The ISM survey of national manufacturing conditions for September was a strong 59.4. A reading above 50 represents growth.
This is very good news as it is post-Katrina data and shows that national conditions remained upbeat even immediately after the hurricane.
This was up from 53.6 in August and above expectations of a 52.0 reading. The new orders and employment categories both rose from August.
This data shows indicates that Katrina had very little national impact on manufacturing in September.
In other news, August construction spending was up 0.4% after a 0.3% gain in September. This is also good economic news but the market will pay far less attention to this data.
This news is causing a sharp decline in the price of bonds. The 30yr yield is now over 4.62%. This looks like it may be convincingly breaking the 200 dma and price resistance. Perhaps interest rates may finally begin to rise. This will strengthen the dollar and hurt metals prices. Couls also be some fireworks in the stock market in coming months. Hold on to your hat!!!
Last report I read was that manufacturing and retail were down. But I guess one can always find a report to refute any claim out there.
Perhaps interest rates may finally begin to rise. This will strengthen the dollar and hurt metals prices. Couls also be some fireworks in the stock market in coming months. Hold on to your hat!!!
This misconception has been tossed out and around the past few years that now it is assumed to be a fact. I disagree.
Higher interest rates will certainly not strengthen the dollar but only further weaken it. As interest rates rise, and they will, the dollar will fall. At some point the interest rates will be high enough to stop the selling of the US dollar and begin a long term swing the other way. Higher interest rates are long-term positive for gold just as they were in the late 70's. The only way to stop the upswing in gold is to raise interest rates higher and higher to offer worthwhile alternatives to investors. Right now interest rates are still below the actual rate of inflation and offer a net NEGATIVE return. The FED is way behind the curve here. It will take interest rates a few % above the rate of real inflation to entice buyers (8-10% would do right now).
Even as interest rates rise, that will not stop gold nor commodities in their tracks. It's a slow process of slowing momentum. Interest rates for years in the 70's and it did nothing to slow PM's until rates were well into double digits.
Higher interest rates plays into the hands of gold and rare coins. It will take a recession to stop rare coins. I don't think a recession would slow gold because it will still have the upper hand over the dollar for some time. Stocks could have some fireworks alright, but in which direction? Very few indicators are pointing up at this point.
Interest rates are up a few percent over the past few years and what has that done to the price of gold? This taken from Jim Sinclair's website article today:
So as currently presented, US financial managers intend to peddle US federal paper to people who are fed up financing the US, producing a backlash that no one really expects. More federal paper means more dollars. More dollars mean more supply on the market as interest rates rise as a direct result of smaller and smaller purchases by non-US interests of the much bigger supply of US Treasuries for sale.
The classical result that will happen by mid 2006 is:
1. A sharply lower US dollar.
2. Sharply higher interest rates.
3. Former Chairman Volcker's prediction that we would have a financial crisis within the next five years (one more year to go) could actually unfold tomorrow.
I do agree to some extent with most of what you write. I have a very(VERY) short term perspective of market movements. I am neither a bull nor a bear. I trade stocks on a daily basis based on todays news. I have no idea what will happen in 5 years nor does anyone else. Yesterday the dollar had a nice rally and gold fell. Today the dollar is down slightly and gold is up slightly. There is a corrolation.
I believe in the short term a rise in interest rates could provide a spark for the stock market as money tries to find a new home. However, rising interest rates have never been particulary good for the stock market on a longer term basis. Thats why I think we are in for quite a ride.
If we want to discuss intermarket relations then we should be looking at Japan. Their stock market appears to be breaking out to the upside. It has been a laggard for the last 15 yrs so that why the relative outperformance should make everyone take notice. Japan has been a HUGE deflationary force in the global marketplace. This may be ending. The era of historically low interest rates my be coming to an end. This should not be read as the end of the world, just that investment philosophies may need to be revisited to take advantage of changes. Here are a few charts of interest.
The first shows the relationship between the Jananese stock market and the US 5 yr interest rates. The second of Japan and gold.
<< <i>“Those people never considered moving to a cheaper place?”
O.K. so where does everyone think that people should move to? Where are the retiring baby boomers going to move to?
