likes of Fidelity, Pimco, and BlackRock.
Part of the debt is a gamble on
ultra-deepwater projects so far out into the Atlantic that helicopters
supplying the rigs must be refuelled in flight. The wells drill seven thousand
feet through layers of salt, blind to seismic imaging.
The Carbon Tracker Initiative
says the break-even price for these fields is likely to be $120 a barrel. It is
much the same story - for different reasons - in the Arctic 'High North',
off-shore West Africa, and the Alberta tar sands. The major oil companies are
committing $1.1 trillion to projects that require prices of at least $95 to
make a profit.
The International Energy Agency
(IEA) says fossil fuel companies have spent $7.6 trillion on exploration and
production since 2005, yet output from conventional oil fields has nevertheless
fallen. No big project has come on stream over the last three years with a
break-even cost below $80 a barrel.
"The oil majors could not
even generate free cash flow when oil prices were averaging $100 ," said
Mark Lewis from Kepler Cheuvreux. They have picked the low-hanging fruit. New
fields are ever less hospitable. Upstream costs have tripled since 2000.
"They have been able to
disguise this by drawing down legacy barrels, but they won't be able to get
away with this over the next five years. We think the break-even price for the
whole industry is now over $100," he said.
A study by the US Energy
Department found that the world’s leading oil and gas companies were sinking
into a debt-trap even before the latest crash in oil prices. They increased net
debt by $106bn in the year to March - and sold off a net $73bn of assets - to
cover surging production costs.
The annual shortfall between cash
earnings and spending has widened from $18bn to $110bn over the last three
years. Yet these companies are still paying normal dividends, raiding the
family silver to save face.
This edifice of leverage - all
too like the pre-Lehman subprime bubble - will surely be tested after the 30pc
plunge in Brent crude prices to $78 since June.
More
Another weekend, and global warming is wreaking
havoc on the land of the freed huddled masses armed with snow shovels. Global
warming notwithstanding, time to winterize the car and fill up the tank with
cheaper petrol. Have a great weekend everyone.
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
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