Steve St Angelo has issued a major warning on the markets. Some markets are about to collapse in both dollar amount and value, and the markets that will crash versus the markets that will weather the storm comes down to the question of energy…

by Steve St Angelo of SRSrocco Report

It’s about time that I share with you all a little secret.  The situation in the markets is much worse than you realize.  While that may sound like someone who has been crying “wolf” for the past several years, in all honesty, the public has no idea just how dire our present situation has become.

The amount of debt, leverage, deceit, corruption, and fraud in the economic markets, financial system, and in the energy industry are off the charts.  Unfortunately, the present condition is even much worse when we consider “INSIDER INFORMATION.”

What do I mean by insider information… I will explain that in a minute.  However, I receive a lot of comments on my site and emails stating that the U.S. Dollar is A-okay and our domestic oil industry will continue pumping out cheap oil for quite some time.  They say… “No need to worry.  Business, as usual, will continue for the next 2-3 decades.”

I really wish that were true.  Believe me, when I say this, I am not rooting for a collapse or breakdown of our economic and financial markets.  However, the information, data, and facts that I have come across suggest that the U.S. and global economy will hit a brick wall within the next few years.

How I Acquire My Information, Data & Facts

To put out the original information in my articles and reports, I spend a great deal of time researching the internet on official websites, alternative media outlets, and various blogs.  Some of the blogs that I read, I find more interesting information in the comment section than in the article.  For example, the Peakoilbarrel.com site is visited by a lot of engineers and geologists in the oil and gas industry.  Their comments provide important “on-hands insight” in the energy sector not found on the Mainstream Media.

I also have a lot of contacts in the various industries that either forward information via email or share during phone conversations.  Some of the information that I receive from these contacts, I include in my articles and reports.  However, there is a good bit of information that I can’t share, because it was done with the understanding that I would not reveal the source or intelligence.

Of course, some readers may find that a bit cryptic, but it’s the truth.  Individuals have contacted me from all over the world and in different levels of industry and business.  Some people are the working staff who understand th reality taking place in the plant or field, while others are higher ranking officers.  Even though I have been receiving this sort of contact for the past 4-5 years, the number has increased significantly over the past year and a half.

That being said, these individuals contacted me after coming across my site because they wanted to share valuable information and their insight of what was going on in their respective industires.  The common theme from most of these contacts was…. GOSH STEVE, IT’S MUCH WORSE THAN YOU REALIZE.  Yes, that is what I heard over and over again.

If my readers and followers believe I am overly pessimistic or cynical, your hair will stand up on your neck if you knew just how bad the situation was BEHIND THE SCENES.

Unfortunately, we in the Alternative Media have been lobotomized to a certain degree due to the constant propaganda from the Mainstream Media and market intervention by the Fed and Central Banks.  A perfect example of the massive market rigging is found in Zerohedge’s recent article; Central Banks Have Purchased $2 Trillion In Assets In 2017 :

….. so far in 2017 there has been $1.96 trillion of central bank purchases of financial assets in 2017 alone, as central bank balance sheets have grown by $11.26 trillion since Lehman to $15.6 trillion.

What is interesting about the nearly $2 trillion in Central Bank purchases so far in 2017, is that the average for each year was only $1.5 trillion.  We can plainly see that the Central Banks had to ramp up asset purchases as the Ponzi Scheme seems to be getting out of hand.

So, how bad is the current economic and financial situation in the world today?  If we take a look at the chart in the next section, it may give you a clue.

THE DEATH OF BEAR STEARNS: A Warning For Things To Come

It seems like a lot of people already forgot about the gut-wrenching 2008-2009 economic and financial crash.  During the U.S. Banking collapse, two of the country’s largest investment banks, Lehman Brothers, and Bear Stearns went belly up.  Lehman Brothers was founded in 1850 and Bear Stearns in 1923.  In just one year, both of those top Wall Street Investment Banks ceased to exist.

Now, during the 2001-2007 U.S. housing boom heyday, it seemed like virtually no one had a clue just how rotten of a company Bear Stearns had become.  Looking at the chart below, we can see the incredible RISE & FALL of Bear Stearns:

 

 

As Bear Stearns added more and more crappy MBS – Mortgage Backed Securities to its portfolio, the company share price rose towards the heavens.  At the beginning of 2007 and the peak of the U.S. housing boom, Bear Stearns stock price hit a record $171.  Unfortunately, at some point, all highly leveraged garbage assets or Ponzi Schemes come to an end.  While the PARTY LIFE at Bear Stearns lasted for quite a while, DEATH came suddenly.