It looks like Florida and the Gulf Coast are going to get hit with several hurricanes a year for the next two decades:
California is taxed to death with rampant inflation in everything but food, which is only going up 3% per year, so you can have lunch but you can’t stay:
LA may be a mess for years:
So if Americans are going to continue their migration patterns, in particular in retirement, where will they go? >>
The Desert Southwest, in particular AZ and NV will keep getting an increasing share of retirees. for the latter, water will loom larger and larger (AZ too, but for awhile they will just divert their CO river alotment from agriculture to household use-NV cannot do that to the same extent as ag uses make up a smaller part of their river water) GA, SC and NC are "the new FL" for retirees. within CA (and don't forget that 1 in 8 Americans is a Californian), folks will both retire to neighboring western states, and move from expensive areas such as coastal SC and the bay area to the high desert and Sierra foothills. Don
Please dont bother with Oregon. It rains all the time, there is no work, the people are poor, all the house's are shacks and we have lots of drive-by's and car jackings...its the arm pit of the USA
You Should Be Afraid of the Boom in Muni Bond Sales:
During the first three quarters of 2005, states and localities sold $309.5 billion in bonds, according to the Bond Buyer newspaper, the most ever during the first nine months of a year.
To put that in context, muni bond sales have crossed the $300 billion threshold just three times, and that was for the full year -- in 2002 through 2004. The record was set in 2003, when $384 billion in bonds were sold.
During the first nine months of 2005, bond sales have averaged $34 billion a month. If that pace holds up for the rest of the year, traditionally a period of heavy issuance, then we could be looking at a total of $411 billion.
That's good news for the people who underwrite bonds, and insure them, and rate them. Whether it's good news for the taxpayers who have to repay all this debt is another matter.
They're using this borrowed money to build things with long lives such as roads, bridges, schools and sewer systems. They have been refinancing their more costly debt. This is a good thing?
Perhaps, though, other forces are at work here, a little dark, a little sinister.
Maybe we're seeing this boom in issuance because states and municipalities are refinancing bonds they sold only years or even months before. Perhaps what's going is nothing more than churning, deals being done just to get deals done, restructurings and refinancings being put together with very little regard for actual savings.
Issuers, for their part, are risk-averse, some would say unduly risk-averse when it comes to considering the direction of interest rates.
If a study of refundings would be interesting, so would a survey of how many issuers out there have the resources to analyze all the ideas Wall Street brings to them suggesting they tinker with their existing debt. If I had to bet, I'd say the answer is the same as the number of issuers who have the ability to figure out the derivative products they are pitched by these same bankers: not many.
To judge from the binge in bond sales we've seen this year, it doesn't look like many people are asking critical questions, or asking many questions at all. To paraphrase Benjamin Franklin's Poor Richard, it looks like we are all borrowing in haste; we will all repent in leisure.
“I'd like to know if there is anybody bored enough to read this entire thread?”
agentjim007
Nobody wants to read this whole thread, it would scare the H-LL out of them.
I don’t think this really matters, all this means is that there will be NO filings next year?
By Caroline E. Mayer Washington Post Staff Writer Wednesday, October 5, 2005; Page A01 Two weeks before a new, more restrictive national bankruptcy law goes into effect, financially strapped Americans are rushing to file for protection from their creditors, with filings climbing to an unprecedented average of 13,000 a day last week. Week after week records are toppled. Last week's 68,287 filings surpassed the record set the week before by 24 percent, and this week's total is likely to be higher, according to data released yesterday by Lundquist Consulting Inc., a financial research firm. Daily filings averaged 10,367 in September, compared with an average of 6,079 in September 2004.
Cohodk; Thanks for sharing the graphs. It seems to provide a lot of food for thought since it would seem the correlation is so strong between these apparently unrelated things as to imply they are essentially the same entities.
A lot of you guys seem to be mistaking inflation for economic "growth" or a "strong economy".
The only thing the U.S. manufactures these days are paper dollars.
I hope the folks btching and moaning on this thread are doing something productive with their lives to help and aren't just being negative.. I believe many hard working Americans would dispute your idiotic second sentence above.
I have to leave for work now (manufacturing cancer medicine) but I'll ponder your comment while I drive on new roads and pass several construction projects, new housing, and many businesses making products and creating value for our people. Maybe I'll buy something manufactured in America on my way home
Life can be good but it is up to the individual to make a difference. The government isn't God.
Yeah, Bailey...I'm with you. Two articles in the news last week (can provide links if challenged) discussed the fact that there are one million millionaires now in the U.S., more than any time in history and the other is that there are now one million homes worth one million dollars or more...
<< <i>Yeah, Bailey...I'm with you. Two articles in the news last week (can provide links if challenged) discussed the fact that there are one million millionaires now in the U.S., more than any time in history and the other is that there are not one million homes worth one million dollars or more...
Man, it's just hell out there. >>
Yes there's a million millionaires out there but how many are buying houses with no money down to rent and it's all on paper? I'd say a whole lot and if the market turns around they'll lose everything. Too much hype in the ecomony today IMO.
