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January
27
2015
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US Gov't Stockpiling Oil to Withstand Complete Systemic Collapse
What it appears has been going on now since at least October is the United States government has been purchasing hundreds of millions of barrels of oil and storing them. The maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, so it would take over 160 days to use the entire inventory. 160 days. That might be just the amount to time required to operate efficiently during the world's greatest economic collapse EVER and during its aftermath- while the rest of the world recovers from the depths of despair and chaos, death and destruction, when after 3 days all their food is gone from their store shelves and there is NO TRADE since all currencies have failed and it takes months for world leaders to convene and agree on a one world economic system going forward. Silver is below $18 and anything below that is my announced buy target but as we go into February, I am changing my guidance. I now recommend buy with total abandon, not waiting, on all precious metal, particularly silver, even if price goes to $20 or higher as time is limited before the great, planned crash. Something's gotta give! Just when you thought things could not get any worse, suddenly, there are daily articles of planes in the United States getting bomb threats from unknown attackers and planes are diverted, Air Force fighters are scrambled and business as usual has become very suspicious, to say the least. Can we start preparing for a new round of government controls and billions of dollars of orders for bomb detection machinery to ensure flights cannot possibly have bombs or other weapons of mass destruction on them? When we talk about the airlines, they are part of what is known as the Dow Jones Transportation Average which is 20 transportation stocks: http://en.wikipedia.org/wiki/Dow_Jones_Transportation_Average Much research has been done and major indicators claim a rise in the DJTA is an excellent predictor of where the DOW is going to go in the future. Here is a comparison I took last week of both: Obviously, if the DOW catches up to the DJTA, then we are looking at huge gains on the DOW! Is that possible? Well, if you have been a reader of Martin Armstrong, then you know he has predicted this scenario is very possible. Notice this massive gap between the two averages has occurred in only 3 months. It might appear to most to be due to low fuel prices made possible by the same drop in oil price that is killing shale oil companies and all their associated infrastructure and the loans those companies, and related/ancillary businesses and the towns and states that support shale oil drilling are responsible to pay back whether they can take another drop out of the shale profitably or not! Obviously, companies and industry that benefit from low oil costs could also be counting their chickens before they hatch. So, what about the oil situation? The mere fact that low oil prices kills everything dependent on high oil prices is one thing but we see articles in the main stream financial press talking about the drop in oil prices being due to lower demand but we here at SilverDoctors know this is also a lie because SRSRocco did a great piece of investigative journalism and blew the lid off the notion of lower demand theory: http://www.silverdoctors.com/record-global-oil-demand-even-as-the-price-of-oil-declined/ I checked in on my friend SRS the other day and we caught up on old times and then the subject drifted to oil and he made me aware of something I had not thought of related to oil demand and where all that oil is going and we postulated the "what if…" oil has nowhere to go idea? After that conversation, I tried but found it impossible to resist checking into storage of oil in the United States and found that oil is stored in strategic reserves both commercially and more importantly via the U.S. Government. It was not easy to find exactly the storage capacity of both those reserves but in several articles and documents I was able to piece it together. This article tells us the current level of commercial reserves but does not tell the capacity: http://www.bloomberg.com/news/2015-01-22/u-s-doe-weekly-petroleum-status-report-for-jan-16-text-.html This article gives the capacity of commercial reserves: http://www.reuters.com/article/2015/01/12/us-oil-tanks-analysis-idUSKBN0KL0AZ20150112 From the Energy Information Administration we get the weekly breakout but they very judiciously do not give total capacity or percentage full information. I got the SPR government reserve information from here: http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_%28United_States%29 And a little math told me the SPR was 95% full on December 23rd. A little more math told me the commercial reserves were 90%+ full at the January 16 report. http://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf All this beckons the question of the 800 lb gorilla in the room "What happens when the commercial and government reserves are completely full and all this oil has nowhere to go ? SRS didn't mention but I was