Another Step Towards Collapse of the Petrodollar

By Rory Hall

Ken Schortgen, Jr., The Daily Economist, recently penned an article about Nigeria approving a currency swap agreement with China, stating,

It has been a little more than a month since China officially began offering oil futures contracts denominated in the Yuan currency, but early results continue to be positive for this contract to over time take more and more market share from the West and the Petrodollar.  And with Iran, Qatar, and even Venezuela having already agreed to buy and sell their oil in currencies other than the dollar, a new currency swap agreement signed on May 3 between Nigeria and China could mean that a fourth OPEC nation could also soon be leaving the Petrodollar.

The Central Bank of Nigeria (CBN) has signed a currency swap deal worth about $2.5 billion with the People’s Bank of China to provide adequate local currency liquidity for transactions between national businesses, The Punch newspaper reported on Thursday, citing a high-ranking official from the Central Bank of Nigeria (CBN). Sputnik News

The Daily Economist

For the past year and a half, a major topic throughout the alternative press has been the new Chinese oil futures contract settled/priced in yuan. The fact that China is directly challenging the Federal Reserve Note, U.S. dollar, is quiet a significant change. For those who have been paying attention, this new futures oil contract is nothing more than the next step in China moving completely away from the Federal Reserve Note, and the “world reserve currency” system and towards a multi-polar world with several currencies being used for international trade.

While China pursued currency swaps as far back as 1997, during the “Asian financial crisis,” none of the agreements were ever activated. That all changed with the global financial meltdown in 2008. China began actively pursuing, and instituting, direct currency swaps and even went so far as to open “Renminbi Clearing Centers” around the world including Canada, the backyard of the U.S.

Beyond the moderate progress in Asian regional financial cooperation, China has signed swap agreements with approximately 30 countries since 2008 (see Table 1). The People’s Bank of China (PBOC) stated that those swap agreements were intended not only to “stabilize the international financial market,” but also to “facilitate bilateral trade and investment.”

Table 1: China’s swap agreements and its counterparties

#	Countries	Signing Date	Swap Amount (RMB billion)	Trade volume (RMB billion)	RMB Clearing Center	RQFII
1	Belarus	May 2015	7	8.94
2	Malaysia	Apr 2015	180	652.66	√
3	South Africa	Apr 2015	30	401.25
4	Australia	Apr 2015	200	839.84	√	√
5	Armenia	Mar 2015	1	1.19
6	Suriname	Mar 2015	1	1.24
7	Pakistan	Dec 2014	10	87.46
8	Thailand	Dec 2014	70	438.29	√
9	Kazakhstan	Dec 2014	7	175.93
10	Hong Kong	Nov 2014	400	2,465.25	√
11	Canada	Nov 2014	200	335.01	√	√
12	Qatar	Nov 2014	35	62.60	√	√
13	Russia	Oct 2014	150	549.15
14	South Korea	Oct 2014	360	1,687.19
15	Sri Lanka	Sep 2014	10	22.27
16	Mongolia	Aug 2014	15	36.66
17	Switzerland	July 2014	150	367.42	√	√
18	Argentina	July 2014	70	91.28
19	New Zealand	Apr 2014	25	76.20
20	EU	Oct 2013	350	N.A.
21	Iceland	Sep 2013	3.5	1.37
22	Albania	Sep 2013	2	3.44
23	Hungary	Sep 2013	10	51.72
24	UK	Jun 2013	200	430.79	√
25	Brazil	Jun 2013	190	554.90
26	Singapore	Mar 2013	300	466.94	√
27	Ukraine	Jun 2012	15	68.43
28	Turkey	Feb 2012	10	136.79
29	UAE	Jan 2012	35	284.45
30	Uzbekistan	Apr 2011	0.7	28.00
31	Indonesia	Mar 2009	100	420.54
Total		–	3,137.2	10,747.2	–	–

CogitAsia

The chart above, from CogitAsia, was produced in 2015 and does include Japan, Nigeria or France — all of which are conducting direct currency swaps with China. All three nations bring something unique, economically speaking, to the table that will prove beneficial for both sides of the trade.

China now has direct currency swaps with more than 30 nations, including some of the largest economies in the world, like Japan, France, Australia to name but a few. This is all part and parcel to circumventing the world reserve currency system which punishes other nations, while at the same time strengthens the U.S. economy. What’s terrible for the rest of the world is awesome for the U.S.

China, along with a great many other nations, are ready for this system to change and balance the economic scale. When you announce to the world that your currency is someone else’s problem, the people who have the problem usually find a way to mend the problem and eliminate the situation creating the problem.

Even the gloomiest pessimists accept that a steep dollar depreciation would inflict more suffering on China and other Asian economies than on the United States. John Snow’s counterpart in the Nixon administration once told his European counterparts that “the dollar is our currency, but your problem.” Snow could say the same to Asians today. If the dollar fell by a third against the renminbi, according to Nouriel Roubini, an economist at New York University, the People’s Bank of China could suffer a capital loss equivalent to 10 percent of China’s gross domestic product. For that reason alone, the P.B.O.C. has every reason to carry on printing renminbi in order to buy dollars. NY Times

This is exactly where we stand today. China, along with Russia, understand this scenario all too well. These two nations, along with 30+ other nations, are making moves to be rid of the problem known as the Federal Reserve Note, U.S. dollar. Once this “problem” is corrected the U.S. economy will change dramatically. Inflation, and according to some economist like John Williams of ShadowStats, hyperinflation will rain down on the U.S. economy like the world has never seen or experienced before. At this juncture we can only hope cooler heads prevail and a major war doesn’t manifest to announce the coming change in our global monetary system.

Rory Hall’s site is The Daily Coin, where this article first appeared. Beginning in 1987 Rory has written over 1,000 articles and produced more than 300 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Silver Doctors, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Don’t forget to visit The Daily Coin and Shadow of Truth YouTube channels to enjoy original videos and some of the best economic, precious metals, geopolitical and preparedness news from around the world.

Image credit: TFTP

China Takes the Long View on Gold-Silver … and So Should You

By David Smith

A cursory look at Chinese history can convince you that China should not be underestimated when it sets its sights on a particular goal.

