The Israel Deception

Is the return of Israel in the 20th century truly a work of God, or is it a result of a cosmic chess move to deceive the elect by the adversary?

Monday, April 13, 2020

Disconnect between physical and paper gold prices in full swing

With the economic slowdown (some may say collapse) entering its second month, few asset classes are coming out unscathed in the financial destruction.  Yet as expected, the single commodity that is exploding upward is of course gold.

But with this in mind there is an even bigger scenario in play beyond simply the price of gold going up, and that is not only the disconnect between physical and paper gold, but also between the futures price and the spot price.

April 13 2020:  Gold prices for paper and physical

Spot Price: $1716

Futures Price:  $1761

Physical Price:  $1864

As you can see, there is nearly a $50 difference ($45) between the current spot price and the June futures price, and a $100 (Futures) and $150 (Spot) premium between the physical and paper prices.

As the demand for gold continues to accelerate, the disconnect between the paper and physical markets will only increase.  And it is now likely that the physical price will surpass its all-time high in dollar terms long before the end of the year.

Sunday, March 8, 2020

Russia uses America's own weapon against them as new oil gambit may be the key to collapsing the Western financial system

For those who do not remember details of the Cold War between the U.S. and former Soviet Union, it was a combination of a military buildup under President Reagan coupled with a depressing of the price of oil that eventually led to the Communist regime's demise.  Yet like a pendulum that swings to the opposite side when there is enough inertia, just 30 years later Russia has set themselves up to use the very same weapons that were used against them in order to bring harm or even destroy the financial systems of their adversaries.

This drop in oil price made it become much less profitable to drill new oil wells. Also, the Soviet Union was an oil exporter, and at a lower price, it earned less profit for the oil it exported. Given these headwinds, oil production stopped rising, and by 1988, began to fall. Oil production did not start rising again until the early 2000s, when oil prices began rising again and a different political system was in power. 
As oil production dropped in the 1988-1991 period, FSU oil exports plummeted. Given the combination of a low quantity of oil exported, and low sales price of oil exports, the FSU found itself in financial difficulty where it could not afford to pay for food imports, which it badly needed, and the country collapsed. -
Fast forward 29 years.

In a move that few could see coming, Russia on Thursday voted against OPEC's desire to reduce production and appears very ready to see the price fall even lower than Friday's market close of $42.
OPEC needs this cut to remain relevant. The cartel is dying. It’s been dying for years, kept on life support by Russia’s willingness to trade favors to achieve other geostrategic goals. 
I’ve said before that OPEC production cuts are not bullish for oil just like rate cuts are not inflationary during crisis periods. 
But finally Russia said No. And they didn’t equivocate. They told everyone they are prepared for lower oil prices. - Gold, Goats, and Guns
Yet this move did not come in a vacuum, as Russia's announcement comes when both the U.S. and Europe are at their most vulnerable... as in having to deal with crashing bond and equity markets, an escalating war within NATO between members Greece and Turkey, and a global pandemic labeled as the Coronavirus.

Invariably the foundation for this gambit opened itself up since OPEC was already on the way out, as seen just a few years ago when the Middle Eastern cartel willingly accepted Russian aid and guidance in what would become known as OPEC+1.  But thanks to a number of chaotic events such as the continuing conflicts in Iraq and Syria, economic sanctions against Iran, and Qatar leaving OPEC completely last year, what was once a coalition dominated by Saudi Arabia and Iran had almost overnight shifted to one being directed from offices located in Moscow.

In addition to all of this, we cannot forget the incredible growth of America's shale industry which by 2019 had overtaken even Russia in producing the most barrels of oil in a given day.  However in doing so, the U.S. leveraged the industry way too much as bank subsidization coupled with higher production costs put America too close to the edge if prices declined too much.

