Steve St. Angelo: The Financial World is One Giant Ponzi Scheme
Tom welcomes back Steve St. Angelo of the SRSrocco Report. Steve discusses the causes of lack of investment in the energy sector. It’s getting increasingly difficult to find oil, especially if we’re not looking. It’s costing a hundred billion dollars to find a billion barrels of oil. We’ve spent five trillion in the past decade to find 54 billion barrels of oil. During that time, the world consumed 300 billion barrels. We’re consuming six times the amount we are finding. It’s becoming impossible to keep up with the decline of at least ten percent annually.
Editor’s Note: The term “Red Queen Syndrome” is derived from Lewis Carroll’s Through the Looking Glass, where the Red Queen informs Alice that “here, you see, it takes all the running you can do to keep in the same place.”
The EIA in the United States appears to be overstating the oil reserves. There are fewer well completions this year than last. Texas is declining, and it’s a major part of the Permian. Shale is going to start rolling over next year, and we will see a fifty to seventy percent decline by 2030.
Oil sands are powered by natural gas usage. It’s essentially a conversion process of what fossil fuel to another. This is what makes extracting Venezuelan oil difficult.
Steve explains the problem of Energy Return on Investment. The U.S. is a net exporter of oil products, but we are currently using up the strategic reserve. We are exporting natural gas, coal, and some oil products. We’re going to have serious problems quite soon, as we will become a net importer once again.
The high dollar and high oil price is destroying Third World countries. This will persist and gradually move to impacting bigger countries.
Europe has built up their natural gas inventories to around ninety percent or higher. However, we don’t know how severe the winter will be. China has been reselling gas from Russia to Europe. The Europeans, however, have paid a high price for it, about four or five times higher in price than the five-year average. By the end of November, we need to pay close attention to European inventories. Europe will be in serious trouble in the coming years.
The Fed really wants to raise interest rates to kill demand and lower prices. When the November elections are done, they will stop selling oil from the SDR. With OPEC cutting supply, we could see a slingshot effect on price.
Steve believes we are at the beginning of something big in the precious metals markets. Those with metals will fare much better because it represents energy, and he cautions that you don’t want to be holding debt. A precious metals market unlike the world has seen before is coming. Focus on the energy because it will be the leading factor for the coming geopolitical and economic problems.
Time Stamp References:
0:00 – Introduction
0:43 – Capital Allocation
5:09 – Red Queen Syndrome
9:20 – Middle East & Oil Decline
11:52 – EIA – Hide the Decline
14:27 – Understanding EROI
18:02 – U.S. Energy Exports
20:04 – Dollar Endgame
24:35 – The Winter Ahead
30:32 – Energy & Foreign Impacts
32:35 – Precious Metals & Energy
39:04 – Institutions & Metals
44:10 – Wrap Up
Independent researcher Steve St. Angelo (SRSrocco) started to invest in precious metals in 2002. Later on, in 2008, he began researching areas of the gold and silver market that, curiously, most of the precious metal analyst community have left unexplored. These areas include how energy and the falling EROI – Energy Returned On Invested – stand to impact the mining industry, precious metals, paper assets, and the overall economy.
Steve considers studying the impacts of EROI one of the most important aspects of his energy research. For the past several years, he has written scholarly articles on some of the top precious metals and financial websites.
You can find many of Steve’s articles on noteworthy sites, such as GoldSeek-SilverSeek, Market Oracle, Financial Sense, GoldSilver.com, SilverDoctors, TFMetals Report, Outsiderclub, SGTreport, BrotherJohnF, Hartgeld, Der-Klare-Blick, PeakProsperity, SilverStrategies, DollarCollapse, FurtureMoneyTrends, Sharpspixley, FinancialSurvivalNetwork, PMBull, Deviantinvestor, PMBug, Wealthwire, and ZeroHedge.