Even before Mao Zedong took over the reins in 1949, and the first Five Year Plan began in 1953, centuries of history demonstrated that long-term planning, while not always meeting expectations, is a core behavioral trait of the Chinese psyche.

And more often than not, it has enabled them to hit the mark.

Expect eventual success for the One Belt, One Road Initiative – the world’s largest construction project, estimated to cost $80 trillion dollars – linking the Asian mainland, (including Central Asia) with Europe via high speed rail, communications links and vibrant financial trading platforms.

And expect this project to be a major factor in bringing about what Doug Casey and others believe could become the greatest commodities bull-run that most of us now living are going to see.

The petro-yuan. A game-changer?

And oh, by the way, China recently officially launched a petro-yuan contract at the Shanghai International Energy Exchange. It marks the first time overseas investors have been able to access a Chinese commodity market – an oil futures contract – that can be settled, not only with U.S. dollars, but also Chinese Yuan, eventually a basket of currencies… and gold.

Asian Analyst, Pepe Escobar, sees clearly where this is heading, saying:

As the yuan progressively reaches full consolidation in trade settlement, the petro-yuan threat to the US dollar, inscribed in a complex, long-term process, will disseminate the Holy Grail: crude oil futures contracts priced in yuan fully convertible into gold…

That means China’s vast array of trade partners will be able to convert yuan into gold without having to keep funds in Chinese assets or turn them into US dollars… Still, the whole petrodollar edifice lies on OPEC – and the House of Saud– pricing oil in US dollars; as everyone needs greenbacks to buy oil, everyone needs to buy (spiraling) US debt. Beijing is set to break the system – as long as it takes.

Meanwhile, gold will continue rising to a level where, at some point, Beijing decides to set a conversion rate. When this “golden moment” arrives, the effects on global oil trade – and U.S. continued supremacy in this arena – will be profound. Mining Analyst, Byron King doesn’t mince any words about it. Says he,

China’s vast array of trade partners will be able to convert yuan into gold without having to keep funds in Chinese assets or turn them into U.S. dollars. It’s a straight-up way to bypass the buck. And what if Saudi Arabia – among China’s largest oil suppliers – agrees to accept yuan instead of dollars? It’ll be a bomb-down-the-funnel for U.S. dollar hegemony in the world.

Gold-for-Oil is just one element which will take precious metals to new all-time highs.

For the last several years, we’ve discussed many of these factors, about which readers can fully test their understanding by perusing scores of reports and essays archived here at https://www.moneymetals.com/news You can also find a steady stream of informative, relevant, actionable information on “The Silver Guru” David Morgan’s Blog.

Once this trend fully gets under way – sooner than most expect – the price you’re looking at for physical gold (and silver with its 90% directional gold-correlation price movement) will quickly recede in the rear-view mirror.

Here are just a few recent commentaries that should give you a sense of the structural changes in these markets, making them increasingly subject to explosive moves on the upside – without sending you an invitation to board the train beforehand.

The bottom line is gold is nearing a major bull breakout above $1365. That will turn psychology bullish and bring traders back in droves. Gold is rallying ever closer to new bull-market highs as evidenced by its massive multi-year ascending-triangle chart pattern now nearing a bullish climax. Today gold is only a couple percent below that decisive breakout, which will finally blast it back onto the radars of investors. – Adam Hamilton, Zeal Speculation and Investment

We see a massive base building in gold. Massive. It’s a four-year, five-year base in gold. If we break above this resistance line, one can expect gold to go up by, like, a $1,000. . . Doubleline CEO, Jeff Gundlach, the “Bond King”

With the growth of high-end consumption and the development in second and third-tier cities, the Chinese market will show its substantial demand, mostly unexplored, for physical gold, as more and more people start to realize gold’s stored and retaining values in the long term. – Song Xin, China Gold Association, April 18, 2018.

So how should you consider handling this situation?

Yes, we’ve been waiting “quite awhile” for this trend to get underway, creating fireworks for metals’ holders. And yes, a few people have become impatient, and actually sold back their metal – which may have taken years to accumulate. But just remember, it’s less a question of if, rather than when this all comes together.

Successful metals’ owners who have prospered since the beginning of the bull run in 2000, got there – and stayed onboard – by following a few sensible rules.

Does this look like an established trend? (Courtesy goldchartsrus.com)

They listen to the “experts” and pay attention to big changes, like the Chinese yuan-for-oil event we’re discussing here.

In addition, they look at what the charts tell them – that Asia continues to suck up gold and silver from the West like a proverbial vacuum cleaner. The Silk Road Gold Total Reserves Plus Demand chart nearby confirms this in spades. They touch base with risk tolerance, taking stock of their financial capability to participate. And acquire metal on a regular basis (without going ‘all in’ at any particular price point), regardless of that the price is doing that month.

They understand that profoundly positive things come to those who are patient, have a plan… and who then act on it. So, ask yourself today, “Am I willing – like the Chinese – to persevere for ‘as long as it takes"”?

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector observations with readers, the media, and North American investment conference attendees.

Here’s Why Gas Prices Are Skyrocketing Right Now

This report was originally published by M.K. Matthews on The Organic Prepper

Global economy and geopolitics are underpinning the oil price surge and gas prices are going up.

Who recalls the oil embargo of 1973? That was when the Arab-dominated Organization of Petroleum Exporting Countries (OPEC) announced they were cutting oil exports to the United States and other countries that provided military aid to Israel during the Yom Kippur War of October 1973.

In six months’ time, gas prices had quadrupled. Prices remained higher even after the embargo ended in March 1974.

But that could never happen again…Or could it?

The current members of OPEC are made up of twelve countries:  Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

Let’s look at some of the OPEC members and their current interactions with their friends, frenemies, foes, other random players, and the resultant alliances.

For weeks, tensions have been rising between Iran and Israel, It began in February when, according to Israel, an armed Iranian drone originating from Syria penetrated the Israeli airspace. Israel downed the drone, then attacked the caravan which launched the drone from the T-4 airbase deep in Syrian territory. An Israeli F-16 jet was brought down by a Syrian missile while over Israeli territory. At this point, Israel launched an extensive retaliatory strike on Syrian air defenses and Iranian forces in Syria. This all occurred in one day. It was remarkable because no Israeli plane had been brought down since 1982.