instantly reminded of an old song sung by an old pal of mine: https://www.youtube.com/watch?v=lkzO44VaUB0 Franky does a good job on this! "Something's Gotta Give" When an irresistible force such as you, Something's gotta give, Something's gotta give, Something's gotta give When an irrepressible smile such as yours Somewhere, somehow, Someone's gotta be kissed So, en garde, who knows what the fates might have in store Fight, fight, fight, fight, fight it with all of our might Something's gotta give, Something's gotta give, Something's gotta give Fight, fight, fight it with all of your might Something's gotta give, Something's gotta give, Something's gotta give Something's gotta give, Something's gotta give Aww, let's tear it up!! Remember, the Bloomberg article tells us the SPR reserves increased by 10.1 MILLION barrels in just one week's time! "U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.1 million barrels from the previous week. At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years." What it appears has been going on now since at least October is the United States government has been purchasing hundreds of millions of barrels of oil and storing them because between commercial and government actual demand not growing fast enough to mitigate the oversupply gap the oil has to go somewhere or else the over supply problem that has caused the 60% drop in oil prices would be far more exaggerated and we could indeed see world oil demand grind to a halt if in fact other countries are doing the same thing as the United States and buying up all excess supply and making it appear the world economy is strong and using up the oil, when in fact since economies are not mitigating the difference in real economic growth what we have is AN OIL BUBBLE ABOUT TO BURST! Imagine what happens once the commercial and government reserves are full and the United States has no where to put it all, and the oil futures markets see this so-called world over supply become suddenly several times as big? The price of oil would drop like a rock from what a few hours ago hit a $44 handle and we could easily see total loss of confidence in the futures and options and a mass exit occurs and price for quite some time heads South of $30 a barrel. SO, my opinion is The Powers That Be are not quite ready to drop the floor out of oil and totally ruin everything economic to every piece of business in any way associated with, related to, or dependent on higher priced shale, tar sands, and deep water oil production. Not quite yet. Are we going to see a false flag somewhere in major oil fields in the world that will stop production there and keep the phony oil bubble alive just a little longer? NOW, ask yourself the next most logical question… To what end has the U.S. government filled up its reserves on VERY CHEAP oil prices? Look at the Reuters article: "the capacity of U.S. commercial oil storage tanks has expanded by a third since 2010". This has all been very well planned. Look at the Wikipedia document: "However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, so it would take over 160 days to use the entire inventory." 160 days. That might be just the amount to time required to operate efficiently during the world's greatest economic collapse EVER and during its aftermath while the rest of the world recovers from the depths of despair and chaos, death and destruction, when after 3 days all their food is gone from their store shelves and there is NO TRADE since all currencies have failed and it takes months for world leaders to convene and agree on a one world economic system going forward. Authors Mark Biltz and Jonathan Cahn tell us they expect a great economic disaster long about what is called the Shemitah 7 year cycle on or about "Feast of Trumpets" coming in September and have produced quite some evidence of these cycles for the 2008, 2001, 1994, 1987, and prior periods. Martin Armstrong has made his case for many years now with his computer database analysis cycles predicting a great economic crash in 2015.75 or late 3rd quarter of this year. Dozens if not hundreds of financial analysts and economists are screaming at us that all the financial markets are grossly manipulated by the central banks, bubbles are everywhere due to the manipulations, and they see little time left before something catastrophic happens. Then you have my belief that all the prophecies and the math behind those prophecies, in the Bible, points to September 23, 2015 as being the start date of Daniel's 70th Week, the worst 7 years in the history of mankind where all remaining items we read in the book of Revelation will come to pass by mid Fall of 2022. No doubt Obama is going to get all the credit for this oil supply buildup just as he is going to get all the credit from Congress and the vast majority of the American people when he comes up with the one world government, one world currency solution in the aftermath of the worldwide financial collapse. So, what does this have to do with gold and silver? Everything! The markets, world events, countries, peoples are totally manipulated and yet it is just the beginning of those manipulations and what they will become. In gold and silver, we