How many lost half their wealth in the last little stock market correction? A whole lot.
Many people get rich and go broke and come back again, it's just part of playing. One thing I do know is the truthfulness in that old saying..."All things come to he that waits, especially if he works like hell while he's waiting." Sitting around and carping about every rumor or prognostication and drawing dubious conclusions just gets people stirred up. It is much different than making some conslusions and providing some kind of plan as a response...such as...dollar is weak so maybe I will stabilize my wealth by putting money in a stable asset instead of playing the markets...that's kind of a no brainer. So what good comes from saying that the market is flooded with US dollars and only doom will follow...it is sufficient to acknowledge that the market is flooded with dollars...what should the individual do to protect himself? would be a more useful response.
<< <i>A lot of you guys seem to be mistaking inflation for economic "growth" or a "strong economy".
The only thing the U.S. manufactures these days are paper dollars.
I hope the folks btching and moaning on this thread are doing something productive with their lives to help and aren't just being negative.. I believe many hard working Americans would dispute your idiotic second sentence above.
I have to leave for work now (manufacturing cancer medicine) but I'll ponder your comment while I drive on new roads and pass several construction projects, new housing, and many businesses making products and creating value for our people. Maybe I'll buy something manufactured in America on my way home >>
You don't get it. I meant manufacturing as in exports. Ever check the latest numbers on the trade deficit? It ain't pretty.
As far as bogus fiat paper dollars go, why do you think the price of gold and silver are going up? The foreigners are losing faith in U.S. paper and are bailing out as I post this.
And where are you gonna find something made in the U.S.A.? Walmart? Last time I looked mostly everything they have on their shelves are made in China. Get a clue before you start ranting and raving.
<< <i>...there are one million millionaires now in the U.S., more than any time in history... >>
There are more millionaires now in the Philippines than anytime in history...Hmmm...How about South Korea? Indonesia? Germany? Let's go even further, up until the end of last year, literally everyone in Turkey was a millionaire. What is the common denominator?
You guessed it, the ever-inflated fiat currency. Guess what? In the next decade there will be more millionaires and the decade after that and so forth.
“There are more millionaires now in the Philippines than anytime in history...Hmmm...How about South Korea? Indonesia? Germany? Let's go even further, up until the end of last year, literally everyone in Turkey was a millionaire. What is the common denominator?
You guessed it, the ever-inflated fiat currency. Guess what? In the next decade there will be more millionaires and the decade after that and so forth.”
Excellent Mark
Don’t forget China and the population changes!
“I hope the folks btching and moaning on this thread are doing something productive with their lives”
Baley,
I sincerely believe as a group of mostly Americans the folks on this forum are about as prepared as any group in the country. So we are really not preaching to each other, but making comments about what is happening all around us.
As far as your following statement,
“The government isn't God.”
This is exactly what we talk about here every week, problem is that no one told the guys in Washington, or all these State capitals that.
Looking at New Orleans will give you a good idea of how dependent huge parts of our populations are in our major cites. They rely on governments of every kind to take care of their every need. This was one storm, and hundreds of thousands of people knew how to do nothing, but hold out their hand waiting for some government to fulfill their needs.
What happens when the Bird Flu Pandemic comes?
RR I meant to tell you I really enjoyed reading the The Long Emergency post you made. This gentleman has been doing some concentrated thinking!
Good point. There may be a million millionaires out there now but when inflation is properly corrected out, you'd probably have a similar number as there were 15 or 25 years ago. The money supply has increased 4X since 1980. I would expect the # of millionaires to have increased by at least that amount. $250,000 was in 1980 as $1,000,000 is today.....and $50,000 in 1913.
As the standard of living in China increases, and they can afford more and more of their own good, there will be less need to export them here for such a cheap price. The cheap imports are really the only thing that has been keeping our standard of living intact. If and when that goes away it will be a severe blow to everyone's income.
Below is a chart of oil. The are a number of indicators that show oil got tired about a month ago. The key here is support at the $62.50 area. A break of support will take the price to the 200 dma and support near $56. My opinion is oil will be there before Thanksgiving and possibly Halloween. Will it then be time to buy?
You day traders and brokers hyping that what people are seeing isn't really so Take it to the bank from someone in this business for almost 30 years, oil not being replaced by any oil company unless there in a high risk area(s) (BP). Were at peak oil and in the next 3 to 5 years were at $100+ bbl and $4 to $5 buck a gallon at the mininum. Think long term people or your getting stuck just like 2000 when the stock market corrected and all the brokers were still hyping there ware to make a buck.
