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THE CRUDE OIL COULD REACH $150 PER BARREL IF PERSIAN GULF TENSIONS ERUPT INTO ARMED CONFLICT. MY FORECAST IS FOR NO WAR, SINCE IT WOULD BE MUTUALLY DESTRUCTIVE. CHINA OFFERS A PROTECTIVE BLANKET ON THE GULF REGION. THE RISE OF CRUDE OIL PAST $100 PER BARREL INDICATES THAT DEFLATION THREATS ARE FADING, REPLACED BY A THREAT OF WAR.
As preface, notice that the crude oil price has risen from $77 to above $100 despite the settlement of violent war in Libya. Their oil output is slowly ramping up. The motive for that war was to steal Qaddafi’s $90 billion held vulnerably in US, London, and European banks. The money was badly needed by the captains on sinking structures. If regional tensions escalate in the Gulf, the crude oil price might surpass the $150 level again. War involving Iran could lead to supply disruption and a mad race to hedge against a systemic event. Among global supplies, about 30% of crude oil passes through the Straits of Hormuz. A wider war would interrupt such shipments, and lead to higher costs of insurance and shipping. My view has been steady and stubborn over the last seven years. Any attack on Iran for whatever reason, to squash their nuclear program or to punish them for Iraqi insurgence, would result in a flash retaliation that would flatten the nation conducting the attack, even if a US ally. No nation, however irrational or suffering from internal disorder, is bent on suicide. So far since 2004, the annual hubbub that comes every August has not resulted in any Iranian attacks. Smart people have been wrong for years on end.
Maybe as an extension of the Arab Spring, some sort of attack on Iran will come. But the Jackass doubts it, since too commonly discussed. The indicator that is most troubling is the surge in crude oil price above the $100 level. It could mean that substantial hedging has been put on against the USDollar and Euro, two major currencies in dire straits fundamentally with budget deficits and insolvent banking system woes. But the rising oil price could instead be a preliminary signal of massive bets in favor of a wider war in the Gulf region.
Sinopec agreed to pay $3.54 billion for a 30% stake in the Galp Energia unit in Brazil. The price tag was a little lower than expected, but the deal is huge. Asia’s largest refiner China Petrochemical took the major stake in Galp Energia Brazilian unit in the nation’s largest overseas acquisition this year. Chinese energy companies have bid at least $16 billion for overseas oil & gas companies and deposits in 2011, to expand its reserves and supply line. The Galp subsidiary has an important claim to the Santos Basin discovery offshore Brazil, one of the two biggest discoveries in the western hemisphere since 1976. Galp is a Portuguese firm listed in theLisbon exchange, the nation’s largest oil firm. Some controversy arose from the valuation of the deal. The entire Brazilian business owned by Galp had been valued at $15.7 billion. Contrast that figure to the $12.5 billion enterprise value for Galp inferred to its unit after the deal. Galp has stakes in four offshore blocks in Santos Basin of Brazil, including a 10% share in Lula, formerly known as Tumi. It stands as the largest crude discovery in the Americas since the Cantarell field of Mexico in 1976. Lula contains an estimated 6.5 billion barrels of recoverable oil and equivalents. Galp boasted its legitimacy as a major player in offshore Brazil oil, ensuring development of the company assets.
China inked a deal just one month ago. China Investment Corp invested EUR 2.3 billion (=US$3.1 bn) in a subsidiary of GDF Suez, related to oil & gas production and exploration. Sinopec Group also paid $7.1 billion for a stake in the Brazilian unit of Repsol YPF last year. Repsol is a Spanish oil giant. China has a string of deals in recent years. Sinopec bought Addax Petroleum Corp for CAN$8.3 billion in 2009 to gain reserves in Kurdistan (disputed province of Iraq) and West Africa. Sinopec might submit a bid for a stake in the Angolan operations of Marathon Oil. Deepwater exploration by a few multi-national giants off the Angolan coast have made the country the second biggest African oil producer after Nigeria.
