Thread by @RonStoeferle

I have just re-read Zoltan's piece called "Oil, Gold, and LCLo(SP)R"....Here's my little summary:

Regardless of fundamentals, global banking reserves are not in danger of a liquidity crunch or default. This is because there are enough emergency backstops in place to essentially bail out anyone that gets into trouble by printing more reserves.

This is not the case in energy markets. Global demand for oil exceeds supply. The US and OPEC+ do not produce enough oil to supply the west. The Biden administration has been relying on the SPR to artificially lower oil prices and meet demand.

But the SPR is not infinate and will need to be refilled soon. Indian refiners are arbitraging Russian oil by refining it and selling diesel to the west, fulfilling the same role as energy traders in the 70's.

Putin is not oblivious to this and will not allow this to continue indefinately. The $60/barrel price cap for Russian oil is equal to +- 1 gram of gold. It would be a smart move by Putin to offer 2x barrels for 1 gram of gold. This would ensure that more oil goes to Europe and

less to the US through India, it would also revalue gold to $3600 overnight, which would increase the value of Russian gold reserves. This is improbable but not impossible if taken into account the unthinkable macro scenarios we have witnessed this year....

#Zoltan #ZoltanPozsar #SPR #Gold #Revaluation #Oil #Putin #GoldforOil