I hope your right and I'll buy another 30 to 40k worth if it drops enough but it doesn't seem your recent post of the stock market is posed to exploed is going to well right now.
So what are we northeasterners who depend on heating oil to heat our homes supposed to do this winter?
My fuel oil company STILL has not promised us a price capped price. They are waiting to the bitter end to see if they can get a lower price.
Get one of those more modernized kerosene heaters and huddle back into one or two rooms? I once did that in the early 80's. Or buy wood and heat my fireplace as I once did? Or put in a coal stove into my fireplace as an insert? Or just a coal stove inside my family room? I already use a set back thermostat with three zones and keep most of the house quite cool. We use lots of sweaters and sleep with night caps.
I have a relatively small bi-level home 44x28 bi-level.
I am willing if I can do it to pad my coin budget?
I never said the stock market would explode. I said there would be fireworks and you better hold on to your hat. So far I think I'm doing pretty well. For the record I said about a month ago that oil would hit the mid 50's before the end of the year. It is in one of these threads somewhere. I will stand by that prediction.
I was hunting in Manitoba a few weeks ago and met a fellow who works on an oil platform in the Gulf. I asked him if oil should be priced so high. His answer in a Texas drawl..."Hell no!!" His son in law is a driller in Alaska. His observation was that there is plenty of oil.
I believe oil prices are completely driven by hedge funds. There is a tremendous amount of money and limited investment choices. These funds chase performance. They all move on the same assets at the same time. This causes artificially wide trading ranges. IE-- Prices go higher and lower than they should. Just think if these funds discovered the precious metals market!!
Oreville,
I got a letter from my oil company yesterday saying they would not be able to offer price caps.
I wouldn't put too much stock in a rig hand there known for their braun not there brain. I worked for a major at the research level for 22 years and I've seen the data. But I wouldn't be surprised if it did fall because of he hype, oils are good in a falling market but they'll fall too in bad times it just gives you a little more time than your typical mutal fund.
So is the market going up or down, I'm still in oils and metals mutal funds but have a lot of cash for the drop. I tend to look at Buffet, Gates, and Saros on this one. The central banks may only have half the gold they claim and when they sell it's being purchased by China, India, and Argentina among others. The games about over IMO. The ecomony looks good because of cheap interest rates where no one owns their home anymore. They tend to refi when it's value goes up to to buy vacations, cars, and toys. They don't understand that if the market drops 40 to 50 percent the bank will make a call rather your paying your morgage or not. May as well play the commodies on a day trader basis IMO.
Raw materials, defense, Cash, and maybe medical stocks are the best in theses times.
Research at the majors got hammered again and again in the 1980's and 1990s. When were you in it? >>
Actually Amoco was one of the best durning those times and were brought out by BP which brought other companies reserves and stripped all the research out when oil and their stocks were cheap. The reason it was bad times was easy oil was over but they had cash to spend. It's a lot harder today without going to unstable areas. Then you have to get it out by building high $$ pipelines and corupt goverments.
I was in Alaska for much of the 80's and part of the 90's with Russian and North Korean gun boats checking out our rigs in the Bering Sea. Camera's on them in case there was an issue. BP is living off of good assets purchased from Amoco. Arco, and Standard Oil of Ohio, not anything there finding today.
The current administration has temporarily eased some supply issues by releasing oil from the strategic reserves. Once this is backed off there ought to be a corresponding move back upwards for gas prices, etc.
There really is no solution for fuel prices this winter. People are going to get cooked, that's all there is to it. I don't see why it should improve any over future winters either.
"You guessed it, the ever-inflated fiat currency. Guess what? In the next decade there will be more millionaires and the decade after that and so forth."
Actually, that is pure speculation. The great depression reduced the number of millionaires by a good number, as did the dot.com bust, as will other events that may lie in our future...time does not make a millionaire and the ultimate test is that you still must get the buks into your holdings to count. Just because there are more buks or any type of currency floating around doesn't necessarily mean there are more millionaires.
And then there's Turkey...as follows: "literally everyone in Turkey was a millionaire. What is the common denominator? "
"Number's up at last for Turkey's lira millionaires
MERIEL BEATTIE IN ANKARA
TURKEY was a land where almost everyone was a millionaire - until today.
In the country with the dubious distinction of having the highest-denomination bank- notes in the world, one million lira was worth a mere 40p.
Monthly wages were paid in billions, the state budget was calculated in quadrillions and cash registers and calculators had to be adapted to cope with the baffling ranks of zeroes.