Two months later. seven Iranian Revolutionary Guard Corps were killed in an airstrike on a Syrian air base, which Iran blamed as being done by Israel. Mutual threats of retaliation have since been issued by both Iran and Israel.  Ultimately the conflict between the two countries depends on the fate of the nuclear deal. On May 12th Trump is anticipated to issue his decision on the deal.

Meanwhile, Iran is dealing with numerous internal issues. To name a few: a struggling economy, the worst drought in 25 years, increasing civil discontent, public demonstrations, and labor strikes. Last week Iranian President Hassan Rohani banned money exchangers from selling U.S. dollars and Euros. Travelers to nearby countries are limited to purchasing just 500 Euros ($615), while those traveling to more distant countries are limited to purchasing 1,000 Euros. Iranians may not hold more than 10,000 USD or 10,000 Euros.

In Israel, longstanding anti-Netanyahu demonstrations against government corruption have gained in size and sentiment. Saturday’s march in Tel Aviv numbered upwards of 4,000 people. Other more recently organized demonstrations, arranged by the Hadash party and composed of Arab Israelis, protested U.S. strikes on Syrian outside the U.S. Consulate in Haifa this weekend.

Meanwhile in Venezuela. Bloomberg outlines the catastrophic economic crisis:

“Venezuela, which holds the world’s largest oil reserves, has seen a steady decline in production amid lack of money for maintenance and exploration. Venezuela imports about 2 million barrels of heavy naphtha per month, and all of it comes from U.S. Gulf refiners, according to data compiled by Bloomberg.  The U.S. is leaning toward imposing oil-sector sanctions on Venezuela before the country holds April 22 elections that opposition leaders have vowed to boycott, according to a senior State Department official.  The official, who asked not to be identified discussing private talks, stressed that no decision has been made and the U.S. is still weighing the impact such sanctions would have on ordinary Venezuelans as well as on U.S. refiners that import heavy Venezuelan crude.”  (source)

A fire on the Libyan oil pipeline has dramatically reduced their output. Libya suffered a major fire on its major export pipeline that was attributed to terrorist activities this past weekend reducing their oil production from 300,000 barrels per day by at least 80,000 barrels per day. It is unknown how long it will take to make the necessary repairs.

Here’s the conclusion reached by OPEC.

OPEC has been meeting this last week and Reuters reported that a Joint Technical Committee meeting held Thursday found that the glut of global oil supplies has been virtually eliminated, citing two sources familiar with the matter.

“Industry sources have linked this shift in Saudi Arabia’s stance to its desire to support the valuation of state oil company Aramco ahead of the kingdom’s planned sale of a minority stake in an initial public offering.

The supply cut has helped boost oil prices this year to $73 a barrel, the highest since November 2014. Oil began a slide from above $100 – a price that Saudi Arabia endorsed in 2012 – in mid-2014 when growing supply from rival sources such as U.S. shale began to swamp the market. But the kingdom wants the rally to go further. Two industry sources said a desired crude price of $80 or even $100 was circulated by senior Saudi officials in closed-door briefings in recent weeks.” (source)

Some OPEC nations and their allies have pushed for the extension of the output curbs beyond  2018 and up to the middle of  2019, Iraq’s Oil Minister Jabbar al-Luaibi said last month in Baghdad.  (source)

But things are going well for Russia, China, and Qatar.

Bilateral relations between Russia and Qatar have been blossoming lately. This is very likely related to the blockade imposed by Qatar’s Arab neighbors. Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt, who collectively imposed a unilateral blockade on Qatar on June 5, cutting diplomatic ties and closing their land, air, and sea borders over Qatar’s alleged support for terrorism.

In response to the blockade, Qatar, the world’s top producer of Liquefied Natural Gas (LNG), diversified and expanded their opportunities and opened the door to tens of billions in income by selling LNG to China. They are planning on increasing production by 30% by 2024 to meet the demand of the Asian market. China has stepped up to do more business with tiny Qatar in other areas as well. (source)

Old alliances are dissolving and new ones are being created

Plans are being made. Are we just one more hurricane away from losing more of our domestic oil and gas production? Are global geopolitical tensions where they were in the 1970’s?

No, not yet, but there isn’t a lot of margin for error as the world plays a risky game.

Please feel free to share any information from this article in part or in full, giving credit to the author and including a link to The Organic Prepper and the following bio.

Daisy Luther is the author of The Pantry Primer: A Prepper’s Guide To Whole Food on a Half Price Budget.  Her website, The Organic Prepper, offers information on healthy prepping, including premium nutritional choices, general wellness and non-tech solutions. You can follow Daisy on Facebook and Twitter, and you can email her at daisy@theorganicprepper.ca</e

Syrian Conflict: Australia Could Run Out Of Fuel In 43 Days, Would Be ‘MAD MAX World’

Australia is at risk of running out of fuel in the next few weeks due to the ongoing conflict in Syria. The escalating situation in the war-torn country threatens to cripple the supply chains that keep Australia going.

While the International Energy Agency mandates that countries hold a stock reserve “equivalent to 90 days of net imports,” Australia only has 43 days worth of supply, the Australian reports. And that could be cut down even further if a global crisis threatens supply channels from places like the Middle East.

Low oil reserves and an over-dependence on imports is what’s driving Austrailia’s fuel concerns.  Defense Strategy and Capability at the Australian Strategic Policy Institute senior analyst Dr. Malcolm Davis says Australia’s fuel reserves would last “20 days at best” if supplies were cut off, News.com.au reports. “[Australia is] one of the few countries in the world that does not take our energy security seriously,” said Dr. Davis. “It would be a Mad Max world. Our society and our economy would begin to fall apart very quickly… [because] everything depends on fuel to make an economy run. It is very serious.”

The rather ominous forecast comes in the wake of major US-led strikes on the Syrian government. As tensions escalate and threaten to compromise international trade, this could prove dire for Australia: a nation that outsources its oil refining to such international locations as Singapore. “Instead of investing in refinement facilities here for refining fuel, the government has decided it’s cheaper to do it overseas,” said Dr. Davis. “The price they pay for that in a crisis is that China can interrupt flow to Australia [from Singapore] relatively easy and our economy falls apart.”

