OASIS FORUM Post by the Golden Rule. GoldTent Oasis is not responsible for content or accuracy of posts. DYODD.

His take on bubble # 3:

What is the collateral for the 5% yields advertised by these fly-by-night funds—–often issued and managed by the same folks who sold housing sector CLOs and CDOs last time around?

Why its the leveraged loans issued by E&P operators in the shale patches. The collateral for these leveraged loans, in turn, is shale rocks 4,000-9,000 feet down under that have been worthless until approximately 2005 and would be worthless today without dramatically over-priced crude oil and drastically underpriced debt capital.

That is to say, the vaunted collateral in the shale patch craps out after about two-years unless new money is poured down the well bore and oil prices are above $75-$80 per barrel on the WTI marker price to cushion the sharp discounts back to the wellhead. But with marker price now plunging into the $50s, the drilling will soon stop, the production will crap-out, the shale rock collateral value will regress toward the zero bound, the E&P borrowers will default, the energy CLO’s will implode and the hapless yield chasers will be left high, dry and panicked.

STOCKMAN WROTE=

“And the resolution:

In short, what is happening now is that risk is coming out of hiding, the collateral chains are buckling, the financial time bombs are beginning to explode.

There is nothing especially new about this development—its the third occurrence this century. But there is possibly something different this time around the block.

This time the carnage could be much worse because the most recent tsunami of central bank credit was orders of magnitude larger and more virulent than during the run-up to the Lehman event or the dotcom implosion.

Moreover, the central banks are now out of dry powder—– impaled on the zero-bound. That means any resort to a massive new round of money printing can not be disguised as an effort to “stimulate” the macro-economy by temporarily driving interest rates to “extraordinarily” low levels. They are already there.

Instead, a Bernanke style balance sheet explosion like that which stopped the financial meltdown in the fall and winter of 2008-2009 will be seen for exactly what it is—-an exercise in pure monetary desperation and quackery.

So duck and cover. This storm could be a monster”

**********************************************************************

Stockman=and his scenario is exactly why gold will not plunge because of deflation

It could plunge-like in 2008–because of official sector suppression–including margin hikes or even force majeure…but the govvie will have a much harder time doing it if we repeat 2008 cause the excesses are so much greater–plus no one will pay any attention to the “selling everything to raise cash” as a rationale for selling gold holdings…the action lately seems to confirm the idea that gold is starting to be accepted for its true role–the currency of last resort–the ultimate safe haven–and not that ridiculous 2008 category devised by the Street–as just another “risk off” asset to be liquidated

…but that’s all in the future–no need to devise end of the world scenarios just because the DOW backed off a few percent…Maybe the U.S. is still in the “virtuous circle”-with King Dollar and the whole 9 yards…and martin armstrongs DOW 40,000

i was sitting in a bar about closing time when this butt ugly heifer slapped me on the hip pockets and said, ” how ya doing cowboy?” Being “slightly intoxicated”, I replied I was very intoxicated but not nearly desperate . She said, “how about taking my number and call me when you’re sober.” Did I mention it required a fifty ton crane to lift her to the top of the tallest ugly tree in North America. She broke every branch on the way down. Her looks indicated she played in th offensive line before face guards.

i asked her if she had a pen. She said, “I surely do”. I replied,  “you better get back into it before the farmer knows you’re gone”.

i never saw that beer mug coming!

i guess a little morphine is out of the question.

rno- who had his nose broken in eight places and still frequents those places.

What could sustain a precious metals rally this time and force a break out to the upside from the sideways trading range? Simply a flight to safety as other asset markets breakdown. Whether you look at bonds or equities they have a definite sense of virtigo at these levels.

Yesterday investors dumped stocks as the Chinese authorities took steps to tighten lending. Meanwhile fears about Greece finally leaving the euro and defaulting on its debts resurfaced after Athens announced it would hold its presidential election two months ahead of schedule. Greek stocks plunged an eyewatering 13 per cent.

Prices going up

Gold and silver are cheap by comparison to stocks and bonds. The fear of higher interest rates to come is over done. The global economy can’t take it. More money printing is on the way to sustain low interest rates. They are already negative in the eurozone making gold a positive hold there by default.

Hold your stomach’s. Not for the squeamish!! Whatever they are they are alive!!

https://www.youtube.com/watch?feature=player_detailpage&v=Dxk5yXnVc-Q

Dave from Denver…

The Oil Black Swan Is No Longer Just A Sighting…

December 10, 2014Financial Marketsadmin

It’s overhead and landing: OPEC Sees Weakest Demand for Its Crude in 12 Years in 2015

I got news for all the analysts and investors who want to believe that the U.S. economy is fine and the rest of the world is in trouble: the U.S. is BY FAR the world’s largest oil consuming country – EIA link– consuming nearly twice as much oil as #2 China.