But at midnight last night, all that was to change. "
Did you all hear about the suicide bomber that killed himself during the OU/KSU game? It now appears he tried to get into the stadium twice but was turned away because he wouldn’t let them search his backpack. They’ve now said he attended a mosque in Norman and they’ve taken in 3 Middle Eastern students for questioning…These are interesting times. Events like this would have shocked the nation if he’d made it in and killed a bunch of fans.
I agree with cladking -- interesting graphs on correlations with Japanese equities.
The five-year treasury yield is particularly interesting, and seems to provide a striking confirmation of intuition -- ie, the Japanese are extremely influential players in the US treasury market, and are moving positions between treasuries and local Japanese equities. When they favor equities, the price of US treasuries falls, so interest rates rise, and vice versa.
Gold may be less correlated than it looks at first glance from these graphs, since our eye tends to go to the latter part of the graph, where both gold and equities rise. Prior to that, there seems to be considerable independence.
<< <i>The current administration has temporarily eased some supply issues by releasing oil from the strategic reserves. Once this is backed off there ought to be a corresponding move back upwards for gas prices, etc. >>
The other reason for the downward movement is that demand fell. I also read were bike sales are going crazy. As gas prices continue increasing demand will fall, people may even start getting rid of their gas sucking SVU's.
<< <i>The current administration has temporarily eased some supply issues by releasing oil from the strategic reserves. Once this is backed off there ought to be a corresponding move back upwards for gas prices, etc. >>
The other reason for the downward movement is that demand fell. I also read were bike sales are going crazy. As gas prices continue increasing demand will fall, people may even start getting rid of their gas sucking SVU's. >>
Of course. This in not an inelastic thing we are dealing with. Oil prices have risen dramatically many times in the past. This time is no different. Just the numbers are higher and after inflation it is all relative.
I wouldn't put too much stock in a rig hand there known for their braun not there brain
In many cases I trust the guy in the field more than the pencil pusher. The scientist geeks said oil would run out 20 years ago. I'm still waiting.
Gold is incredibly underpriced compared to oil and most other things (including the dollar). Lots of catching up still to do.
Considering that since we came off the gold standard in 1971, the money supply has increased by 13X since then. Just based on $35 gold x13 you would get $455/ounce. But this is a foolish approximation considering that gold was not allowed to "rise" in market value from 1934 to 1971. One could easily come to the conclusion that gold ought to be at $700-900 today just to account for the M3 increase and what gold should have been valued at in 1971 to account for the previous 37 years of inflation. There is no doubt in my mind it has been "managed" very well by the FED, Central Banks, JPM, GS, and others. Considering that M3 has increased 4X since the gold peak of 1980, you could forecast a gold spike as high as 4x$875=$3500 based on what gold has done over the past 35 years.
Of particular note on the graph (2nd page or so) is the increase that occurred in 1996 and has added 1 trillion dollars to the money supply every year since. Yowser. Pure Nasdaq fuel.
I don't know which analysts have predicted oil to run "out" by now but the study by Hubbert in 1956's predicted peak US oil by the late 60's or early 70's. It occurred in 1970. It would not seem unreasonable to me that world peak oil is around the corner since all the Saudi's major wells are over 20 years old with no major discoveries since. One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
Fed's Fisher Says `Inflation Virus' Must Be Stopped Oct. 6 (Bloomberg) --
Federal Reserve Bank of Dallas President Richard Fisher said policy makers must prevent an ``inflation virus'' from disrupting the U.S. economy and financial system.
Fisher, in the text of a speech in Waco, Texas, today also repeated earlier comments that inflation shows ``little inclination'' to slow and is moving closer to the ``upper end of the Fed's tolerance zone.'' Fisher and other Fed policy makers suggested earlier this week that the central bank may have to raise interest rates further to tame inflation.
Stocks Face the Rare Danger of a Declining Decade: Chet Currier Oct. 7 (Bloomberg) --
Slightly more than four years in the future lurks an unfamiliar peril for the U.S. stock market. It's the very real possibility that the market indexes will finish the decade of the 2000s, counting from the end of 1999 through the end of 2009, with a loss.
More than halfway through the Double-0s -- five and three- quarters years, to be exact, as of the end of September -- the index tables are dotted with minus signs. The Standard & Poor's 500 Index is down 1.5 percent a year, including dividends, and the Nasdaq Composite Index shows an annualized loss of 10.1 percent.
So to reach the ignominious outcome of a declining decade, these indexes don't have to do anything special -- just stay right about where they are.
How unusual would this be? You have to go back to the 1930s to find the last stretch of 10 calendar years in which the S&P 500 posted a loss.
