[T.S.R:16507] Byron King: Crude At $90/bbl signals return of hyper-inflation!

There's a huge, giant, flashing, buzzing, blasting warning signal going off in my head. It's like the Klaxon horn in a Navy warship indicating that enemy missiles are inbound. General quarters! All hands to battle stations! Secure all watertight doors! Set Condition Zebra!

"I'm perceiving the distinct warning of "Inflation!" Or maybe it's "Hyper-stagflation!" I'm still not quite sure on that. But it's a sentiment as in, "Oh no! It's the 1970s all over again, and maybe worse!""

"What should we do? You have to ask? That's easy: Head for the hills. In particular, head for the hills and dig some coal, copper, zinc, gold and whatever else you can find that'll hold its value in the coming times of trouble. Preserve, protect and defend your wealth."

King's explanation for the recent oil twitch:

"Last summer, the Chinese government announced that it wants domestic industries to become more efficient in their use of electricity (most of which comes from polluting coal-fired plants in China). The Chinese government enforced this edict by — literally — pulling the switches on the power grid and blacking out entire factory complexes and industrial areas. Nothing subtle about it, eh?

"So what did the Chinese factory owners do? They threw other switches and fired up their back-door diesel generators. The result? There was an instant, sustained surge in demand for diesel fuel across China. Indeed, starting in August, oil imports surged into China, as did imports of refined diesel fuel.

"This action helped strengthen oil and refined product prices all fall across the world. Add into this the generally inflationary conduct of U.S. monetary policy. And add on a generally declining U.S. oil inventory as refiners crank out heating oil in anticipation of the cold winter. There's your $90 oil."

This makes me really worried about what exactly is going on in China, not for the first time. 

In fact, King sees a coming China crunch as another reason to own gold. He writes: "Point is, there's nothing easy for China in making the transition from massive investment in formerly booming export-led growth to a new focus on internal consumption.

"I believe that there's a still lot of thinking and planning in China that's stuck in the mind-set of economic boom times from the early part of this decade. We'll probably still see gross over-investment in obsolete economic ideas coming out of China. Entire industries will pursue growth and expansion in markets that are no longer there. The world will face the consequences of resources filtering through a trade model that's no longer valid.

"The result? Inflation. Flash booms. Flash busts…it means that there's even less reason to trust in national currencies over the long haul. 

"You still want to own physical gold and silver as core holdings in your portfolio…At LEAST 10% in precious metals, or more if it helps you sleep at night."

 

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Nothing in this article is, or should be construed as, investment advice.

 

 

 

 

 

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