In just a little more than a year, Bear Stearns stock fell to a mere $2… a staggering 98% decline.  Of course, the financial networks and analysts were providing guidance and forecasts that Bear Stearns was a fine and healthy company.  For example, when Bear was dealing with some negative issues in March 2008,  CBNC’s Mad Money, Jim Cramer made the following statement in response to a caller on his show:

Tuesday, March 11, 2008, On Mad Money

Dear Jim: “Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?” – Peter

Jim Cramer: “No! No! No! Bear Stearns is fine. Do not take your money out. Bear sterns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly.”

Thanks to Jim, many investors took his advice.  So, what happened to Bear Stearns after Jim Cramer gave the company a clean bill of health?

 

 

On Tuesday, March 11, the price of Bear Stearns was trading at $60, but five days later it was down 85%.  The source (linked above) where I found the quote in which Jim Cramer provided his financial advice, said that there was a chance Jim was replying to the person in regards to the money he had deposited in the bank and not as an investment.  However, Jim was not clear in stating whether he was talking about bank deposits or the company health and stock price.

Regardless, Bear Stearns stock price was worth ZERO many years before it collapsed in 2008.  If financial analysts had seriously looked into the fundamentals in the Mortgage Backed Security market and the bank’s financial balance sheet several years before 2008, they would have realized Bear Stearns was rotten to the core.  But, this is the way of Wall Street and Central Banks.  Everything is fine, until the day it isn’t.

And that day is close at hand.

THE RECORD LOW VOLATILITY INDEX:  Signals Big Market Trouble Ahead

Even though I have presented a few charts on the VIX – Volatility Index in past articles, I thought this one would provide a better picture of the coming disaster in the U.S. stock markets:

 

 

The VIX – Volatility Index (RED) is shown to be at its lowest level ever when compared to the S&P 500 Index (GREY) which is at its all-time high.  If we take a look at the VIX Index in 2007, it fell to another extreme low right at the same time Bear Stearns stock price reached a new record high of $171.  Isn’t that a neat coincidence?

As a reminder, the VIX Index measures the amount of fear in the markets.  When the VIX Index is at a low, the market believes everything is A-OKAY.  However, when the VIX surges higher, then it means that fear and panic have over-taken investment sentiment, as blood runs in the streets.

As the Fed and Central Banks continue playing the game of Monopoly with Trillions of Dollars of money printing and asset purchases, the party won’t last for long as DEATH comes to all highly leveraged garbage assets and Ponzi Schemes.

To get an idea just how much worse the situation has become than we realize, let’s take a look at the energy fundamental that is gutting everything in its path.

WHY THE BIG MARKET COLLAPSE IS COMING:  It’s The Energy, Stupid

Even though I belong to the Alternative Media Community, I am amazed at the lack of understanding by most of the precious metals analysts when it comes to energy.  While I respect what many of these gold and silver analysts have to say, they exclude the most important factor in their forecasts.  This critical factor is the Falling EROI – Energy Returned On Investment.

As I mentioned earlier in the article, I speak to many people on the phone from various industries.  Yesterday, I was fortunate enough to chat with Bedford Hill of the Hill’s Group for over 90 minutes.  What an interesting conversation.  Ole Bedford knows we are toast.  Unfortunately, only 0.01% of the population may understand the details of the Hill’s Group work.

Here is an explanation of the Hill’s Group:

The Hill’s Group is an association of consulting engineers and professional project managers. Our goal is to support our clients by providing them with the most relevant, and up to-date skill sets needed to manage their organizations. Depletion: A determination for the world’s petroleum reserve provides organizational long range planners, and policy makers with the essential information they will need in today’s rapidly changing environment.

I asked Bedford if he agreed with me that the hyperinflationary collapse of Venezuela was due to the falling oil price rather than its corrupt Communist Government.  He concurred.  Bedford stated that the total BTU energy cost to extract Venezuela’s heavy oil was higher than the BTU’s the market could afford.  Bedford went on to say that when the oil price was at $80, Venezuela could still make enough profit to continue running its inefficient, corrupt government.  However, now that the price of oil is trading below $50, it’s gutting the entire Venezuelan economy.

During our phone call, Bedford discussed his ETP Oil model, shown in his chart below.  If there is one chart that totally screws up the typical Austrian School of Economics student or follower, it’s this baby:

 

 

Bedford along with a group of engineers spent thousands and thousands of hours inputting the data that produced the “ETP Cost Curve” (BLACK LINE).  The ETP Cost Curve is the average cost to produce oil by the industry.  The RED dots represent the actual average annual West Texas Oil price.  As you can see, the oil price corresponded with the ETP Cost Curve.  This correlation suggests that the market price of oil is determined by its cost of production, rather than supply and demand market forces.

