Complete Collapse

Wed, Jan 14, 2015 - 11:13am

The destruction wrought by the endless creation of fiat money is reaching a terminal phase. As spreads and carry trades are unwound, the effects have been devastating to individual commodities and this will soon spill over the entire global "economy".

This site and others have been chronicling the decline on crude oil for over six months. What started as a selloff/correction, perhaps initiated as a covert sanction regime against Russia, has become an outright bloodbath. Prices have fallen from $108 to $44 in seven months...nearly 60%!...and the impacts, the unknown unknowns and unintended consequences are just now coming over the horizon. On a price chart, it looks like this:

But it's not just crude oil. Take a look at these industrial metals:



Iron Ore

And no one is shipping any of this stuff anywhere, witness the multi-year lows of the Baltic Dry Index:

What does this have to do with QE and money-printing? Everything!

You see, since The Fed began QE in March of 2009, they've created from thin air over $3T. Notwithstanding that these dollars have been levered multiples higher, the predictability of the ongoing U.S. QE led "investors" around the globe to use carry trades to finance their speculations. Buy the yen/short the dollar OR buy the euro/ short the dollar were global risk funding vehicles and the resulting spiral led to increases across the board for dollar-priced assets.

However, over the past two years, several changes have altered this landscape:

  • Japan began their own, very aggressive QE program
  • The US decided to taper and eventually end its overt QE program
  • The ECB is expected to announce it's own QE program next week

These three changes have had a disastrous impact on commodity prices and the downward moves appear to be far from over. And when did all of this begin and then accelerate? Note the two, distinct declines in the yen which coincide with the start and subsequent increase of Japanese QE, also known as "Abenomics":

And with ECBQE expected to be announced next Thursday, note the collapse in the euro...down over 7% in just the last month:

As "traders" around the globe continue to unwind these "carry trade" positions, expect the declines in the yen and euro to persist. This will cause further drops in commodity prices. Not only will this have a devastating impact on various global industries, the global economic impact will be great, as well. Additionally, as Raoul Pal warned back in November, extreme currency movements such as the kind we're seeing will, no doubt, add additional unknown unknowns to the global financial daisy chain of derivatives and counter-party risk.

In the end, the US Fed will likely find no other escape hatch than the resumption of overt QE. Will it be too little, too late to reverse the trends and "save" the global economy? Probably...but you know they'll try. (Though as stackers of physical metal, it doesn't really matter to you and I.) Just as the Keynesian solution to the debt crisis is to add more debt, the Keynesian solution to this currency crisis will be to add more currency. You can count on this just as surely as you can count upon night following day.

Physical gold and silver will always be the only money and store of wealth that cannot be diluted and devalued by the Keynesian central planners. They are your only protection against this economic madness and you should continue to use this time to prepare accordingly for The End of The Great Keynesian Experiment.


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 14, 2015 - 11:17am


Well done. I vote to make this public.

Jan 14, 2015 - 11:19am

Again and again

First to the slaughter

Paper looks thin

Jan 14, 2015 - 11:19am


gonna start buying real cheap otm calls on GDX and GDXJ.

in old days would have done it on gld and slv--but who knows what happens with those two?

Jan 14, 2015 - 11:22am

Thanks.I'll think about it.

Maybe tomorrow...

Jan 14, 2015 - 11:28am

tease them making public

make it partially public like Martensen does

Then when this section gets too crowded create an inner circle for a few bucks more.

oops--in the not too distant future they will likely close down the internet. or, get this idea--the nsa can override ip software to charge a tax on internet users.

have one fee to use e mail, another fee for FB, another fee for non controversial websites and a huge fee for the sites like here.

I wonder how many people like us there are--then the real preppers and the others who are really far out there (by our estimation--my wife thinks I am already "out there" by having a weeks worth of food and water in the house besides what's in the freezer-if she only knew 6 months might be a necessity).

ya have to have a sense of humor about all of this. I bought the canned goods and dried food I like--my wife will be pissed as little of it is low fat. except for the canned fruit-which we wil absolutely need. first week we use the freezer-second week teh stash--third week I start losing weight.