According to The Daily Mail UK, liberal Senator and former major general in the Australian Army Jim Molan agrees that “we [Australia] stand[s] in real trouble.” Speaking to 2GB on Monday Morning, Molan criticized the government’s passive approach to issues of fuel supply and energy security, calling it “a single point of failure for Australia.”

“The way that we seem to get around this is that we buy credits overseas which ignores the entire problem,” Nolan said. “Those credits say that if things go wrong we can buy from overseas, but hang on: our supply lines of communication by ship are likely to be either threatened or because of insurers nothing will come to us at all.”

Moreover, a chronic shortage of petrol, diesel, and aviation fuel could render the Australian military immobile, and in these times where rhetoric and tensions over a war are high, that could prove disastrous for the country.

China Moves to Neuter King Dollar in International Trade

By Stefan Gleason

Last Monday, the Shanghai International Energy Exchange launched the first futures contract for crude oil priced in Chinese yuan. It’s a major step forward in the process of international de-dollarization. Now Chinese and other international traders can buy and sell the world’s most important commodity in a liquid market without using U.S. dollars.

The “petro dollar” now faces the prospect of being rendered unnecessary as China – the world’s biggest oil importer – attempts to establish a “petro yuan.”

China is launching a pilot program to purchase oil from Russia and Angola (two of its top suppliers) using yuan. Russia and China share a common interest in trying to break the dollar’s dominance in global commodity trading.

The two powers have been among the world’s top gold accumulators in recent years, with some reports suggesting Russia is now also loading up on silver for the possible launch of a silver ruble. Russia and other emerging commodity supplier markets stand to be among the big beneficiaries of a weaker dollar, as does China.

That’s a view echoed by Frank Holmes, CEO and Chief Investment Officer at U.S. Global Investors.

Holmes told listeners of the latest Money Metals podcast,

When we went back over 20 years of data analysis, the emerging markets always do well with a weaker dollar. So, I think that bodes well for rising GDP per capita. And rising GDP per capita in China and India is very important for the love trade, which is 60 percent of all demand for gold, and also good for silver. So, I think from that end we could probably see this continuous buying like we’ve been seeing out of China.

The ability to sell oil for yuan, then trade yuan for gold in Shanghai, Hong Kong, or other regional exchanges bodes well for demand. Foreign sellers of oil to the Chinese don’t necessarily want to hold yuan per se, especially as China still imposes currency controls that prevent the yuan from being freely traded on international markets.

But an oil-to-yuan-to-gold pipeline could be good for everyone – that is, everyone except King Dollar.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, and National Review.

Image credit: The Anti-Media

In Unprecedented Move, China Plans To Pay For Oil Imports With Yuan Instead Of Dollars

This report was originally published by Tyler Durden at Zero Hedge

Just days after Beijing officially launched Yuan-denominated crude oil futures (with a bang, as shown in the chart below, surpassing Brent trading volume) which are expected to quickly become the third global price benchmark along Brent and WTI, China took the next major step in the challenging the Dollar’s supremacy as global reserve currency (and internationalizing the Yuan) when on Thursday Reuters reported that China took the first steps to paying for crude oil imports in its own currency instead of the US Dollars.

A pilot program for yuan payment could be launched as soon as the second half of the year and regulators have already asked some financial institutions to “prepare for pricing crude imports in the yuan“, Reuters sources reveal.

According to the proposed plan, Beijing would start with purchases from Russia and Angola, two nations which, like China, are keen to break the dollar’s global dominance. They are also two of the top suppliers of crude oil to China, along with Saudi Arabia.

A change in the default crude oil transactional currency – which for decades has been the “Petrodollar”, blessing the US with global reserve currency status – would have monumental consequences for capital allocations and trade flows, not to mention geopolitics: as Reuters notes, a shift in just a small part of global oil trade into the yuan is potentially huge. “Oil is the world’s most traded commodity, with an annual trade value of around $14 trillion, roughly equivalent to China’s gross domestic product last year.” Currently, virtually all global crude oil trading is in dollars, barring an estimated 1 per cent in other currencies. This is the basis of US dominance in the world economy.

However, as shown in the chart below which follows the first few days of Chinese oil futures trading, this status quo may be changing fast.

Superficially, for China it would be a matter of nationalistic pride to see oil trade transact in Yuan: “Being the biggest buyer of oil, it’s only natural for China to push for the usage of yuan for payment settlement. This will also improve the yuan liquidity in the global market,” said one of the people briefed on the matter by Chinese authorities.

There are other considerations behind the launch of the Yuan-denominated oil contract as Goldman explains:

• A commercial benchmark and hedging tool. Until now, Chinese oil imports were based on FOB benchmarks, with long-term procurement contracts settling off Platts Oman/Dubai or Dated Brent. The INE contract has therefore the potential to become the pricing reference for CIF China crude oil, enabling corporate financial hedging. Its warehouse structure is however likely to limit its use for physical crude delivery and may in fact at times reduce its hedge efficiency.


• A new investment vehicle for onshore investors. The majority of China commodity futures trading volumes are from retail investors, yet these had until now little ability to trade oil futures. China’s capital control was the main bottleneck  to trading contracts like Brent as authorities only allow $50,000 outflow a year per person. While several petrochemical and bitumen contracts already trade in China, INE will be the first contract for crude oil, likely drawing significant interest.


• Direct access to China’s commodity markets for offshore investors. China offers deep and liquid commodity markets to its onshore investors. Due to China’s tight capital controls, however, foreign investors have so far only been able to trade these through qualified onshore subsidiaries. The INE contract opens up the first channel for offshore investors to trade in its onshore commodity market, with both the USD deposit and capital gains transferable back to offshore accounts. The government further announced last week that it would waive income taxes for foreign investors trading these new contracts for the first three years. The obligation to trade in Yuan will also add a currency risk exposure to offshore investors. We illustrate in Exhibit 6 a likely template (amongst others) of how overseas investors will be able to access INE liquidity.

The danger, of course, is that such a shift would also boost the value of the Yuan, hardly what China needs considering it was just two a half years ago that Beijing launched a controversial Yuan devaluation to boost its exports and economy.

Still, in light of the relative global economic stability, Beijing may be willing to take the gamble on a stronger Yuan if it means greater geopolitical clout and further acceptance of the renminbi.