The nearest thing in modern times came from the end of 1964 through 1974, when the S&P 500 scratched out a 1.2 percent annual gain including dividends, and the Dow Jones Industrial Average rose a mere 0.3 percent a year (the Nasdaq Composite didn't come into existence until 1971). Without dividends, both the S&P 500 and the Dow would have posted losses.
Fisher is the same guy who a few weeks back said there is no inflation and nothing to worry. Unless he is trying to act all independent and is vying for greenspan's position, he has lost his credibility. But offcourse, the market rallied when he said there is no inflation and three weeks later he says inflation is in the danger zone and the market falls. There is something fundamentally lacking in the equities market. Original thinking by traders.
Gold is incredibly underpriced compared to oil and most other things
I agree. It is nowhere near its inflation adjusted highs. It can also be manipulated very easily.
One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
I just dont buy this peak oil arguement. The Canadian oil sands reserves are much larger than Saudi Arabia. This area is just being developed. The new energy bill also set aside money to explore the development of US oil shale in Wyoming, Utah and Colorado.
I think we have only found the "easy" oil. However we really must explore alternative sources.
<< <i>Gold is incredibly underpriced compared to oil and most other things
I agree. It is nowhere near its inflation adjusted highs. It can also be manipulated very easily.
One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
I just dont buy this peak oil arguement. The Canadian oil sands reserves are much larger than Saudi Arabia. This area is just being developed. The new energy bill also set aside money to explore the development of US oil shale in Wyoming, Utah and Colorado.
I think we have only found the "easy" oil. However we really must explore alternative sources. >>
Let’s clarify “Peak oil”. Some seem to think that means were running out of oil, not true we’ll have enough oil for the next century. The argument is the cost and oil shale and oil sands is a very dirty process that is more strip mining than drilling. The good news is there are new technologies to process both if oil stays over $60 a barrel but you have to pass the environmental test as well as building an infrastructure to transport it to market. Amoco had plenty of Oil shale and couldn’t make it work when a barrel of oil was $20 to $30 a barrel. They also brought out Dome (Canada) that had vast oil sands and we worked on that issue for a couple of decades.
Peak oil is very simple it’s the amount of oil a company produces a year (bench mark). All of the known reserves are excluded. It’s the amount of oil a company can find a year to replace there demising assets. If they are producing less than that company in the last year it’s past peak for that year and almost all companies have hit this for quite some time. If they were to find some big oil fields than the assumption would not be valid but the experts fell that the big fields are found and they must look into the secondary recovery methods to have a chance for it’s replacement. In common talk expect gas to rise because coal, sands, and shell are an expensive way to produce oil.
The world isn't going to run out of oil soon and peak oil should be a few years away. Oil production will drop and will fall sharply causing enormous change in the world.
Oil prices to date have not been caused so much by a shortage as the change in psychology by users, drillers, and speculators. Now that most of us are on the same page the price will settle toward where supply and demand equalize under the new changed conditions. This will likely be somewhat lower but there can be enough speculative buying to keep it at current levels or even push it higher.
Prices will head up sharply though even shortly before peak oil production is reached.
Until recently, silver prices (like gold) have been relatively depressed since 1980, when gold traded briefly above $700 and silver topped at $50. While the media has been touting gold as the obvious inflation hedge as it rallied to 17-year highs, we believe silver is quietly starting to garner interest. While silver should be helped by a weakening dollar, there is also a favorable demand factor here. In Aug, precious metal and commodities consultant CPM Group forecasted a supply deficit of 43.4 mln ounces when combined with coinage and changes in inventories, with total supply of silver estimated at 774.3 mln ounces for 2005 vs expectations industrial demand for silver will total 805.7 mln ounces. From a technical perspective, silver recently took out two key resistance levels ($7.25 and $7.50). While a case can be made that silver is being used less in the photographic sector, the use of the metal has risen in the electronics market and is now used in cell phones, military technology, a host of new healthcare applications, alternative energy technology and as a safeguard for superconductive wire. Silver stocks worth watching are PAAS (unhedged, co produces more than 13 mln ounces of silver annually and expects to become the largest primary silver producer in the world), SIL (operates in San Cristobal, a region considered one of the world's largest open-pit silver deposits), SSRI (controls the world's largest published in-ground silver resources of any publicly-traded silver co, and according to the co, offers high leverage to silver prices), SLW (unhedged, and the only mining co with 100% of its revenue from silver production), and HL (unhedged, the lowest-cost primary silver producer in North America, which mines both silver and gold).
