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Bloomberg/John Authers/3-10-2020
“In the meantime, this will put immense pressure on anything that benefits from a high oil price. An immediate effect will be on the U.S., which has profited from the shale oil boom. The economics of that industry now come under threat — which is precisely the purpose of allowing prices to drop so far. Shale operators tend to be heavily leveraged and so now face a great risk of bankruptcy, which will hurt banks, and credit investors.”
USAGOLD note: Bloomberg reports that the Trump administration may be readying a bailout of the oil shale industry following Monday’s 30% drop in the price of oil. On Tuesday oil recovered somewhat, but things still look shaky in the oil patch. Gold gets a mention is this highly recommended opinion piece. “Normally,” says Authers, “when people are scared, they seek sanctuary in dollars … That isn’t happening this time, at least so far. The dollar has fallen to its lowest versus the Japanese yen since 2016, while gold has topped $1,700 per ounce for the first time in 12 years.” Authers, as the title suggests, thinks major adjustments in global monetary order may be in the offing.