CENTRAL BANKS LOADED UP WHEN THE SEPTEMBER CHEAP GOLD PRICE WAS HANDED TO THEM, OR CREATED BY THEIR AGENTS. THE KEY WAS NOT ONLY VOLUME BUT ADDITIONAL PLAYERS. THEY SEE THE RUIN IN THEIR OWN MONETARY SYSTEM. THEY ARE DIVERSIFYING OUT OF THE STANDARD USTBONDS AND EURO BONDS.
Central Bank Gold purchases made a 40-year high in 3Q2011, in response to the sweet low price made available in September against a backdrop of magnificent sovereign bond destruction in secondary nations. The sharp price decline enabled them to shift to bullion in a diversification tactic. The net +148.4 ton addition in the month of September was much greater in revision, enough to surprise veteran traders. The data was published in a quarterly report by the World Gold Council, which declined to identify of the central banks behind the majority of the buying. They did mention that a „a slew of new entrants emerged wishing to bolster gold holdings.“ The expanding breadth of buyers is great news for the gold market, as the lesser nations are noticing the ruin in the global monetary system. Gold purchases among central banks was at the highest level since the group surged as a net buyer of the precious metal in 2Q2009, according to the quarterly report. Central banks and other official institutions had bought 66.5 tons of gold in the second quarter and 22.6 tons in the third quarter of 2010. So the Q3 purchase was more than double the Q2 total in a grand acceleration. They notice that currency debasement through monetary expansion has not borne a solution. They notice that new mountains of debt do nothing to remedy the damage from excessive debt and the associated bubble & bust cycles. They are diversifying out of USTBonds and EuroBonds. Given the large volumes involved, central banks are important drivers of the gold market. They are tight lipped about their maneuvers naturally.
JPMORGAN TRIPLED ITS REGISTERED SILVER INVENTORY IN AN MYSTERIOUS OVERNIGHT SUCCESS. THE GAIN IS ROUGHLY EQUAL TO THE UNDELIVERED C.O.M.E.X. VOLUME RELATED TO THE MF-GLOBAL FIASCO THEFT. THE METAL WAS PROBABLY DIVERTED TO THE JPMORGAN VAULTS WITH REGULATOR BLESSING. BUT IT COULD BE MORE BASIC SEIZURES OF S.L.V. INVENTORY FROM THE EXCHANGE TRADE FRAUD. A BELIEF IS FORMING THAT JPMORGAN ACTED DESPERATELY TO ACQUIRE SILVER, EVEN IF BY SABOTAGING MF-GLOBAL, IN ORDER TO MEET DECEMBER HUGE SILVER DELIVERY DEMANDS. THE SUPPLY WILL BE TIGHT IN DECEMBER.
On the November 16th update to the COMEX silver inventory, JPMorgan has made a massive adjustment of physical silver into its registered vaults. They moved over one million ounces from Eligible into Registered overnight! No interruption with their operations, even perhaps some exploitation of the COMEX from the MF Global shock and vomits. The actual detail is JPMorgan adjusted 1,103,280 ounces out of Eligible vaults, and into Registered vaults on the official inventory tally. Their Registered inventory tripled from 557,265 ounces to 1,660,545 ounces last Tuesday! They choose not to explain their good fortune in defiance. One should conclude that MF Global events are good for JPM business. Maybe the giant criminal titan is preparing for substantial delivery demands coming due in December, doing what is required. The similarity between the 1.1 million ounce adjustment into Registered and the 1.4 million ounces of Registered silver that remain blocked for delivery due to the MF Global fiasco is striking. Do not expect the CFTC regulators to look into the diversion of metal due to be directed into client hands, hardly a priority. Regardless, the Morgue is moving to prevent a COMEX default due to the 1.4 moz being unavailable for physical delivery.
