Here are the latest items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of JWR. (SurvivalBlog’s Founder and Senior Editor.) Today’s focus is on the price of crude oil. (See the Commodities section.)
First off, there is this from John Rubino, at Gold-Eagle.com: The 1970s All Over Again? (Part 1: The Middle East Explodes)
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Economy & Finance:
Reader H.L. suggested this: Australia Bans Payments Over $10,000, Unleashes “Mobile Strike Teams” In War On Cash
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Next, a piece by Wolf Richter, at the great Alt-Market.com site: Fed’s QE Unwind Accelerates Sharply
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SRSrocco at Silver Phoenix 500: The Three Stage Housing Bubble Collapse
Commodities (Crude Oil):
With escalating Middle East tensions, the world press has turned its attention to the rising price of crude oil. But in this round of the rodeo the United States has the advantage of newly-developed oil shale deposits in the Bakken Region (in Eastern Montana and western North Dakota.) In fact, the U.S. is now on track to become a net exporter of oil in a few more years. That oil independence will be a huge advantage in both foreign trade and foreign diplomacy. We will no longer be at the mercy of OPEC. The only thing that could stop the expanding development of the Bakken is cheap oil. (Since the production costs of getting crude oil from oil shale is fairly high.) OPEC made a two-year attempt to undercut the Bakken, but that couldn’t be sustained, so it failed.
So what is the big picture, for crude oil? We will probably witness a price spike this summer. But that will only further solidify U.S. resolve to achieve crude oil independence. High prices will mean that the U.S. drill rig count will continue to go up–both onshore and offshore. In the long term, we will see good supplies of crude oil. But with high global demand, prices will remain high unless there is a global economic depression. As the Bakken development expands, the coincident production of natural gas will rise, and natural gas prices will fall. Ironically, this cheap natural gas will hurt America’s coal miners. Those are the folks that Donald Trump promised to help, remember? Such is the law of unintended consequences.
The Great Unknown for crude oil is the inevitable decline of the petrodollar. If and when oil is no longer traded predominantly with U.S Dollars, it will degrade the value of the Dollar on the Forex. Indirectly, this will also make the U.S. less attractive to foreign investors. President Trump should be cautious about pushing for a weak Dollar. Because soon, it might be weaker than he wants!
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By way of Seeking Alpha: Reuters: Trump biofuel policy overhaul to include fewer refinery waivers
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Steven Englander at Bloomberg: Why the U.S. Treasury Likes a Weak Dollar
SurvivalBlog and its Editors are not paid investment counselors or advisers. So please see our Provisos page for our detailed disclaimers.
Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who particularly watch individual markets. And due to their diligence and focus, we benefit from fresh “on target” investing news. We often “get the scoop” on economic and investing news that is probably ignored (or reported late) by mainstream American news outlets. Thanks!