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April 04 2018

moneymetals

China Moves to Neuter King Dollar in International Trade

Last Monday, the Shanghai International Energy Exchange launched the first futures contract for crude oil priced in Chinese yuan. It’s a major step forward in the process of international de-dollarization. Now Chinese and other international traders can buy and sell the world’s most important commodity in a liquid market without using U.S. dollars.

The “petro dollar” now faces the prospect of being rendered unnecessary as China – the world’s biggest oil importer – attempts to establish a “petro yuan.”

China is launching a pilot program to purchase oil from Russia and Angola (two of its top suppliers) using yuan. Russia and China share a common interest in trying to break the dollar's dominance in global commodity trading.

The two powers have been among the world’s top gold accumulators in recent years, with some reports suggesting Russia is now also loading up on silver for the possible launch of a silver ruble. Russia and other emerging commodity supplier markets stand to be among the big beneficiaries of a weaker dollar, as does China.



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April 02 2018

moneymetals

Silver Price Best Setup In Years & Update On Continued Meltdown In Stock Markets


This update is by far one of the most important as the silver price setup is the best I have seen in years. According to the data, the silver price is by far in much better position to outperform gold when the precious metals market takes off. Also, I do an update on the stock market as well as the continued disintegration of the U.S. Shale Oil Industry.

While most investors will be interested in what is taking place in the silver market, it’s very important to understand how much the situation is deteriorating in the U.S. Shale Oil Industry. Without cheap and abundant oil, the value of most stocks, bonds, and real estate would collapse. Unfortunately, falling stock and real estate prices are precisely what is going to happen to 99% of the public’s investments as only 1% hold precious metals.

The reason I believe the gold and silver prices will start to take off when the stock markets begin to really plunge lower is due to the setup of these assets since the Fed’s Q3 policy at the end of 2012. Because the precious metals sold off from 2013 to 2016 and are still close to their lows, they are ripe for much higher prices. However, the real estate and stock markets are near their highs. Thus, we are going to experience one hell of a disconnect between the stock and real estate market and precious metals.. quite the opposite that took place after 2012.

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March 02 2018

moneymetals

Why U.S. GDP Hasn’t Really Increased Since 2000

While official sources forecast U.S. Gross Domestic Product (GDP) to surpass $20 trillion this year, the real figure is probably much less. So how much less is real U.S. GDP? Well, that depends on how it is measured. If we factor in energy consumption and the increase in total public debt, U.S. GDP is likely less than half of the current figure.

Yes, it sounds insane to say that the current U.S. GDP is likely overstated by at least 50%, but if we go by fundamental data, it isn’t that crazy at all. Unfortunately, Americans have been conditioned to believe that money grows on trees and energy comes from the Wizard of Oz. Thus, if we need more money, then the U.S. Treasury can print more Federal Reserve Notes, or we can swipe the credit card. And, if we need electricity, we just switch on the light. Easy… Peasy.

Due to the highly complex nature of the world in which we live in today, the individual is clueless as to the tremendous amount of energy and work that it takes to produce the foods we eat and the goods, energy, and materials we consume. So, it should be no surprise that U.S. GDP can be overstated by 50%+.

If we go by the data that shows the growth of Global GDP is related to the growth of Global Oil Supply, then it is very quite easy to spot inflated GDP figures. However, you have to be able to understand this essential ENERGY=GDP relationship. Of course, this is not taught in business or economic classes in high school or college. Instead, the economic teachers focus on the insane theory of SUPPLY vs. DEMAND. If individuals are taught GARBAGE, then their thinking and reasoning is GARBAGE. So, we really can’t blame them.

In looking at the following chart by Gail Tverberg, the increase in Global GDP corresponds to the rise in Global Oil Supply:

World oil supply growth vs. world gdp growth

As the annual growth percentage of World Oil Supply declined in the periods shown in the chart above, the same trend took place in World GDP. If we can understand the OIL-GDP relationship figures in the chart, then it is impossible for a country to grow its GDP if it does not increase its energy consumption.



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