Which is why restructuring oil fund flows may be the best first step: as of this moment, China is the world’s second-largest oil consumer and in 2017 overtook the United States as the biggest importer of crude oil; its demand is a key determinant of global oil prices.

If China’s plan to push the Petroyuan’s acceptance proves successful, it will result in greater momentum across all commodities, and could trigger the shift of other product payments to the yuan, including metals and mining raw materials.

Besides the potential of giving China more power over global oil prices, “this will help the Chinese government in its efforts to internationalize yuan,” said Sushant Gupta, research director at energy consultancy Wood Mackenzie. In a Wednesday note, Goldman Sachs said that the success of Shanghai’s crude futures was “indirectly promoting the use of the Chinese currency (which, however as noted above, has negative trade offs as it would also result in a stronger Yuan, something the PBOC may not be too excited about).

Meanwhile, China is wasting no time, and Unipec, the trading arm of Asia’s largest refiner Sinopec already signed a deal to import Middle East crude priced against the newly-launched Shanghai crude futures contract, which incidentally is traded in Yuan.

The bottom line here is whether Beijing is indeed prepared and ready to challenge the US Dollar for the title of global currency hegemon. As Rueters notes, China’s plan to use yuan to pay for oil comes amid a more than year-long gradual strengthening of the currency, which looks set to post a fifth straight quarterly gain, its longest winning streak since 2013.

In a sign that China’s recent Draconian capital control crackdowns have sapped market confidence in a freely-traded Yuan, the currency retained its No.5 ranking as a domestic and global payment currency in January this year, unmoved from a year ago, but its share among other currencies fell to 1.7 percent from 2.5 percent, according to industry tracker SWIFT.

A slew of measures put in place in the last 1-1/2 years to rein in capital flowing out of the country amid a slide in yuan value has taken off some its shine as a global payment currency.

But the yuan has now appreciated 3.4 percent against the dollar so far this year, with solid gains in recent sessions.

“For PBOC and other regulators, internationalization of the yuan is clearly one of the priorities now, and if this plan goes off smoothly then they can start thinking about replicating this model for other commodities purchases,” said a Reuters source.

Still, it will be a long and difficult climb before the Yuan can challenge the dollar and for Beijing to shift the bulk of its commodity purchases to the yuan because of the currency’s illiquidity in forex markets. According to the latest BIS Triennial Survey, nearly 90% of all transactions in the $5 trillion-a-day FX markets involved the dollar on one side of a trade, while only 4% use the yuan.

* * *

Still, not everyone is convinced that the new Yuan-denominated contract will create a “petro-yuan” as the following take from Goldman highlights:

The launch of the INE contract is not just about oil, as it will also be the first Yuan denominated commodity contract tradable by offshore investors. Such a set-up meets the PBOC’s monetary policy committee goal to raise the profile of its currency in the pricing of commodities. It has raised however the question of whether the INE contract is an incremental step in achieving the currency reserve status for the Yuan. We do not believe so.

While the INE launch does represent an additional step in the CNY internationalization, the CNY denomination of the INE contract does not in itself imply CNY investments. The INE contract does not represent an opening of China’s capital accounts since foreign deposits operate in a closed circuit, deposited in designated accounts and not to be used to purchase other domestic assets. In practice, the collateral deposit and any capital gains can be transferred back to offshore accounts. The potential for greater foreign ownership of Chinese assets is therefore not impacted by CNY oil invoicing and would require instead oil exporters to recycle their proceeds in local assets, for example. The incentive to do this has not changed with the introduction of the INE contracts. In particular, most Middle East oil producers still have currencies pegged to the dollar and limited ability to hedge CNY exposure.

Whether or not Goldman is right remains to be seen, however it is undeniable that a monumental change is afoot in global capital flows, where the US – whether Beijing wants to or not – will soon be forced to defend its currency status as oil exporters (and investors in this highly financialized market) will now have a choice: go with US hegemony, or start accepting Yuan in exchange for the world’s most important commodity.

Unprecedented: China to Pay for Oil Imports With Yuan in Major Blow to Dollar

(ZHE) Just days after Beijing officially launched  Yuan-denominated crude oil futures (with a bang, as shown in the chart below, surpassing Brent trading volume) which are expected to quickly become the third global price benchmark along Brent and WTI, China took the next major step in the challenging the Dollar’s supremacy as global reserve currency (and internationalizing the […]

U.S. satellites reportedly catch China selling oil to North Korea

China has reportedly been caught supplying North Korea with oil despite already imposed U.N. Security Council sanctions which bar such action

(INTELLIHUB) — Spy satellites have reportedly captured photographs of Chinese oil tankers conducting illegal ship-to-ship transfers of oil with various North Korean vessels despite the fact that the U.N. Security Council has imposed sanctions on such activity.

The illicit activity is damning, to say the least, and could even be seen as an act of war after a resolution was passed in September.

Via chosun.com

©2017. INTELLIHUB.COM. All Rights Reserved.

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China Moves To Destroy US Dollar As They Launch The Gold-backed Petro-Yuan

By Matt Agorist

In a massive move against the global dominance of the U.S. dollar, China’s highly anticipated Petro-Yuan has been launched in Shanghai. With China being the world’s largest consumer of oil, this new currency is an international game-changer that was a predicted move by China to directly compete—and subsequently devalue—the US dollar.

Analysts call the plan, announced by Beijing in September, a huge move against the dollar’s global dominance – and reserve currency status.

The Chinese government reportedly plans to allow the crude oil futures contract priced in yuan to be fully convertible into gold.

As TFTP reported at the time, in addition to serving as a hedging tool for Chinese companies, the contract will allow for increased use of the yuan in trade settlement.

These contracts will thus enable China’s trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars, according to Bloomberg.

Essentially, the new benchmark will allow exporters, such as Russia, Iran or Venezuela to avoid US sanctions by trading oil in yuan that is convertible to gold – thereby negating the hegemony of the petrodollar.

On Monday, trading of the new oil futures contracts for September settlement started on the Shanghai International Energy Exchange at 440.20 yuan ($69.70) per barrel, reports Chinese daily the South China Morning Post. Some 18,540 lots have reportedly been sold and purchased so far.

As Bloomberg reports, the Petro-Yuan is a direct challenge to the dollar’s dominance. However, whether or not it will have an immediate effect remains to be seen.