The flood of Delivery Notices will come. Clients realize they do not want to end up like Gerald Celente with empty pockets and alert minds. Witness the next stage marred by massive loss of confidence in the paper COMEX market, triggered by the theft of client assets at MF Global. Once confidence is lost in the paper market, it is essentially game over. The next stage, gradually to appear, will be a Cash & Carry market without margin, where orders are placed, money is deposited, and product is hauled away like a hardware & building supply store. Although it is easy to point the finger at MF Global, one should never lose sight of the fact that the easier and less conspicuous method of supplying inventory from the back door is to raid the SLV Silver Exchange Traded Fund. It too is a gigantic fraud. The JPMorgan custodian shorts the SLV shares, and takes silver bullion off the loading dock in the middle of the night. Investors in SLV and GLD are some of the dumbest and laziest sacks the Jackass has ever seen. The custodian of the SPDR Gold Trust is JPMorgan, and people should know that fact. Adam Hamilton is a trusing fool.
Put aside questions about the verifiability and validity of the reported COMEX inventory of Gold & Silver, from which the JPMorgan benefit is derived. The sheer size of the reported inventory move by JPMorgan is unusually large. It suggests that JPMorgan is anticipating the required delivery of mammoth silver volume for the December delivery month. Some analysts estimate that JPMorgan is likely short at least 17,000 of the current 34,000 in recorded Open Interest, equal to 85 million ounces. There are still eight trading days until the First Notice day for December silver, which is November 30th. The OI could decline between now and then to a considerable degree. The naked shorting ambushes that took the Silver price below 32 tend to reduce positions as the victims are forced to liquidate. JPM must reduce the futures contract positions much more, in big liquidations from vast illicit shorting. Even with the newly arrived silver in inventory, the situation calls for JPMorgan to be in a very difficult spot for delivery. The silver inventory supply could be very tight this month.
CHINA IMPORTED A HUGE AMOUNT OF GOLD. THE SEPTEMBER VOLUME WAS HALF OF THE ENTIRE 12-MONTH TOTAL FOR THE ENTIRE YEAR 2010.
China has taken advantage of the big September price Gold decline. Their Gold imports hit a record high. Once more the so-called American experts were dead wrong. They are shills, not analysts. They expected a liquidation cascade in China, where citizens would dump all holdings at the first hint of deflation. They were supposedly loaded to the gills in gold. The Financial Times reported that „Chinese gold imports from Hong Kong, a proxy for the country’s overall overseas buying, leaped to a record high in September, when monthly purchases matched almost half that for the whole of 2010. After hitting a nominal all-time high of $1920 a troy ounce in early September, the yellow metal fell to a three-month low of $1534 an ounce later in the month. Chinese investors snapped up the metal as prices fell.“ The natural bid under gold will remain solid, even if the Shanghai stock market suffers some downdrafts and declines. The main sellers were the usual suspects, the paper merchants with their illegal naked shorting, selling metal they do not own and cannot locate on the other side of the trade. Also, some big players like the Paulson Fund were victimized, motivated by their Sino Forest blunder and liquidation pressures.
DUBAI CONTINUES TO ENCOURAGE ITS CITIZENS TO BUY GOLD. NEW COMMEMORATIVE COINS ARE BEING PROMOTED FOR SAVINGS PROGRAMS.
Dubai has launched a popular Financial Incentives Program to encourage citizens to invest in physical gold. Such a program would never occur in the United States, the center of false money and active propaganda against valid money. JRG Intl Brokerage DMCC, a leading broker and clearing member of the Dubai Gold & Commodities Exchange, has put forth a innovative scheme to encourage a savings culture through systematic investment in new gold coins labeled Visions of Dubai. The event took place on 11 November 2011. The brokerage firm will offer information support. The new commemorative coins depict as souvenirs how Dubai contains visionary leadership for the Emirates. Some coin images Shaikh Mohammed bin Rashid Al Maktoum on one side, while Burj Al Arab is engraved on the other. Other coins in the series feature landmark images of Dubai that identify the emirate. The initiative can only add to demand.
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