On the heels of continued chaos around the globe and with many stock markets seeing dramatically increased volatility, today a 40-year market veteran sent King World News a powerful piece that warns the relentless Western propaganda and aggression against Russia will end in disaster. Below is what Robert Fitzwilson, founder of The Portola Group, had to say in this exclusive piece for King World News.
By Robert Fitzwilson of The Portola Group
December 22 (King World News) – In 2002, a gripping movie was released depicting the gruesome Battle of Ia Drang fought in Vietnam during November of 1965. The main character, played by Mel Gibson, was Army Lieutenant Colonel Harold (“Hal”) Moore. Moore was ordered with his 400 soldiers into what was a deadly trap, surrounded by a division of 4,000 veteran North Vietnamese troops. As the battle rages on, their situation becomes increasingly desperate. Moore finally concludes that his positions are in danger of being completely overrun and broadcasts over the radio “Broken Arrow”. “Broken Arrow” was a pre-arranged code phrase for any military assets in the area to immediately come to join in the battle….
Continue reading the Robert Fitzwilson piece below…
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In the past week, the financial markets cried out “Broken Arrow”, too. The price of oil was spiking downward. Stock markets around the world were imploding. Spreads on critically important sectors in the fixed income markets were exploding. Capital spending budgets in the energy sector were being slashed in an uncharacteristically rapid and dramatic fashion. Drilling applications were plunging. The stocks for companies engaged in the U.S. shale oil industry and companies providing oil field services were collapsing. Predictions of bankruptcy began to be suggested in the mainstream media and analyst reports. It was reported that the entire North Sea operations for the U.K. had become unprofitable and might have to be shuttered.
As has been the case many times since the 2008 financial collapse, the Federal Reserve rode to the rescue by pushing the prospect of interest rate increases further into the future. While welcome, it was a bit anti-climactic as we all know that the central planners are trapped in a world drowning in fiat currency, credit and low interest rates.
It is hard to imagine given the stomach-churning volatility of the past month, but this past week ended with the Standard & Poor’s 500 and the Dow Jones Industrials flat since first trading day after the OPEC announcement. Gold advanced 1%.
What remains in the dumpster is the price of crude. Crude is still down 22% since the day after the Thanksgiving OPEC Massacre, including an 8% loss for the past week. What is really interesting, however, is that the XLE, the Spdr Energy proxy, rose 9% during the last week. For the 30-day period, the XLE is ahead 1%. All of the interim decline was erased. The XLE is heavily weighted toward Chevron and Exxon-Mobil, but clearly energy investors took advantage of the decline in crude and equity prices to load up on the bargains. The damage remains primarily in the shale oil sector and the service providers.
The sale on crude resulted not only in bargain shopping for equities, but also for oil. Tanker rates to Asia, particularly Singapore, have demonstrably spiked. This decline in the price of oil clearly has been a blow to some, but it is an enormous gift to Asia. Perhaps this is all according to plan or perhaps it is simply misguided people with their hands on the tiller of the global economy and politics. It is impossible to say.
If this was deliberate, it is an incredibly stupid policy. The number of unintended consequences is too numerous to detail, but virtually all of them are bad. Even the touted reduction in gasoline prices was debunked as surveys indicated that consumers were going to save the money. For those pulling the levers, there is an old adage about not burning down the neighborhood just to get back at the disliked person across the street. The global neighborhood was definitely on fire and spreading rapidly until the Fed brought out the firehoses.
The propaganda and the manipulation dominate the precious metals markets. While gold did erase the declines since the OPEC meeting, the battle rages over the $1,200 price level. It was predicted that Russia was going to have to start selling their gold reserves, but Putin angrily responded that they had actually purchased another 600,000 ounces.
As Dr. Roberts pointed out in his KWN interview, the cards left to be played by Russia are considerable. Despite the obvious insanity of antagonizing Russia, which includes relentless propaganda, the West continues to do just that by adding more sanctions and arming Ukraine. But this relentless propaganda and aggression against Russia will end in disaster. While attention has been directed toward the Russian banking system, there is actually a card game called “Russian Bank”. It is played with two decks, and the goal is to get rid of your cards before your opponent does the same. Sounds familiar if you switch “dollars” for “cards”. As Russia and China continue to reduce their holdings of dollars and Treasuries for gold and oil, their odds of winning this geo-political financial struggle steadily increases.
With the Fed once gain stepping in to prevent a stock and bond market calamity, the Fed “put” remains in force. Gold and silver have continued to be suppressed in this environment, but a breakdown in the physical market will take place at some point that will send the Western cartel reeling. So the acquisition of the metals, miners, energy-related stocks and the subsection of the equity markets with sound fundamentals remains the appropriate path at the moment.
Finally, we ran across this great quote from the past. It is great food for thought.
“The Roman Republic fell, not because of the ambition of Caesar or Augustus, but because it had already long ceased to be in any real sense a republic at all. When the sturdy Roman plebeian, who lived by his own labor, who voted without reward according to his own convictions, and who with his fellows formed in war the terrible Roman legion, had been changed into an idle creature who craved nothing in life save the gratification of a thirst for vapid excitement, who was fed by the state, and directly or indirectly sold his vote to the highest bidder, then the end of the republic was at hand, and nothing could save it. The laws were the same as they had been, but the people behind the laws had changed, and so the laws counted for nothing.” — President Theodore Roosevelt
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