Shady Shaher, head of macro strategy at Dubai-based lender Emirates NBD PJSC, says it makes sense in the long run to look at transactions in yuan because China is a key market, but it will take years. Bloomberg Gadfly columnist David Fickling argues that China doesn’t have “nearly the influence in the oil market needed to carry out such a coup.” On the other hand, paying in yuan for oil could become part of President Xi Jinping’s “One Belt, One Road” initiative to develop ties across Eurasia, including the Middle East. Chinese participation in Saudi Aramco’s planned initial public offering could help sway Saudi opinion toward accepting yuan, which is used in only about 2 percent of global payments.

Leading economist, Carl Weinberg, managing director at High Frequency Economics, goes even further, predicting a major paradigm shift. Weinberg told CNBC last year that China will likely “compel” Saudi Arabia to abandon the petrodollar, and instead, begin trading oil in yuan—a move he says is likely to precipitate the rest of the oil market following suit and abandoning the U.S. dollar as the global reserve currency.

At the BRICs summit last year, Russian President Vladimir Putin expressed Russia’s support for the Petro-Yuan to specifically challenge the “unfairness” of the US dollar’s global dominance.

Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.

As the respected journalist/geopolitical analyst Pepe Escobar explains: ‘to overcome the excessive domination of the limited number of reserve currencies’ is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

“It is more of a game changer for the US. As soon as other nations have a real credible alternative to the US dollar, they can dump dollars and switch to the yuan which can spark a dollar crisis. If that happens, not only will there be inflation from the tariffs, but also from the flood of dollars,” Ann Lee, Adjunct Professor of Economics and Finance at New York University and author of the book What the US Can Learn From China, said.

Matt Agorist is an honorably discharged veteran of the USMC and former intelligence operator directly tasked by the NSA. This prior experience gives him unique insight into the world of government corruption and the American police state. Agorist has been an independent journalist for over a decade and has been featured on mainstream networks around the world. Agorist is also the Editor at Large at the Free Thought Project, where this article first appeared. Follow @MattAgorist on Twitter, Steemit, and now on Facebook.

China Moves to Destroy US Dollar As They Launch the Gold-backed Petro-Yuan

China has just launched the petro-yuan, a gold-backed currency directly challenging the US dollar signaling the beginning of the end of the American greenback.

The post China Moves to Destroy US Dollar As They Launch the Gold-backed Petro-Yuan appeared first on The Free Thought Project.

China Is One Signature Away From Dealing The Dollar A Death Blow

This report was originally published by Brandon Smith at Alt-Market.com

If you leave your sliding glass door open, you might let in a stray cat, raccoon, or bugs without knowing it.

Some intruders are worse than others. All can be annoying. But let in a thief, who robs your home… and it only takes that one time to change your life forever.

The U.S. has essentially left their “sliding glass door” open, and on March 26 China is set to become the intruder that may very well deal a death blow to the dollar.

China Prepares Death Blow to the Dollar

On March 26 China will finally launch a yuan-dominated oil futures contract. Over the last decade there have been a number of “false-starts,” but this time the contract has gotten approval from China’s State Council.

With that approval, the “petroyuan” will become real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention.

This could be a death blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency.

But this isn’t just some slow, news day “fad” that will fizzle in a few days.

A Warning for Investors Since 2015

Back in 2015, the first of a number of strikes against the petrodollar was dealt by China. Gazprom Neft, the third-largest oil producer in Russia, decided to move away from the dollar and towards the yuan and other Asian currencies.

Iran followed suit the same year, using the yuan with a host of other foreign currencies in trade, including Iranian oil.

During the same year China also developed its Silk Road, while the yuan was beginning to establish more dominance in the European markets.

But the U.S. petrodollar still had a fighting chance in 2015 because China’s oil imports were all over the place. Back then, Nick Cunningham of OilPrice.com wrote…

Despite accounting for much of the world’s growth in demand in the 21st Century, China’s oil imports have been all over the map in recent months. In April, China imported 7.4 million barrels per day, a record high and enough to make it the world’s largest oil importer. But a month later, imports plummeted to just 5.5 million barrels per day.

That problem has since gone away, signaling China’s rise to oil dominance…

The Slippery Slope to the Petroyuan Begins Here

The petrodollar is backed by Treasuries, so it can help fuel U.S. deficit spending. Take that away, and the U.S. is in trouble.

It looks like that time has come…

A death blow that began in 2015 hit again in 2017 when China became the world’s largest consumer of imported crude…

Now that China is the world’s leading consumer of oil, Beijing can exert some real leverage over Saudi Arabia to pay for crude in yuan. It’s suspected that this is what’s motivating Chinese officials to make a full-fledged effort to renegotiate their trade deal.

So fast-forward to now, and the final blow to the petrodollar could happen starting on March 26. We hinted at this possibility back in September 2017…

With major oil exporters finally having a viable way to circumvent the petrodollar system, the U.S. economy could soon encounter severely troubled waters.

First of all, the dollar’s value depends massively on its use as an oil trade vehicle. When that goes away, we will likely see a strong and steady decline in the dollar’s value.

Once the oil markets are upended, the yuan has an opportunity to become the dominant world currency overall. This will further weaken the dollar.

The Petrodollar’s Downfall Could be a Lift for Gold

Amongst all the trouble ahead for the dollar, there are some good news too. The U.S. might have ditched the gold standard in the 1970’s, but with gold making a return to world headlines… we could see a resurgence.

For the first time since our nation abandoned the gold standard decades ago, physical gold is being reintroduced to the global monetary system in a major way. That alone is incredibly good news for gold owners.

A reintroduction of gold to the global economy could result in a notable rise in gold prices. It’s safe to assume exporters are more likely to choose a gold-backed financial instrument over one created out of thin air any day of the week.

Soon after, we could see more and more nations jump on the bandwagon, resulting in a substantial rise in gold prices.

After 8 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.

‘American Oil Memes’ Is the Best Thing on the Internet Right Now

(ANTIMEDIA) — Memes have become the fabric of everyday internet life, and while many are often silly or flat out stupid, every once in a while, a new meme craze provides potent social commentary. Last year, “If it pleases the crown” memes questioned the fundamental authority of government and mocked the widespread belief that we must […]

Mysterious Entities Secretly Stealing Billions from ‘Frozen’ Gaddafi Accounts

Billions in sanctioned Libyan funds from Muammar Gaddafi—meant to be given back to the Libyan people—are being stolen by secret interests from frozen accounts in Belgium.