The ETP Cost Curve goes up until it reached an inflection point in 2012… then IT PEAKED.  The black line coming down on the right-hand side of the chart represents “Maximum Consumer Price.”  This line is the maximum price that the end consumer can afford.  Again, it has nothing to do with supply and demand rather, it has everything to do with the cost of production and the remaining net energy in the barrel of oil.

I decided to add the RED dots for years 2014-2016.  These additional annual oil price figures remain in or near the Maximum Consumer Price line.  According to Bedford, the oil price will continue lower by 2020.  However, the actual annual oil price in 2015 and 2016 was much lower than the estimated figures Bedford, and his group had calculated.  Thus, we could see some volatility in the price over the next few years.

Regardless, the oil price trend will be lower.  And as the oil price continues to fall, it will gut the U.S. and global oil industry.  There is nothing the Fed and Central Banks can do to stop it.  Yes, it’s true that the U.S. government could step in and bail out the U.S. shale oil industry, but this would not be a long-term solution.

Why?  Let me explain with the following chart:

 

 

I have published this graph at least five times in my articles, but it is essential to understand.  This chart represents the amount of below investment grade debt due by the U.S. energy industry each year.  Not only does this debt rise to $200 billion by 2020, but it also represents that the quality of oil produced by the mighty U.S. shale oil industry WAS UNECONOMICAL even at $100 a barrel.

Furthermore, this massive amount of debt came from the stored economic energy via the various investors who provided the U.S. shale energy industry with the funds to continue producing oil at a loss.   We must remember, INVESTMENT is stored economic energy.  Thus, pension plans, mutual funds, insurance funds, etc., had taken investments gained over the years and gave it to the lousy U.S. shale oil industry for a short-term high yield.

Okay, this is very important to understand.  Don’t look at those bars in the chart above as money or debt, rather look at them as energy.  If you can do that, you will understand the terrible predicament we are facing.  Years ago, these large investors saved up capital that came from burning energy.  They took this stored economic energy (capital) and gave it to the U.S. shale oil industry.  Without that capital, the U.S. shale oil industry would have gone belly up years ago.

So, what does that mean?  It means… IT TOOK MORE ENERGY TO PRODUCE THE SHALE OIL than was DELIVERED TO THE MARKET.  Regrettably, the overwhelming majority of shale oil debt will never be repaid.  As the oil price continues to head lower, the supposed shale oil break-even price will be crushed.  Without profits, debts pile up even higher.

Do you all see what is going on here?  And let me say this.  What I have explained in this article, DOES NOT INCLUDE INSIDER INFORMATION, which suggests “The situation is even much worse than you realize… LOL.”

For all my followers who believe business, as usual, will continue for another 2-3 decades, YOU HAVE BEEN WARNED.  The energy situation is in far worse shape than you can imagine.

PRECIOUS METALS:  Are Stores Of Economic Energy.. Stocks, Bonds & Real Estate Are Energy IOU’s

If you want to lose all your money (most of it), I suggest that you keep it invested in most STOCKS, BONDS and REAL ESTATE.  I still receive emails from individuals who try to convince me that real estate is a safe-haven during economic distress.  Yes, real estate was good to own in the past, but we are living in much different times today.

Years after the markets finally crack, I see thousands and thousands of suburban homes, commercial and industrial properties empty… never to be used again.  We just won’t have the energy to run them.  Thus, there will be Trillions of Dollars of sunk investment capital gone forever.

So, if you are still watching late night infomercials on how to become RICH buying Real Estate, you have my sympathies. 

Lastly, if you are one of the few Americans not suffering from BRAIN DAMAGE, I suggest that you consider owning some physical precious metals to protect your wealth.  Once the markets finally implode, there will be few bids for most STOCKS, BONDS and REAL ESTATE.

The time to get out of highly-inflated garbage assets is before everyone else tries to.

GOD HATH A SENSE OF HUMOR…

    • What delusional nonsense! For over a year people like this have been forecasting a dollar and Dow collapse and it hasn’t happened and won’t. Capital flows especially international capital flows has been moving into both of these most from Europe as the euro, the EU, most of its banks and countries are in serious financial trouble. If you control large amounts you are not going to park it in a collapsing currency or banks in trouble. Capital is simply being parked in markets where there are large pools of liquidity and that is the dollar and the Dow and this will continue. According to Armstrong Economics computer models which track these flows in world markets both the Sovereign Debt and Monetary Crisis will hit in 2018 in Europe. All of their clients are still moving capital out. The models are also forecasting the worst for the Dow is a normal correction at a maximum 8% before moving to 23,000. The reason is that currently we have short term dollar weakness and even if entities in Europe wanted to sell they would not because when they converted dollars back to euros they would take a hit on the exchange rate. This guy is just clueless.