have seen a steady rise in the spot price for a couple of weeks now and I documented that initial price rise with the Commercials purchasing the vast majority of about 20,000 new contracts taking almost all the short side and a lion's share of the long side. They were very successful in this effort as these evil bullion banking Commercials have banded together and coaxed Speculators to think the price worm has turned and they bend and begin going long! In silver, we see over 2,600 new contracts (13 million new ounces) and the Speculators are up almost 4,000 additional longs while the Commercials are up over 8,000 (40 million) new short ounces. The disaggregated COT shows us both Commercial houses piling on shorts as fast as they can, acting in concert with each other, hatching their plan together. The price rise forces Speculators out of almost 4,500 short positions. Those shorts were deep in the money only a couple of weeks ago and now they are toast since they did not sell (cover) when I told them to sell. The silver side of the COT looks fairly normal but it is in the gold side where you get the real picture as to what has transpired. In gold, the aggregate numbers tell us Large Speculators picked up 30,298 additional longs and Small Specs grabbed 4,461. Commercials took 31,664 new short positions to their totals. That paints a very incredible and accurate picture of what is happening if you stop to think for a moment what had to transpire. Commercials DO NOT have to take the short side of the Speculators long bet. They could choose to let Speculator's longer and higher bids set there as unclaimed offers. They did not make that choice, instead they chose to grab every higher bid the Speculators placed and they did so in concert, in congruency I like to say, with each other as the devious partners in crime they are. In gold, we have over 28,000 new contracts in total open interest and it is virtually a 100% clean and clear divide in who took the short sides and who took the long sides. Think about it. It looks almost like Congress in Washington DC divided along sharp party lines left and right over a contentious abortion bill. A house divided cannot stand and stand it will not. January 19 was a day off for MLK day but short buying commercials hardly rested. Think about the velocity of new contract bids and resolutions. Over 28,000 new long bids accepted willingly! In just 4.x days. I can almost hear the ghost of Blythe Masters saying "Ahhhh, another long bid at a higher price? You got it, baby! We will take that bet!!" They took virtually every bet offered. Why? There seems to be no variety in the 2 houses of Commercial's traders with differing opinions of what to do… They all think exactly the same. In the disaggregated gold COT, we see the Producer Merchant taking 15,634 shorts and the Swap Dealer taking 19,019 shorts. They both sold some long positions. What has happened since the COT last Tuesday? Silver has gained another 2,000 contracts and gold has gained another 19,000 contracts. So, price has decreased somewhat in the face of rising open interest. Did the Commercials put in a price ceiling? Are they waiting for and enticing an even larger segue of Speculator total open interest into the long side before they bring the house down? Reviewing the 2 Year Silver Bottoms chart I have become so fond of, we see silver went up to and almost kissed the June, 2013 low of about $18.14 and has retreated somewhat. In the 2 Year Gold Bottoms chart, which is murkier, gold broke out of its new lows, went through the 2 Years Bottom range and slightly broke the top of the Bottom's range and has since retreated. Gold is still below the previous lower high of $1346 so the lower highs and lower lows direction holds, for now. The gold Commercials are in total control of the gold price and what happens in the near future is what they will to happen not what the market determines happens… Silver is below $18 and anything below that is my announced buy target but as we go into February, I am changing my guidance. I now recommend buy with total abandon, not waiting, on all precious metal, particularly silver, even if price goes to $20 or higher as time is limited before the great, planned crash and the start of Daniel's 70th Week. Get physical while you can. I recommend liquidating for cash, anything you possibly can and purchasing metal and previously I recommended cash out refinances of mortgages and I will go so far as to say if you have great credit and a sizeable cash reserve and can afford payments, take a loan and buy metal but calculate that very carefully so you do not get caught short for loan payments before the rise or afterwards. Keep the reserve cash not in a bank. The U.S. banks still have to accept USD payments after the crash even if other countries will not honor the currency. Are we ready to see false flag oilfield attacks in places like Yemen, Iraq, and maybe Libya in an effort to draw down world supply after the American reserves are full of cheap oil? Something's gotta give! Reporting from the wilderness of Southern Illinois, stay thirsty for physical metal, my friends! Marshall
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