If You Like Gold Buy Silver Sean Rakhimov October 10, 2005 The world is running out of silver. Or is it? Let us qualify that: the world is running out of cheap silver. And how, you ask, we arrive at such conclusion? And I turn it right back at you, and say – show me the silver!
As we look around the world we find all but two dozen silver companies. That’s against a backdrop of hundreds of gold, oil, natural gas companies.
Why is gold in the news the last few weeks? Because gold price just made a 17-year high. It crossed the $470 mark recently. Where is that relative to the bottom? Not even a double. But gold, oil, uranium are highly political resources. That’s why the media tends to focus on them. What else is in the news? Natural gas. What about lead, zinc, copper, timber, iron-ore, nickel, etc? Are they not worthy of a discussion? Jim Rogers thinks they are. But I would like to zero in on another ignored metal – silver.
Silver is bulky, I hear. Hmm. Buffett didn’t think so. He didn’t buy gold, he bought silver. Why is it bulky for the average Joe? Because SILVER IS CHEAP!! Because you can still buy quite a bit of silver for your investment dollar. I will bet my rent money that at $50/oz silver won’t be bulky at all, and those who didn’t want to hear about it at $7 and $8 will be lining up to get some, because at $50 they will be carrying home a substantially lighter load.
Silver is not money, they tell me, it’s a commodity. Duh! Is that supposed to be bad for silver? Are we not in a commodities bull market? Oil is a commodity and you don’t see the oil price suffer from it.
You have to laugh at gold bugs that shun silver. They know all the reasons why gold will go up, but they can’t muster a couple for silver. “This time it’s different”, isn’t it? Is it different for silver? Which part is different? As of this writing gold/silver ratio stands at 62. I am betting that before this bull market is over you’ll see that number slashed at least in half. My message to gold bugs is - if you like gold, buy silver.
Comments
This is very good news as it is post-Katrina data and shows that national conditions remained upbeat even immediately after the hurricane.
This was up from 53.6 in August and above expectations of a 52.0 reading. The new orders and employment categories both rose from August.
This data shows indicates that Katrina had very little national impact on manufacturing in September.
In other news, August construction spending was up 0.4% after a 0.3% gain in September. This is also good economic news but the market will pay far less attention to this data.
This news is causing a sharp decline in the price of bonds. The 30yr yield is now over 4.62%. This looks like it may be convincingly breaking the 200 dma and price resistance. Perhaps interest rates may finally begin to rise. This will strengthen the dollar and hurt metals prices. Couls also be some fireworks in the stock market in coming months. Hold on to your hat!!!
Knowledge is the enemy of fear
AF - do tell us all... when was your America great?
The only thing the U.S. manufactures these days are paper dollars.
<< <i>A lot of you guys seem to be mistaking inflation for economic "growth" or a "strong economy".
The only thing the U.S. manufactures these days are paper dollars. >>
Inflation is not evil. Just excess.
Knowledge is the enemy of fear
But I guess one can always find a report to refute any claim out there.
Perhaps interest rates may finally begin to rise. This will strengthen the dollar and hurt metals prices. Couls also be some fireworks in the stock market in coming months. Hold on to your hat!!!
This misconception has been tossed out and around the past few years that now it is assumed to be a fact. I disagree.
Higher interest rates will certainly not strengthen the dollar but only further weaken it. As interest rates rise, and they will, the dollar will fall. At some point the interest rates will be high enough to stop the selling of the US dollar and begin a long term swing the other way.
Higher interest rates are long-term positive for gold just as they were in the late 70's. The only way to stop the upswing in gold is to raise interest rates higher and higher to offer worthwhile alternatives to investors. Right now interest rates are still below the actual rate of inflation and offer a net NEGATIVE return. The FED is way behind the curve here. It will take interest rates a few % above the rate of real inflation to entice buyers (8-10% would do right now).
Even as interest rates rise, that will not stop gold nor commodities in their tracks. It's a slow process of slowing momentum. Interest rates for years in the 70's and it did nothing to slow PM's until rates were well into double digits.
Higher interest rates plays into the hands of gold and rare coins.
It will take a recession to stop rare coins. I don't think a recession would slow gold because it will still have the upper hand over the dollar for some time. Stocks could have some fireworks alright, but in which direction? Very few indicators are pointing up at this point.
Interest rates are up a few percent over the past few years and what has that done to the price of gold? This taken from Jim Sinclair's website article today:
So as currently presented, US financial managers intend to peddle US federal paper to people who are fed up financing the US, producing a backlash that no one really expects. More federal paper means more dollars. More dollars mean more supply on the market as interest rates rise as a direct result of smaller and smaller purchases by non-US interests of the much bigger supply of US Treasuries for sale.
