Warning: Markets Reaching Extreme Leverage

While inflated asset values allow governments to collect more taxes, they still aren’t enough to keep the economic and financial systems from collapsing. Yes, I know I am a broken record, but the FUNDAMENTALS DON’T LIE…. only humans do. So, a lie or a Ponzi Scheme can continue for quite a while. A perfect example is the Bernie Madoff 20-year Ponzi Scheme that defrauded investors by $65 billion.

If the Fed and Central Banks lose control over the markets (yes, they will), then the ensuing collapse will make 1930’s Depression and the 2008 economic meltdown look quite tame indeed. As I have mentioned in several interviews, when the markets were crashing in 2008, the U.S. Oil Industry was still in relatively good shape. However, today the shale energy industry has debt up to its eyeballs and two-thirds to three-quarters of the shale energy companies are losing money:

The chart above by energy analyst, Art Berman, shows that the majority of U.S. shale energy companies lost money in the first three quarters of 2017. While Chevron, ConocoPhillips, and Statoil made money, they are not heavily invested in shale oil or gas as are the companies are shown in the RED.

Lastly, the oil price is getting ready to experience one hell of a correction-crash as the Commercials hold the largest number of net short positions in history. Furthermore, the NYSE margin debt and the Volatility Index are at extreme levels. This has allowed the stock prices of many companies to surge to completely insane prices.

While the leverage in the market will move from extreme to outrageously extreme before it crashes, the timing of this event is not years or decades away as some more wishful thinking investors have deluded themselves into believing. Huge market corrections are normal, and stock market crashes have occurred many times in the past.

However, the present leverage in the market is now beyond bubble territory. When the markets finally crack, if you own some physical gold and silver, you will be one of the few 1% that will have protected your wealth as most individuals watch their investment bubbles pop.

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Cynthia Decker 2 years ago Member's comment

Good article, very well done. Interesting comparison between $UNH and $BITCOMP. But I'd say the former is a far safer bet. Plus #bitcoin has been crashing for the past month.