Why the price of oil may trade down to the high 30's......or lower




There is much more at stake in this game then the mainstream media lets on.

Imagine a world in which one of the most essential human needs, energy, settles in a currency other than the US dollar.

In May 2014, Russia and China signed a 30 year deal worth $400 billion to deliver gas to China.

[Begin to play Prokofiev's Dance of the Knights as theme song...]


When did oil begin to slide? hhmmm....sure, it may be a coincidence.

Consider the implications of the US dollar losing reserve status. They have a bloated government, underfunded social obligations, massive debt load, and a papered over depression.

Two things that they cannot afford: rising interest rates and the inability to sell their debt.

As long as the other players have obligations to pay for denominated in dollars it makes sense to buy American debt.

Losing the domestic oil production to a friendly nation is no different than trading a pawn for a queen. Unlike some countries America is not a one-trick pony. They have many aces up their sleeve. This tactic has worked well to keep the banana republics inline.


Truth is a fruit which should not be plucked until it is ripe.
- Voltaire



Comments

Popular Posts