And with all of these black swans and white albatrosses circling the globe, a perfect storm emerged for Moscow to use now as the time in which they could exact revenge on Washington by using the very weapon (oil prices) that was a catalyst for their own collapse in 1991 and flip it towards bringing down the already tenuous global financial system.
When dealing with a more-powerful enemy you have to target where they are most vulnerable to inflict the most damage. 
For the West that place is in the financial markets. 
Remember, the first basic fact of economics.  Prices are set at the margin. The only price that matters is the last one recorded.  
That price sets the cost for the next unit of that good, in this case a barrel of oil, up for sale. 
In a world of cartelized markets the world over, where prices are set by external actors, it is easy to forget that in the real economy (regardless of your political persuasion) the world is an auction and everything is up for bid.
High bid wins. 
So, the most important geostrategic question is, “Who produces the marginal barrel of oil?” 
For more than three years now, President Trump has supported his policy of Energy Dominance in a Quixotic quest for the U.S. to become that supplier.  Trillions of dollars have been spent on building up domestic production to their current, unsustainable levels. 
This policy pre-dates Trump, certainly, but he has been its most ardent pursuer of it, sanctioning and embargoing everyone he can to keep them off the bid.
What he could never do, however, was push Russia off that bid. 
The reason U.S. production rates are unsustainable is because their costs are higher per barrel than the marginal price especially when all other prices are deflating.  Simple, straightforward economics.  
All of this adds up to Russia holding the whip hand over the global market for oil.
The ability to say, “No.” 
And they will have it for years to come as U.S. production implodes.  Because they can and do produce the marginal barrel of oil.   
That is why oil prices plunged as much as 10% into today’s close on the news they would not cut production. 
There is a cascade lurking beneath this market. There is a lot of bank and pension fund exposure in the U.S. to what is now soon-to-be non-performing fracking debt.
Liquidations will begin in earnest later this year.
And like clockwork, it appears that repercussions have already begun to emerge just three days after Moscow laid down the law over production cuts.

Monday, January 13, 2020

Millennials find a ray of light as Judge opens crack into being able to discharge student loans through bankruptcy

It doesn't take biblical wisdom to realize that debtors are always slaves to the lenders.  And when the Federal Government took control over nationalizing the student loans process back under the Obama Administration, it set in motion the potential for an entire generation of Americans to become indentured servants to Washington.

Diabolically as well, one of the primary reasons President Obama wanted his administration to seize control over the student loan program was to be able to provide unlimited money to millennials at a time when the nation was deep in recession following the 2008 financial crash.  Because by providing an outlet for young Americans to 'hide out' on campuses instead of potentially protesting in the streets because there were few available jobs, Obama was able to easily make it through any potential crisis that might have taken place while the central bank was infusing the financial system with tens of trillions of dollars in QE.

Unfortunately, the natural laws of artificially expanding the money supply this way (via the Fed and the Federal budget) had some very real repercussions in two areas of the economy.  First, because the student loan program suddenly expanded in scope to individuals to be able to borrow much more than in the past, universities seized upon this government underwriting by escalating tuition's and fees to astronomical levels.  Thus where a decade prior a student may have left college with less than $30,000 in debt, that number skyrocketed to well over $100,000.

Secondly, the advent of the Affordable Care Act (Obamacare) precipitated the same thing in the medical industry as costs also skyrocketed, and premiums for Obamacare insurance took nearly 20% of many Americans paychecks.

However at least for those Americans who's debt was tied to overwhelming medical costs, there was always the option of bankruptcy to be able to get out from under the burden of their massive obligations.  But for those who's debts were tied to student loans, there was little recourse as Congress had skewed the laws against them to be able to use bankruptcy as a viable safety net.

Until now?

But on January 7, 2020, a New York judge ruled that the $221,385.49 in student loan debt owed by Rosenberg as of November 2019 was dischargeable under chapter 7 bankruptcy. 
“I have a chance now to have a life,” the 46-year-old Rosenberg told Yahoo Finance in an interview. 
A bankruptcy expert told Yahoo Finance that Rosenberg’s case is a watershed in that it dispels the notion that student loans were not dischargeable in bankruptcy. – Yahoo Finance
For what appears to be a first in the more than 40 years of government intrusion over bankruptcy laws, a judge has ruled against that the legislative branch by putting a crack into a system that has 'enslaved' a generation of Americans under the weight of nearly unpayable debts.

Sadly for most millennials, knowledge of how their student loan debts have hampered their abilities to experience the American Dream has been understood for more than a decade by the very same government who helped create their situations.  And while some Democratic Presidential candidates like Bernie Sanders and Elizabeth Warren pander to millennials by promising that the government will erase their debts if they get voted into office, the reality is that most political promises never manifest the way they think, and instead their best option may be in this small innocuous court ruling early here in 2020.