If oil demand is weak, it’s because end-user demand is weak. That means demand from U.S. companies and consumers is weak. That means the U.S. economy is much weaker than the narrative being vomited out by Wall Street, Obama and the Fed.

“Faith” is defined as “believe without evidence.” Anyone buying stocks and fiat money-based assets is placing faith in some money deity for which there’s no evidence of existence. Over 6,000 years of civilized history, fiat currencies have a 100% failure rate. That’s 100% evidence of paper money’s validity. Gold and silver have survived that 6,000 years and stand alone as real money. Again, that would be considered fact backed by evidence.

Willem Buiter can kiss my ass…

http://investmentresearchdynamics.com/the-oil-black-swan-is-no-longer-just-a-sighting/

This action had already begun while oil was still over $100 per barrel as less demand for dollar assets was evident. Now, on top of less “willingness” on the part of petroleum exporters to recycle, they have less (or none) to recycle. No problem because the Fed will just monetize you say? Think again!

Look what is currently happening. The reflation of the reflation of U.S. real estate is failing. Oil has deflated 40%+++. High yield credit is in an outright crash and already at record “wides” to Treasuries. The euro and yen have deflated drastically …even against gold. The Chinese stock market dropped over 5% last night, this is like a 900 point drop in the Dow. They changed their “collateral rules” and now only AAA and AA credits can be used as collateral. While speaking of China, let’s not forget their shadow banking system which has basically now been frozen solid. Commodities across the board have been hammered lower while growth rates across the globe (except of course the U.S. as we lie about every economic report) have either slowed drastically or turned negative. The “reflation” is clearly failing! There is no way around it, we are watching a credit contraction unfold.

Yet, gold has bottomed? How could this be? Gold surely should be close to or even under $1,000 if you listen to the Dent’s and Armstrong’s of the world? Let me put this together for you. Everything is “controlled”. By “controlled” I mean “price”. The price of everything is controlled. I could have said “hidden”. The “hiding” process began in 2008-09 when the Fed took all sorts of toxic (insolvent) paper on to their balance sheet. They did this to hide their values. Yes, they did this to get liquidity into the banks but in my mind their primary reason was to get these assets off the market so they could not be used as “comps” are in real estate. They carry these on their books at par when they could not even get .18 cents on the dollar when they tried to sell them. Do you see? This is where the scheme kicked into high gear.

Back to gold, how could it possibly be going higher if all of a sudden asset values are declining or deflating? First, gold has also been “priced”. Gold, more than any other asset (except silver) HAD to be “priced”. It had to be suppressed because the numbers on the thermometer had to be altered to foster confidence. As you know, I absolutely believe gold’s price has been “made” on the paper markets. Nothing else could explain a falling price with increasing and greater demand than supply. If other markets are being lost control of, then so are gold and silver, they are only moving away from being controlled and towards a natural price.

It looks like to me that “confidence” if it is not broken yet, will very soon because control is being lost in too many of these markets. Was the price drop in oil a “control” measure by the U.S. to punish Russia? I believe yes, this was “our” plan but not “THE” plan. As I wrote a week ago, we may have thought it was our bright idea but I am sure the new Chinese/Saudi relations are as big of a factor, if not greater. Because so many different markets now begin to tell a story opposite of the “official” story, it tells me that “control” is now beginning to slip. If you doubt this, think to yourself “why have we had extraordinary measures” for six years? Why are we still six years later talking about recovery? What happened to the “expansion” phase? It’s like the Dutch boy with all of his fingers and toes in the dike, leaks are springing up everywhere and with each one more control is lost! If I am correct and this is true then we will either see massively convulsive markets or an outright closure and re set of prices.

Please remember this, volatility will create more volatility just as a small fire or fires in a dry forest will spread and create more fire. Volatility will create losses and losses will create bankruptcies. It is these bankruptcies which will turn winners on the other sides of trades …also into losers.

Quite simply, we have lived through the greatest Ponzi scheme of all time where leverage of over 100 to (probably 1,000 to one when all is said and done) has been employed for control. The recent volatility suggests that control is finally being lost. If this is true and I firmly believe it is, we are on the doorstep of the worst financial panic event in all of human history. The sad part is the humanity. Only a small percentage of the global population ever even played in this game but everyone will be affected by it! Regards, Bill Holter, Miles Franklin Associate writer

U.S. economic news:

Seems to work fine, All the bells and whistles, and no snoops allowed. Check it out!!