Jan 14, 2015 - 11:31am

Gold charts

Again, The Forces of Darkness and Evil DO NOT want to allow a "higher high" in the recovery from the December bottom. Therefore, they are fighting hard to cap at/near $1240.

Jan 14, 2015 - 11:39am

Additionally, as we've been discussing here...

The $3,000,000,000,000 that The Fed created is now sloshing around the globe, desperately searching for "yield".

Is it any surprise, then, that the 30-year Long Bond is now showing a new record low yield of 2.43%, eclipsing the previous low of 2.46% seen back on 7/15/12? Incredible!

So much money that the yield on the German 5-year bund is negative 0.01%!! The 10-year bund is just 46 basis points!!

So much money that even the 10-year notes of a financial black hole like Portugal are currently yielding just 2.66%!!

Jan 14, 2015 - 11:45am

All that "money"

All that "money" and 46 Million are on food stamps. Insane in the membrane, insane in the brain.

Cypress Hill - Insane In The Membrane
Jan 14, 2015 - 11:51am

Looks like...

"they" should have a rough time to cap at 1240 when stocks, treasury bonds, commodities are all on the way down today. "They" must have another covert way to begin QE very soon. As Dave Fry always says, "2:15 Buy Express leaves the station" to prop up the stock market(s).

Jan 14, 2015 - 11:51am

More from Raoul Paul

Saw this really great video recently of Raoul Paul talking about the global carry trade, among other things. It was included in an email newsletter from Mauldin Econonics:

Jan 14, 2015 - 11:58am


Another one of the "unintended"(?) consequences of this artificial oil price manipulation will probably be further China influence through finance in many of the small oil-producing countries that are very distressed now. Including larger Russia. Just more petro$ losses.

Jan 14, 2015 - 12:06pm

You may have already seen

You may have already seen this. But, I predict the Oil Co's/Banks/USG/EEE will start a war in some place that takes 10 million gal/day off the market. That's what they did when they smashed Iraq, Libya, then Egypt, etc. That will get the price back up there where they want it - UNLESS of course this is the blk swan event they want to cause the crisis in which case, they have their "unforeseen event".

Wash, rinse, do it again

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

Tue, January 13, 2015

By Michael Snyder, on January 12th, 2015

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.

Jan 14, 2015 - 12:10pm

Though gold continues to be

Though gold continues to be pinned below $1240, this is interesting:

4 oz
Jan 14, 2015 - 12:11pm

JPMorgan's Dimon says banks 'under assault'

Not that I trust anything coming from Reuters....

The biggest U.S. bank by assets, reported a 6.6 percent drop in quarterly profit as legal costs exceeded $1 billion in the wake of government probes, leading Chief Executive Jamie Dimon to claim banks were "under assault."

Jan 14, 2015 - 12:13pm


Looks like it's breaking upwards with another tick or so :D Last of 1239.5

Jan 14, 2015 - 12:15pm

S&P to test 200 day moving average @ ~1964?

S&P currently @ ~1996, 11 points down from 100 day moving average @ ~2007.

Without another stick save, could be...

tread_w_care Mickey
Jan 14, 2015 - 12:20pm

RE: Mickey and the high-fat canned goods . . .

I get the joke and appreciate the humor.

I couldn't help but think though . . . when we start breaking out the survival rations, no one, not even your wife, will care about non/low fat at that point. There will be MUCH bigger problems to worry about, sadly.

Not to mention we'll all need as much fat and calories as we can possibly scrounge to survive.

Keep stacking friends . . .

Jan 14, 2015 - 12:24pm

@ Turd Re: Gold price and the Japanese Yen

The correlation between the Japanese Yen and gold price is certainly a compelling thesis (noting that correlation does not imply causation). I suggest another potential reason for the 'strong' performance of gold in face of a 'strong' performance of the dollar is that relative to other currencies, e.g., Euro, Canadian dollar, etc., gold (and silver) are looking pretty good. According to those charts, making a case for the bottom being in is easier, so physical demand might be up in those countries.