      I have been hearing about peak oil since the so called Arab oil embargo. The fact is that the US has some of the largest crude and natural gas reserves on the planet and oil companies always under estimate their reserves to keep the illusion of less to help keep prices high. Why do you think Congress passed legislation to allow producers to export out of the country? In addition Congress placed additional sanctions on Russia which was actually aimed at European oil and gas suppliers so the US majors could export to Europe which has a population of over 550 million and take the market away from Russia.

      The majors have been making billions even at these low prices as it is actually less expensive to drill than actually claimed. Take the nonsense that frackers need $100 oil to break even. BULLSHIT! Do you really thinks banks would keep lending to companies losing money? BULLSHIT! Take investors. Do you really think they are so stupid that they would place capital in losing companies? BULLSHIT! The major oil companies in the US wet dream is to have all the independents which most frackers are to go south removing 2 to 4 million barrels a day which would cause prices to rise. As with any commodity, when firms go belly up this reduces supply and then prices rise. What do you think would happen to the price of wheat if 50% of supply is removed from the market? Again this is all BULLSHIT and fear porn. The guy is totally clueless. You can tell that he just reads other people’s BULLSHIT on the net and repeats. None of these claims are based on any economic or financial reality!

      Now a strong dollar would collapse the international financial system. The FED knows this and went into panic mode attempting to weaken the dollar and stopping the capital flight out of Europe. They have been attempting to jawbone markets down using the big banks and Greenspan and Rickards. They even marched out the head of the CME claiming gold should be at $5000 and Rickards at $10,000. They have planted stories like bringing out a BoA analyst claiming that gold is ready to take off. Goldman said gold is a currency and its head claiming all markets are overvalued. They even planted the Chinese BULLSHIT that they were going to allow the yuan to be fully convertible to gold which they are not. This would increase the value of the yuan and collapse their exports, their economy and the new silk road project. They are not stupid. Even Deutsche Bank came out claiming the US equities markets are going to collapse. Why? The Bundesbansk is owed close to 1 trillion euros from central banks in southern Europe as the capital flight has also been moving to Germany. Folks are we seeing a pattern here yet? This all shows how desperate the FED has become and they know the euro is going south along with Europe and there is nothing they can do to stop it but by bringing out the shills jawboning markets down. So much for the absurd nonsense that some “cartel” is suppressing prices to instill dollar confidence. With all this going on the net is still full of people claiming this. Totally clueless people!

      Now the dollar will remain THE reserve currency for at least 10 years according to Martin Armstrong. Why? Countries do not like to hold large amounts of foreign currencies because they do not pay interest. They buy foreign sovereign debt and the US has the largest and most liquid on the planet. China is developing theirs but this will take at least a decade to be large and liquid enough where countries can utilize these. Countries are fully entrenched in dollar based assets and this is not going to change anytime soon as where else are you going to park capital? China was actually forced to set up currency swaps with many trading partners as dollar strength increased trade settlement cost and it is not because they lost faith as many claim. China bought billions in treasuries in both June and July and these proves it. No one buys a countries sovereign debt without having faith in the currency.

      50% of all international trade is still settled in dollars. 75% of all international financial transactions are done in dollars. Most commodities are quoted and sold in dollars around the planet. Banks have lent trillions to foreign entities in dollar denominated loans all serviced in dollars. All of this creates demand for dollars. In fact this is why the SDR was created to provide liquidity to central banks when there are dollar shortages in foreign markets which happened at the end last year and at the start of the year all caused by  the capital flight out of Europe.

      The last thing is Venezuela is not a communist nor a socialist country as many have been claiming on the net. Hell they do not even have a national health care system like most of Europe, the UK, Canada and Australia. Are these all communist countries? Of course not! This is just another proof that he reads crap on the net and repeats it. The US wants their natural resources and this is why they are in trouble.

       

    • Wholly $ht jj….I really did try to read your post, but it was waaay too long. Try consolidating your message into strong brief points and summarize at the end.

      I think you raise valid points, however I have forgotten many of them as your post rants through too many points; however I would like to say this in regards to exports of China, strong currency, and convertability to gold:

      Cheap exports are a system that hold during global peace. During times of impending war a country desires independant strength, and a solid currency. Germany will not abandon its nat-gas accord with Russia. China had publically stated if U.S. attacks NK they support NK- cant do that when a U.S. tit-sucker can you? Need solid currency (aka gold backed) When global trade collapses during war, asset backed currencies are what holds them together.