Unseen Product Updates and Site Improvements

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Secure Your Privacy, Secure Your Freedom

December 10, 2014
Santiago, Chile

As the holiday season approaches you might have mistletoe on your mind for cheery, romantic reasons.

What you might not have known however is that the festive flora and its relatives are all actually parasites.

Unable to photosynthesize to feed itself, mistletoe latches on to a host plant and steals away its nutrients and water.

From the mistletoe’s point of view this may seem like a great idea… for a while.

Depleted of nutrients, the host’s growth is stunted. Branches fall off. And eventually if the mistletoe grows large enough, the entire host plant just dies.

Thus, mistletoe can quite literally eat its own self out of house and home. This isn’t exactly a solid long-term strategy.

Given their behavior it seems that most governments belong to the same genus.

The public sector has no ability to support itself. In theory, they’re supposed to survive by taking a modest portion of people’s earnings through taxation, and then providing valuable services in exchange.

Nature calls this ‘symbiosis’. But life rarely follows theory.

In reality, bureaucrats and politicians who produce nothing of value parasitically choke off the productive class through onerous taxation and regulation.

This cannot last forever, because at some point they will have no hosts left to feed off of.

Ukraine is the perfect example of this right now.

In a leaked version of a new budget proposal (in Ukrainian), we are seeing the drastic extent to which bankrupt governments feed on their hosts.

The proposal includes measures to cut public education in Ukraine from 11 to 9 years. And more importantly, education will no longer be funded by the state.

There will be no more free food for children in school or for patients in hospitals, and healthcare will no longer be completely state-funded.

The government is also proposing to drastically reduce pension benefits.

Women will have to work 10 more years in order to qualify for a pension, and men an additional 5.

They’re also proposing to FREEZE pension benefits, i.e. no longer adjusting them to the rampant inflation that’s unfolding in Ukraine.

They’d also like to do away with a number of other public services; they’ve proposed slashing the number of judges, prosecutors, and police.

They’ve even proposed reducing the number of members of parliament from 450 to 150.

Now, I happen to quite like the idea that a government is pulling itself out of the business of education, healthcare, security, etc.

But it begs the question—if the government is no longer going to provide these services… then why the hell should anyone have to pay tax?

Of course, taxes are still obligatory.

So on one hand the government is defaulting on all the obligations it has made to its citizens… essentially breaking the social contract.

Yet on the other hand they’re still going to throw people in jail for not paying taxes.

Just like mistletoe, this is a highly parasitic relationship. And it’s precisely what happens when a country goes bankrupt.

Ukraine is in this position for a number of reasons; certainly the war has been very costly and has wrecked havoc on the economy.

But Ukraine’s government has had a long history of pitifully bad decisions, corruption, and fiscal mismanagement. [stop me when this sounds familiar]

At this point they’ve managed to blow the vast majority of their foreign reserves (i.e. the country’s US dollar cash savings).

In fact, as of this morning, Ukraine’s total foreign reserves amount to just 0.34% of its enormous debt level.

This is barely enough to pay interest on the debt for the next six weeks! Astounding.

Oh… wait a minute. Hang on. I got my data wrong. I’m actually talking about the United States.

Fact is, Ukraine has $10 billion in foreign reserves on $70 billion in debt. That’s 14.2%.

The United States, on the other hand, has $61 billion in cash in its operating account [less than Apple], which equals 0.34% of its $18 TRILLION debt.

Nothing to worry about, though.

I’m sure that the rest of the world will continue to give the Land of the Free a pass.

It makes total sense that Ukraine is in the midst of an epic financial crisis, even though the US government is in far worse financial condition.

Because there are absolutely zero problems whatsoever with the US government being admittedly insolvent, highly illiquid, warmongering, and deceitful to even its own allies.

This is a consequence-free environment. Nothing to see here, people; you should have zero concerns about having 100% of your savings and assets tied to a bankrupt government that’s in worse shape than Ukraine’s. What could go wrong?

Hey look over there! It’s Kim Kardashian’s buttocks!

But if you want to do something about it and actually take steps to protect yourself, you might as well take a lesson from the father of communism, Karl Marx. Yes, that’s right. 

Until tomorrow,

Simon Black
Founder, SovereignMan.com

We have a 20 plus year old Kettle, which boils water in seconds, a wonder to watch compared to the new ones. I dread the day that it packs up !!!!

I work off the basis that every thing the EU touchs, only reults in misery or ruin !!!!!

Ps I see the Scum are haveing to operate in the dead zone, like now…..Hitting Au and bidding the SM.

Sometimes I really wonder if it will ever end.

Cheers.

R 640 I hear you good buddy, but boy do they make it hard.

