Putin May End Ruble Crisis By Taking Russia Onto the GOLD STANDARD!

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Gold & currency expert Alasdair Macleod joined The Doc & Eric Dubin this week for an EXPLOSIVE show discussing: 

• End game to Russian Ruble collapse: Putin may take the Ruble onto the GOLD STANDARD- if Russia detonates this Nuclear Financial Weapon, the West is DEAD! 
• Macleod: ABSOLUTELY NO GOLD STOCK IN THE MARKET SUB $1200!
• Did the US/Saudi Arabia plan the oil crash to collapse Russia & the Ruble? -Putin’s counter-move could result in an EPIC BACKFIRE for the West
• Is a Global currency crisis is in the making!?!
• Alasdair provides his outlook on gold & silver, and explains why 2015 is likely to be an EXPLOSIVE YEAR for the metals after a prolonged consolidation- but PM investors won’t like what comes along with MASSIVELY HIGHER gold & silver prices! 

Precious metals turned in a very respectable week considering the way the week started, the high volatility in other assets, and this being an FOMC announcement week.  GOFO slipped back into negate rate territory by the end of the week demonstrating all over again that the managed retreat thesis we’ve been discussing for two months remains in operation, and anytime the cartel tries to take gold down below $1,200 for any length of time, stresses in the physical market appear.  We discuss this and more with Alasdair.

By the latter half of this week, both the ruble and oil managed to turn in a modest bounce.  Carnage in the oil industry has yet to really sink into the minds of average financial professionals.  While Janet Yellen and her marry band of jawboning Fed board members have been able to rekindle “animal spirits” with the introduction of the latest Federal Open Market Committee buzzword, “patient,” too few market professionals are looking over the horizon to what may prove to be a painful oil supply shock if crude prices fail to rebound quickly.  Even with a healthy rebound to, say, $70 oil, Goldman Sachs estimates nearly $1 trillion in future oil projects will not be able to make a profit and will remain in limbo.  That’s not even factoring US shale plays, and their study is based only on the largest 400 projects.  Bloomberg published a solid news story on Goldman’s research.  Click here to read the story.

Then we have the problem with the industry’s extensive use of high yield financing.  There’s roughly $170 billion in the U.S. energy junk bond market, and it represents the biggest portion of the U.S. junk bond market.  Excuse me for being blunt, but this is a clusterfuck, and it’s going to result in a major wave of capital investment cancellations and bankruptcies across the industry.  Boom-bust cycles are nothing new to the resource markets.  But what’s truly pathetic this time around is that the carnage will be far deeper given the lunacy of western central bank zero interest rate policy that drove yield-hungry investors to be even more exposed and oblivious to overall risk levels.  

But wait, it gets even more goofy.  The energy sector has been one of the single most powerful segments of the U.S. economy.  When it tanks over the next 2 to 6 months, the sector crunch will cut into the U.S. economy at the margin and help the Fed justify zero interest rates for an even longer period of time and other probable, new forms of stimulus.  

Dear Santa:  Can we have an end to the Fed for Christmas 2017?  2018?  What’s that you say?  Only doable after the next financial crash?  Time will tell...

Dow 18,000, Take Two

As the general equities market rolled over in October and bears started growling about the the “big one” unfolding before our eyes, I warned that the Fed was going to drive equities right back up, with the Dow Jones Industrial Average likely to rebound past 18,000 in December.  Thus far, we came within 9 points of 18,000 earlier in the month and I think the Fed and Treasury are going to see to it that we close the year above 18,000 just for MOPE bragging rights.  This market is treacherous for anyone short.  But a major correction is probably in store for 2015 and I’ll share some scenarios and associated probabilities to help frame a discussion about what’s likely to come to pass next year.  We’ll publish that report as a year-end special.

For your weekend reading, I highly recommend checking out the transcript of Putin’s 3+ hour annual press conference and Q/A session.  Click here.  We reference it in today’s show.

Wishing all our listeners happy holidays — Eric Dubin