The post Mysterious Entities Secretly Stealing Billions from ‘Frozen’ Gaddafi Accounts appeared first on The Free Thought Project.

“I Haven’t Eaten Meat In 2 Months” – Venezuelan Oil Workers Are Collapsing From Hunger On The Job

This report was originally published by Tyler Durden at Zero Hedge

Those who are unfamiliar with Venezuela’s unprecedented economic collapse might be surprised to learn that the country’s oil production has only slowed, even as the price of a barrel of crude has risen in most international markets.

Unsurprisingly (it’s Venezuela), there’s a macabre explanation for this phenomenon: The workers at PDVSA – Venezuela’s state-owned oil company, which once showered Venezuelans with oil wealth – are literally collapsing due to hunger and exhaustion as workers defy their government handlers and flee their jobs in their desperation as the value of their pay has been completely erased.

Bloomberg spoke with several workers in Venezuela’s oil industry about the harsh conditions they face on a daily basis.

Of course, oil workers aren’t the only ones suffering: The situation in Venezuela is getting so dire that ordinary Venezuelans are losing tons of body weight because of the food shortages. Many can no longer afford to buy meat.

One worker told Bloomberg about how his weekly salary barely pays for the corn flour he mixes with water and drinks every morning.

At 6:40 a.m., Pablo Ruiz squats at the gate of a decaying refinery in Puerto La Cruz, Venezuela, steeling himself for eight Sisyphean hours of brushing anti-rust paint onto pipes under a burning sun. For breakfast, the 55-year-old drank corn-flour water.

Ruiz’s weekly salary of 110,000 bolivares — about 50 cents at the black-market exchange rate — buys him less than a kilo of corn meal or rice. His only protein comes from 170 grams of canned tuna included in a food box the government provides to low-income families. It shows up every 45 days or so.

“I haven’t eaten meat for two months,” he said. “The last time I did, I spent my whole week’s salary on a chicken meal.”

Hunger is hastening the ruin of Venezuelan’s oil industry as workers grow too weak and hungry for heavy labor. With children dying of malnutrition and adults sifting garbage for table scraps, food has become more important than employment, and thousands are walking off the job. Absenteeism and mass resignations mean few are left to produce the oil that keeps the tattered economy functioning.

Researchers at three Venezuelan Universities reported losing on average 11 kilograms (24 lbs) in body weight last year and almost 90% now live in poverty, according to a new university study on the impact of a devastating economic crisis and food shortages. That annual survey has become a key barometer of the country’s economic stress since the government stopped releasing reliable economic data, as Reuters reports.

Per Reuters, over 60% of Venezuelans surveyed said that during the previous three months they had woken up hungry because they did not have enough money to buy food. About a quarter of the population was eating two or less meals a day.

After winning the presidency in 1999, leftist President Hugo Chavez was proud of improving Venezuela’s social indicators as the country’s economy was bolstered by oil-fueled welfare policies.

But his successor President Nicolas Maduro, who has ruled since 2013, has allowed corruption to flourish. And his political allies have mismanaged the economy to such a degree that the collapse in the price of oil during 2014 had ruinous consequences.

Even as the price of crude has begun to creep materially higher, the situation in Venezuela is only getting worse.

In contemporary Venezuela, currency controls restrict food imports, hyperinflation eats into salaries, and people line up for hours to buy basics like flour.

As a result, 90% of Venezuelans live in poverty.

In what appears to be a last-ditch effort to rescue the country’s economy and his regime, President Nicolas Maduro yesterday began sales of the Petro, Venezuela’s oil-backed cryptocurerency. The launch was so successful, Maduro has assured the public, that he is considering launch a “Petro Oro” – a cryptocurrency backed by gold reserves.

But perhaps even more shocking than the dire circumstances under which PDVSA’s remaining employees go to work every day is the contrast with the country’s prosperous past, as Bloomberg describes it…

For decades, PDVSA was a dream job in a socialist petro-state. The company supplied workers not only with a good living and revolutionary-red coveralls, but cafeterias that served lunches with soup, a main course, dessert and freshly squeezed juice. Now, the cafeterias are mostly bare, the children are hungry and employees are leaving to work as taxi drivers, plumbers or farmers. Some emigrate. Some hold out as long as they can.

…Now, instead of enjoying the trappings of a comfortable, middle-class life (not to mention freshly squeezed fruit juice), desperate employees are risking the government’s wrath – and possibly sacrificing their chance at a government pension someday – to escape not only from their jobs, but from Venezuela.

Those who quit without notice risk losing their pensions, as bureaucrats refuse to process paperwork. Many managers live in terror of arrest since the Maduro regime purged the industry, imprisoning officials from low-level apparatchiks to former oil ministers. In one human resources office, a sign advertised a limit of five resignations a day.

“Management is holding them back to stop brain and technical drain,” said Jose Bodas, general secretary of United Federation of Venezuelan Oil Workers. He estimates 500 employees have resigned at the Puerto La Cruz refinery and nearby processing facilities in the past 12 months – even though superiors have labeled them “traitors to the homeland,” a phrase that often precedes arrest. In the streets, families sell their boots and the red coveralls.

“They’re giving up because of hunger,” Bodas said. “They’re leaving because they get paid better abroad. This is unheard of, a catastrophe.”

In a nightmarish reflection of what life must’ve been like in some of the most poverty stricken areas of the Soviet Union, widespread adsenteeism is forcing those who stay behind to work long hours at the state’s insistence – without any additional compensation.

Sitting in the living room of his house, on his day off, Endy Torres says he has lost 33 pounds over the past 18 months. He shows his PDVSA identification photo as proof: a chubby-cheeked man, weighing 176 pounds.

Ten years ago, he joined the company expecting an ample salary and comfortable pension. Today, his 700,000 bolivars per month, plus a food bonus of 1.6 million bolivars (about $9.50 altogether) can’t fill the fridge at his grandmother’s house, where he lives.

About 10 people from his department resigned in January. There are 263 plant operators remaining and 180 vacancies at the Puerto La Cruz refinery, he said.

