Friday, June 3, 2011

Checking the Levels

Oil flash crashed today and yesterday.  This is a sign that there was large supply moved on strong demand.  This is very bullish.  Oil is sitting right under the level I called for it to break America's back.  One reason it has not gone much above $105 (the number I picked last Fall) is because precious metals were allowed to appreciate.  Precious metals are money and they trade with oil.  They trade with oil because it is a necessary component of the economy more so than any other; oil is its lifeblood, and precious metal is monie.

Gold has been the clear winner, as silver sold off and platinum is stuck in a range.  Gold reserves are important because this is how Central Banks trade with each other; they loan gold to each other to facilitate growth.  They are not using silver and platinum yet, so those two have a backseat role.

When I called the Next Move last Fall I said the system would break when gold was at $1440, silver was at $36, platinum was at $1800, and oil was at $105.  The Central Banks knew oil was the only one that would instantly bankrupt the system if it broke the said level, so they let gold handle the inflation (although silver took the torch for a minute).  This was to their benefit anyway.

Eventually, because silver is undervalued, silver will catch up.  Since silver and oil trade as a pair, this will be disastrous for currencie,  So since gold facilitates loans, gold will have to rise too.  Platinum will go along for the ride, or it will get cornered, and lead what will be a parabolic move for these four.


  1. I read this post and I totally believe in everything you are saying. It feels like not only the US economy but many of the world are just hanging by a thread, and once that thread breaks, we are in for something never experienced before. The being said, what kind of time frame do you give before this 'thread breaks'?
    Also, I had a couple of questions in regards to your post. You mentioned that platinum will go along for the ride with gold, silver and oil or it will be cornered and lead what will be a parabolic move. I'm not quite familiar with the lingo, so what do you mean by cornered? Also, what price levels do you possibly see these 4 commodities hitting?


  2. Jack,

    Platinum is the tiniest market out of the sister metals three. It could be as easy to corner as silver. If someone could afford it it could make a wise investment to buy out a lot of the specs.

    This but the paper market has a lot of fake contracts. It would have to be the physical market that was cornered so as to create a lack of supply for either bullion or industry.

    I think Bernanke will say in two weeks that the recovery needs to stay on track, and it will be implied that quantitative easing will continue. Then the debt ceiling will need to be raised. This will all come to a head in July. I think the thread will unravel then, and it will lead into a massive problem come next fall that will see precious metals double from where they are priced now, this by December. Oil too.

  3. Lennon,

    Sorry, I read what you posted but I still don't quite understand what cornering a market is; if one wanted to do that, how would you go about doing it? Do you think somebody with the financial means may attempt to corner the platinum market?
    On the financial side of things, you mention a massive debt problem by next fall, do you mean fall of 2011 or fall of 2012? I ask because you say PM's will double from their current price by December, which made me think you were referring 2011.
    With QE3 coming and the raising of the debt ceiling limit, do you forsee a hike in interest rates anytime soon? I myself am in Canada and exited real estate, thinking that the government will raise interest rates bringing prices down, but no such luck. I figure Canada has kept interest low so our dollar does not appreciate too much against the USD, so when the US raises their interest rate, we'll follow soon after.

    Thanks again, awesome blog,


  4. One would corner the platinum bullion market by placing large orders at the bullion banks and ask for delivery. It could be done on Comex and other like exchanges too, but they would try to negotiate for a paper sale, as they do not have the physical to deliver.

    Next Fall thre will be another liquidity crunch on the Major Banks due to their bad loans. PMs will double by then. An interest rate hike is an interest thing: it is a loss of faith in bond prices. People would try and catch the falling sword and watch rates rise. This could happen soon, and certainly will. My thought about that is when rates do begin to rise, they won't stop rising until the financial system has changed completely, at which point I think PMs will be used to back the bonds that no one wants to buy. Also, I think that corporate bonds will butterfly with T Bills, meaning corporate bond prices will rise while T Bills fall.

    You are welcome, and thank you for the compliment.