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Expert: Crude oil could hit $15 by year end
CNBC “Fast Money” panelist and financial expert Dennis Gartman has bad news for oil: It’s going to go “stunningly” lower. In an interview with CNBC.com’s “Futures Now,” the “Commodities King” said that a combination of a rapidly rising inventories and a strong dollar could lead to $15 oil by the end of the year.
“For months I’ve said that crude oil is heading from the upper left to the lower right of the chart,” said the CNBC contributor and editor and publisher of The Gartman Letter. “I wouldn’t be surprised if oil went down to about $15 a barrel.”
Crude oil prices have been in a steep and steady decline over the past six months, down more than 50 percent trading just above $40 a barrel. Traders had hoped an improving economic picture in both the U.S. and Europe could give crude a lift.
At the start of February, crude staged a sharp and violent rally off its lows. But according to Gartman, there simply is too much supply to contend with. As such, he expects future crude rallies to be met with a similar fate.
“That is not how a bull market is supposed to act,” he said. “That is how a bear market acts.”
From the Trends Research Institute:
Going for gold, not bonds
By Gerald Celente
History is being made. A unique phenomenon is in play that few outside the business media are reporting.
Recently, for the first time in its history, Germany sold five-year bonds that guaranteed a negative yield. And Germany is not alone. Eurozone nations, including France, Belgium, Finland, Denmark, Switzerland, Netherlands, Sweden and Austria, have issued bonds with negative yields.
This means investors, as a reward for tying up their money for several years, will get less money back than they put in when the bonds mature.
Among the rationale for investors to accept a loss is that government bonds provide a safe haven in an uncertain economic future. And with banks trending toward negative interest rates (charging savers to hold their money) and bail-ins that permit seizure of deposits above the insured amounts, negative bond yields, rather than bank deposits, are the price paid for security.
Moreover, there are assumptions that in the current economic climate of deflation and weakening currencies, investors may get some protection should future deflation exceed the current negative bond yield.
Gold yes, bonds no: When I had forecast the beginning of the Gold Bull run in 2001, I based it in part on the 46-year-low interest rates and subsequent ultra-easy-money schemes Wall Street and Washington were peddling to the public. My reasoning was that the more cheap money flooding the marketplace, the less the currency would be worth. And the more money pumped into the real estate and equity markets, the greater the bubbles would grow. In November of 2007, I secured the domain name “The Panic of 08.com” in anticipation of the bubbles bursting. And, our Top Trend of 2008, made eight months before the Lehman Brother bankruptcy debacle, was “The Panic of ’08.”
Today, virtually anyone with an open mind and no hidden agenda – profit motive or otherwise – knows the economic facts and what they mean. The tens of trillions of central bank dollars, yen, yuan and euros, plus the unprecedented years of record low (and now negative) interest rates, have again created massive speculative bubbles in the equity markets. Therefore, growing economic uncertainty combined with increasing geopolitical instability still make gold the safest of safe-haven investments for me.
The longstanding argument made by anti-gold equity market players that it makes no sense to invest in the precious metal because it pays no interest is absolutely no longer valid in a negative-yield and negative-interest-rate environment.
And, while it is guaranteed that German and other bonds with negative yields will be worth less in five years than they were last Wednesday, the upside forecast for much higher gold prices in five years is far greater than gold selling for less than it is today.
Central banks paralyzed at the zero bound
By Alasdair Macleod
Though the Fed would deny it, it is clear from the minutes of the last Federal Open Market Committee (FOMC) meeting that a rise in interest rates has been put off indefinitely.
The subsequent rally in the price of gold and the sudden fall in the dollar tend to confirm this conclusion.
From Russia Today:
Iran backs notion of ruble/rial trade with Russia – ex-foreign minister
Tehran is open to the idea of conducting more trade payments in rubles and rials, not U.S. dollars, and would support an official deal, according to Iran’s former Minister of Foreign Affairs Kamal Kharrazi. “This is a very important step that Iran and Russia should take. And there is no other way to get rid of the dominance of the dollar in trade exchanges,” Kharrazi said, RIA Novosti reported.
Kharrazi is now director of the Strategic Council for Foreign Relations, having served as Iran’s foreign minister from 1997 to 2005.
Iran “will very seriously consider the question” of using Russian and Iranian national currencies to settle bilateral trade, adding it was “natural for Iran to welcome such an agreement,” Kharrazi said.
Russia-Iran trade is currently worth $5 billion a year. A so-called “oil-for-goods” contract has long been discussed, by which Moscow would buy oil from Tehran and export products and expertise in machinery, rail, trucks, metals and grain. The West worries that the deal will push Iran to exceed its 1 million barrels per day limit, which is part of its nuclear deal with Russia, China, the U.S., Britain, France, Germany and Iran.
From the (London) Telegraph:
Low rates will trigger civil unrest as central banks lose control, BIS says
Low inflation, bond yields and interest rates around the world will push the boundaries of economic and political stability to breaking point if they continue on their downward trajectory, the Bank for International Settlements has warned.
The Swiss-based “bank of central banks” said the “sinking trend” of global rates would push countries further into uncharted territory. It highlighted that $2.4 trillion (L1.6 trillion) of long-term global sovereign debt was now trading at negative yields, with an increasing number of investors willing to pay governments for the privilege of lending to them. “As bond markets show us day after day, the boundaries of the unthinkable are exceptionally elastic,” said Claudio Borio, head of the Monetary and Economic department at the BIS. …
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