Absenteeism forces those who show up to work extra hours and burn precious calories. The lack of investment in equipment and maintenance has increased technical failures, almost all in the early hours of the morning, he said. When they occur, workers are too fatigued to act quickly, and accidents occur.

And the worst part of it all is: Even if oil prices make a surprise comeback, years of favoritism, corruption and – now – international sanctions mean it’s unlikely Venezuela’s oil industry will suddenly blossom once again: For those who stay behind, the formerly wealthiest country in Latin America will probably remain mired in poverty, for as long as it’s ruled by a corrupt autocracy.

Peter Schiff: In The Impending Collapse ‘Everything That Can Go Wrong, Will’

The impending economic collapse is hidden from most. People only see a rising stock market, not the negative underlying factors that will cause the whole system to crash.

The weakening of the U.S. dollar is just getting started, warned veteran market forecaster Peter Schiff, CEO of Euro Pacific Capital. “We have just begun a major, long-term bear market in the dollar,” he said, which should cause a spike in oil prices. He thinks oil will reach $80-$100 a barrel in 2018. The commodity currently trades at roughly $63 a barrel. Shiff focuses on oil as just one example of the inflation that will help collapse the dollar.

When the price of oil rises, it reverberates through the economy. Peter called it a gigantic tax hike for consumers. But the Fed is still worried prices aren’t going up fast enough and that they won’t hit the mystical 2% goal.

“They’re going to hit that out of the park. They’re going to be looking at 2% in the rearview mirror – in the distant rearview mirror. That is going to be the big story. They’re going to way overshoot and they’re not going to be able to do anything about it.” –Peter Schiff

Schiff also warns that the dollar’s decline is just getting starting.  He also says “everything that can go wrong, will.” We are not experiencing economic growth.  We are experiencing inflation.

“High inflation is not good for the dollar. By definition, high inflation means the dollar is losing purchasing power. If the dollar is losing purchasing power, that is bad for the dollar,” Shiff explains.

“If they [the public and investors] don’t think there’s going to be inflation, they’re wrong. Those expectations are totally wrong. People are ignoring what is going on in the currency market, what’s going on in the commodities markets, what’s going on in the bond markets. All of this stuff is flashing inflation – at least the way you measure it – consumer prices.” –Peter Schiff

 

Shiff continues with even more dire news. “We are very close to a major breakdown in the bond market. Now, I know the bond market has dodged a lot of bullets…so you could say ‘cryin’ wolf. Look how long the bond market has held in there. But you know what? It’s gonna hold up until it doesn’t. And when it breaks…this bond market is gonna unravel. The whole thing could unravel very, very quickly. This is what is so dangerous here. You have the bond market potentially about to break down, a major 30-year bull market about to unravel, you have the dollar getting ready to go over the edge of a cliff. “

Shiff also warns to not put your trust in the government or their bonds.

“Everybody belives the fed is going to shrink it’s balance sheet. Now, I don’t believe that but the markets believe it. Now, I checked the balance sheet on Thursday again. So far, it hasn’t shrunk at all. So there’s been no tapering.

The risk of a big drop in the bond market has never been this high. And what happens if the bond market tanks? That’s it. The stock market is gonna crash…there’s a massive crash coming. And if the fed is gonna panic, they’re gonna try to stop it.”

The feds will try to fix a stock market crash by not raising rates, which will lead to the imploding of the dollar.  Everything that can go wrong, will.

“I don’t know if this is going to unravel very quickly.  But it is close,” Shiff warns.

Liberal Michael Moore Is So Angry About Destruction Of Environment, He Plans To Destroy The Environment In Protest

The hypocrisy of wealthy liberals knows exactly zero bounds. Rich and whiny liberal, Michael Moore, is so upset about the destruction that’s been done to the environment, that’s he’s planning to destroy the environment to make a point.

And no, this is not a joke. According to Newsmax,  the infamous liberal filmmaker (who has gotten rich by exploiting other liberals) has threatened to begin fracking off the Florida coast.

We are back on the air in September — in prime time! “Michael Moore LIVE FROM THE APOCALYPSE!” Our fracking off the coast of Mar-a-Lago begins right after Labor Day. I’ve already got the rig — a beautiful Halliburton G-0008 fracking system with a monster Caterpillar engine! https://t.co/riUn0QgvkG

— Michael Moore (@MMFlint) January 6, 2018

His anger appears to be directed towards president Donald Trump, as Moore said the fracking will take place off the coast of Mar-a-Lago, which is Trump’s resort in Florida. Long opposed to everything Donald Trump has said and done, Moore took to Twitter to openly protest the administration’s decision to open nearly all U.S. offshore waters to drilling for oil and natural gas. Interior Secretary Ryan Zinke announced a plan Thursday, reversing protections in the Arctic, Atlantic, and Pacific.

The administration believes the proposed territory holds some 90 billion barrels of oil and 319 trillion cubic feet of natural gas, or reserves that are about 80 percent larger than is currently available. “Under President Trump, we are going to become the strongest energy superpower this world has ever known,” Interior Secretary Ryan Zinke told reporters.

This announcement angered Moore and his liberal hypocrisy quickly came to the surface. In other words, he’s going to protest the destruction of the environment by destroying the environment.

Here’s our fracker! We’ll be drilling right off the coast of Mar-a-Lago. God Bless You Donald Trump for making this possible! The oil we drill just off your beach will pay 4 our entire show! And any spills – we’re going to let the ppl of Florida keep whatever they collect 4 free! pic.twitter.com/iGq2f1Gi33

— Michael Moore (@MMFlint) January 6, 2018

Moore is also all but saying he’s planning an oil spill, something that has disastrous effects on the environment. But Moore’s a liberal hypocrite, so in his mind, to protect the environment, he has to help destroy it.

Zinke said the draft National Outer Continental Shelf Oil and Gas Leasing Program for 2019 to 2024 would make over 90 percent of the outer continental shelf’s total acreage available for leasing, including areas put off-limits by the Obama White House.

However, there may already be a kink in Moore’s plan to frack of the coast of Florida. Florida Republican Governor Rick Scott immediately opposed Zinke’s plan, saying that he had asked to meet with the secretary to discuss “the crucial need to remove Florida from consideration.”