Now EU targets our kettles, toasters and even lawnmowers

THE British way of life is under fresh threat from the EU as it targets the nation’s kettles, toasters and even lawnmowers.

Campaigners last night rallied round to vent their fury as Brussels bureaucrats unveiled their latest plan to erode the “lifestyles and choices of ordinary people”.

It follows the banning this week of vacuum cleaners which have motors above the new EU limit of 1,600 watts in a bid to cut energy usage.

The permitted wattage will be almost halved again from September 2017 as the limit is reduced to 900 watts.

Dozens of other everyday appliances could have the power sucked out of them too and some scrapped altogether if new rules around climate change are brought in.

A report published by Deloitte and commissioned by the European Commission, the EU’s executive body, sets out plans to look at the energy usage of a range of items and whether they could be made more efficient.

As well the staples of the kitchen the kettle and the toaster, the list of around 30 appliance categories in the EU’s sights includes heated greenhouses, power tools, aquarium lights and filters and gym equipment.

Mixers, rice cookers, blenders and deep fat fryers are also under threat although meat slicers and popcorn machines are to be spared the chop as they are “niche markets”.

It forms part of an energy efficiency drive – Ecodesign directive – to reduce consumption by 30 per cent by 2030.

more http://www.express.co.uk/news/uk/506749/European-ban-on-household-goods

ahhh, yes but I bet CNBS anchors are crowing about how “stocks are off the lows”!

gold being down just .3% and the HUI dropping 9 pts off the high–jnug down 8%-etc–was signal that tomorrow they would hit comex gold futures hard–but today i say that gold futures will be up and so will PM stocks–DEFLATION is not a death sentence for gold

Gold is the currency of last resort—

PM stocks down while the Papanese yen is UP 1000 bps and the $ index is down 352 bps–btw-I expect no bounce in PM shares today

http://futures.tradingcharts.com/marketquotes/DX.html

Odds? 😉

No doubt the Cartel is still with us.

as Scum enact Samson defence….ie if you take dn the SM we will smash evrything else.

You can only invest in Stocks or Treasuries, all other investments will be crushed.

Yep I’m still holding onto a bunch of First Majestic … the shadow of what it was. I’m waiting for it to rematerialize. 😉

If we don’t come back today then it’s very soon. Is that the Salvation Army man ringing that bell or …

That JNK is a nice looking chart. Yikes.

Although you and I can both attest that we’ve seen charts of pm shares that look like that multiple times.

Don’t know if you’re still in some First Majestic but that has performed really well the last couple of days.

Hoping our shares come back to life in the last hour.

India should allow banks to hold gold as reserves – WGC

(Reuters) – India should allow banks to use gold as part of their liquidity reserves, which would let them make more use of gold inside the country and reduce the need for imports, an industry body said on Tuesday, seeing that as an alternative to import curbs.

The world’s second-biggest consumer of the metal should also consider setting up an exchange for transparent gold pricing and to streamline trade, according to a report commissioned by the World Gold Council (WGC).

“We have made our points to the government and some of these recommendations are in consideration,” Somasundaram PR, head of the WGC’s India operations, told Reuters. He did not elaborate.

Last year, struggling with a high trade deficit, India imposed a record 10 percent import duty on gold and a rule requiring a fifth of all imports to be re-exported. Bullion is the second-biggest item on India’s import bill after oil.

The WGC says allowing banks to hold gold as part of their liquidity reserves would motivate them to introduce gold deposit schemes, which would in turn circulate existing bullion within the country, removing some of the need to import fresh supply.

“The solution to meeting India’s enduring appetite for gold lies not in restricting the import of gold, but in making better use of the gold that is already in the country, making it a productive, fungible asset class like any other financial savings,” Somasundaram said in a separate statement.

About 22,000 tonnes of gold is estimated to be held in Indian households.

Gold deposit schemes are already offered by banks but have not proved popular with consumers, who prefer to hold their gold in ornament form and would need strong incentives to give up heirlooms and wedding gifts.

Once the consumer deposits gold with the bank, it is refined to be sold to others. The consumer earns interest and receives gold bars when the term matures, regardless of what was originally deposited.

“At present, financial products linked to gold have been poorly marketed. If banks were able to include gold in their reserve calculations, they would be financially incentivised to innovate, market and explain gold-based products,” the WGC report said.

The re-export rule was scrapped late last month to counter the smuggling and high premiums that had resulted.

Although the rules had curbed gold supplies entering India, consumer demand remained strong.

http://in.reuters.com/article/2014/12/09/gold-india-wgc-idINKBN0JN0YP20141209

Somebody last Friday suggested with long term charts, that things went far enough. Dollar too high, Dow SnP too high, and Euro too low.

JNK