Steve Silver
Jan 14, 2015 - 12:30pm

the gold rig is on its last legs!!

The massive debt overhang is causing deflation and weakening economies. The banksters can't tolerate deflation because of cascading debt defaults. So we will get QE on steroids. The market is digesting the terrible retail sails number and crashing commodities. The calls for more fed easing will multiply. Gold and silver will start to rise and once the rise commences there won't be any bankster physical to slow the assent. Time to buy popcorn and watch the show!

Jan 14, 2015 - 12:37pm

US Dollar Strength - The Final Act

The rising US$ is like the bow of the Titanic rising high into the air as the rest of the ship (mostly the Euro) sinks and passengers (global capital) run to stay dry. The Euro is defective and won't last regardless of whether it joins the Asian currency/trading bloc in whole or in parts. If your think it through logically, the US$ index must rise as a final act before its decline into insignificance. The US$, the Euro and the Yen aren't really competing currencies, they are like a stool with three legs that can't survive without all three legs in place.

My guess is that a rising US stock market (with lots of volatility and internal carnage to come in some sectors (eg. banks) will continue to confound analysts. If investment capital (excluding central bank money) is running from government bonds and other debt instruments, there are just so many places that that kind of capital can go in size. Global stocks that continue to do business all over the world is one such place. I think the drop in oil and copper etc. may just be part of the final "seize up" similar to 2008 (the oil drop is almost identical), before the big run really begins. If big capital is really starting to get scared and bonds are no longer an alternative, global stocks would be a logical place to go.

Commodities and gold may have to wait until the bow of the ship also starts to sink. Perhaps that "sinking" is already starting to occur with the turn up in gold. The run could be epic.

Jan 14, 2015 - 12:42pm

Gold and silver coming to a decision point

the price has been oscillating around a mean value (just under 1240 and 17) with smaller amplitudes (higher lows and lower highs) waiting to break one way or the other. the premium on PSLV has increased today. perhaps this is the signal that PM price will soon break up.

4 oz
Jan 14, 2015 - 12:52pm

~~Some of Todays Numbers~~

CBOE Interest Rate 10 Year T No (^TNX)

1.80 -0.09(-4.55%) Chicago Board Options Exchange - As of 12:26PM EST

US Mint Silver Eagle Sales 2015 ---January 3,614,500

Crude Oil Futures - Feb 15 (CLG5) 46.20 +0.31 (+0.68%)

Clarki Stomias
Jan 14, 2015 - 1:00pm
Jan 14, 2015 - 1:03pm

The Petrodollar collapse - somebody help me out please

Article cited above:

I'm struggling to fully comprehend the implications suggested by the shift from capital outflows from EM/oil producers, to inflows. I get that's cash money (US Dollars) not coming back into US Assets, that part seems pretty clear.

Anybody got a 2 minute elevator pitch that can 'splain the death of the petrodollar meme? 

Jan 14, 2015 - 1:03pm

Like Our Pal Andy Hoffman Who Resides in Colorado with me..

First the body gets engulfed with fiat cancer. Now it appears to be attacking the head.

Or as Mike Maloney says in his book. Massive deflation followed by a helicopter drop of money like you have never seen...

We are fast approching the end of game no doubt in my mind...

Jan 14, 2015 - 1:05pm

Though gold continues to be

TPTB must be really afraid...what a tight lockdown and gold and silver after early morning FUBM!

Jan 14, 2015 - 1:17pm
Iceberg Slim
Jan 14, 2015 - 1:20pm

First Majestic

Any idea why AG is being taking out to the woodshed today? down over 9%..while other Silver miners just down between 1-3%..

could it be because if the powerful run it had over the past 2 weeks and it's just taking a breather or is there a news item i missed here?

Jan 14, 2015 - 1:22pm

Since all global markets are inter-connected

Guess we can attribute HUI down big, Pallad being crushed, etc. all to stocks down HUGE!!!

Jan 14, 2015 - 1:26pm

Desperation and Panic

Nail guns for everybody!

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