  1. @goldsilverfart    “bullshit fear mongering crap”—
    until it’s in your face and you face the real world where  your money in the banks is leveraged 120:1 cash vs. computer generated numbers.   Every other CO2 breathing body is after the :1 cash—-then you know your walking over the edge of the clif, right behind the other sheep in front of you and all your savings in the world are inaccessible and your money you thought you had, null and void-stolen like a thief in the night.  Fine, be a sheep, or a Troll.

    • It doesn’t matter if the dollar goes to nothing. The PMs are not going to be allowed to increase in value. How many times does anyone need to be kicked in the groin in order to realize PMs are speculative garbage??

    • Oh @Charlie … it matters. That statement reveals how little you kniw about currencies & money. Wealth in currencies is not equal around the world. The dollar may be worth more than an Egyptian Pound, but it buys FAR less over here in the U.S. A currency is only is valuable as #1 other govts value it fir global trade, #2 people/vendors value it.

      I just returned from Egypt, I carried 2 ASE’s with me everywhere I went, because if I ran out of pounds and dollars, I could always get a cab ride, hell even a meal for silver. Its more valuable over there! About 40.00 US in services for 1/2 oz of silver. I explained it to my coworkers, its global money.

      If the dollar tanks silver may not buy you a mansion, but in a country where everyone is piss-poor because they have no wealth, your silver or gold will place you in a position where your the only one that can affird to drive your car, or live in a clean house, or pay for water/electricity. Currency is relative and its purchasing power is with it. Keep that in mind while you hang dry your FRNs after you do laundry.

  2. @Charlie

    How in the world do you know?   Do you have a set of magic charts?

    Are you some kind of gifted analyst that knows what happens before and not after,  like most so called experts !

    I think your Full of Cow Dung Sonny Boy or Girl or whatever gender tag you have applied to yourself?

    Go back to your basement and let us crazy peoople continue to stack our money without benefit of your financial expertise.

    China Su Madre Baboso Caga Palo!

    • Not only were you kicked in the groin, but the head as well.

      You’re too stupid to understand certain things, but others aren’t quite so dumb. If you own PMs, there is no skim that financial parasites need in order to continue functioning. That’s why they’ve been trying to get their hands on the Social Security fund, because current administrative costs are a fraction of what you’re charged if you turn your funds over to those institutions.

      Point is, you mouth breathing imbecile, any and all investments than can bypass that skimming scam, must be destroyed. That’s the prime reason PMs have been in an extended bear market. If a dope such as you wants to look at charts rather than the underlying political and economic powers that control markets, then there is no hope for you……

  3. Stacking the pm shiny phyzz no matter what the paper pushers of fiat say or do.

    Stock market drop of 85% in 5 days? Well, then the shiny pm phyzz will increase 85% in 5 days?

    Stacking the stack, so someday will be worth sum Jack.

  4. The markets will crash when the CB’s lose control which will be the same time PM’s breakout as it’s all connected. First, as in 2008, there will be a downdraft for all markets including PM’s (when CB’s will cover shorts and go long) and this will mark the beginning of the next monumental leg up in the bull market. How the CB’s react is yet to be seen but they will probably throw unprecedented money printing at the problem which could send the stock market and property prices sky high – en route to their final collapse.

  5. These guys have been calling for an epic crash for the past 8 years and all stocks do is go up, up and up some more. You would have done just fine holding onto your stocks and doing absolutely nothing else. Especially nothing suggested by the “gurus” on this site.

    Just look at the poor folks that cashed out their 401K’s and IRA’s back in 2011 on the advice of the great guru Jim Sinclair. How did that end up working out for them? Oh and remember to avoid the cryptocurrency Ponzi-schemes. Had you put only a fraction of what you have parked in PM’s into cryptos you would be on easy street right now. The hardened goldbugs don’t want to hear that but the facts are the facts. Returns don’t lie and profits pay the bills.

     

  6. Another misleading headline… St Angelo didn’t say it going to crash 85% in five days.  He said that when it crashes… it will fall 85% in five days.   He is probably right about that.

    For me… the low VIX keeps telling the story.   The Fed is the one that is doing all the big buying and adding about $1 trillion per year to the debt.  Only a troll could see the bright side of that trend.  The Fed keeps pumping the lie that they are going to reduce their balance sheet starting at the end of this month.  Its a lie cause if they do… then everything comes crashing down.

    Like St Angelo…    I am not rooting for a collapse or breakdown of our economic and financial markets…. I am content to let the Fed fantasy continue.  Keep stacking… as the Fed keeps cranking… because whats coming is unavoidable… Pop goes the Weasel.

Leave a Reply