The classical result that will happen by mid 2006 is:
1. A sharply lower US dollar.
2. Sharply higher interest rates.
3. Former Chairman Volcker's prediction that we would have a financial crisis within the next five years (one more year to go) could actually unfold tomorrow.
roadrunner
Maybe the sky is not falling.....
LINK( couple min. read
I do agree to some extent with most of what you write. I have a very(VERY) short term perspective of market movements. I am neither a bull nor a bear. I trade stocks on a daily basis based on todays news. I have no idea what will happen in 5 years nor does anyone else. Yesterday the dollar had a nice rally and gold fell. Today the dollar is down slightly and gold is up slightly. There is a corrolation.
I believe in the short term a rise in interest rates could provide a spark for the stock market as money tries to find a new home. However, rising interest rates have never been particulary good for the stock market on a longer term basis. Thats why I think we are in for quite a ride.
If we want to discuss intermarket relations then we should be looking at Japan. Their stock market appears to be breaking out to the upside. It has been a laggard for the last 15 yrs so that why the relative outperformance should make everyone take notice. Japan has been a HUGE deflationary force in the global marketplace. This may be ending. The era of historically low interest rates my be coming to an end. This should not be read as the end of the world, just that investment philosophies may need to be revisited to take advantage of changes. Here are a few charts of interest.
The first shows the relationship between the Jananese stock market and the US 5 yr interest rates. The second of Japan and gold.
Knowledge is the enemy of fear
<< <i>“Those people never considered moving to a cheaper place?”
O.K. so where does everyone think that people should move to? Where are the retiring baby boomers going to move to?
It looks like Florida and the Gulf Coast are going to get hit with several hurricanes a year for the next two decades:
California is taxed to death with rampant inflation in everything but food, which is only going up 3% per year, so you can have lunch but you can’t stay:
LA may be a mess for years:
So if Americans are going to continue their migration patterns, in particular in retirement, where will they go? >>
The Desert Southwest, in particular AZ and NV will keep getting an increasing share of retirees. for the latter, water will loom larger and larger (AZ too, but for awhile they will just divert their CO river alotment from agriculture to household use-NV cannot do that to the same extent as ag uses make up a smaller part of their river water)
GA, SC and NC are "the new FL" for retirees. within CA (and don't forget that 1 in 8 Americans is a Californian), folks will both retire to neighboring western states, and move from expensive areas such as coastal SC and the bay area to the high desert and Sierra foothills.
Don
Joe Mysak is a columnist for Bloomberg News:
You Should Be Afraid of the Boom in Muni Bond Sales:
During the first three quarters of 2005, states and localities sold $309.5 billion in bonds, according to the Bond Buyer newspaper, the most ever during the first nine months of a year.
To put that in context, muni bond sales have crossed the $300 billion threshold just three times, and that was for the full year -- in 2002 through 2004. The record was set in 2003, when $384 billion in bonds were sold.
During the first nine months of 2005, bond sales have averaged $34 billion a month. If that pace holds up for the rest of the year, traditionally a period of heavy issuance, then we could be looking at a total of $411 billion.
That's good news for the people who underwrite bonds, and insure them, and rate them. Whether it's good news for the taxpayers who have to repay all this debt is another matter.
They're using this borrowed money to build things with long lives such as roads, bridges, schools and sewer systems. They have been refinancing their more costly debt. This is a good thing?
Perhaps, though, other forces are at work here, a little dark, a little sinister.
Maybe we're seeing this boom in issuance because states and municipalities are refinancing bonds they sold only years or even months before. Perhaps what's going is nothing more than churning, deals being done just to get deals done, restructurings and refinancings being put together with very little regard for actual savings.
Issuers, for their part, are risk-averse, some would say unduly risk-averse when it comes to considering the direction of interest rates.
If a study of refundings would be interesting, so would a survey of how many issuers out there have the resources to analyze all the ideas Wall Street brings to them suggesting they tinker with their existing debt. If I had to bet, I'd say the answer is the same as the number of issuers who have the ability to figure out the derivative products they are pitched by these same bankers: not many.
To judge from the binge in bond sales we've seen this year, it doesn't look like many people are asking critical questions, or asking many questions at all. To paraphrase Benjamin Franklin's Poor Richard, it looks like we are all borrowing in haste; we will all repent in leisure.
agentjim007
Nobody wants to read this whole thread, it would scare the H-LL out of them.
I don’t think this really matters, all this means is that there will be NO filings next year?
By Caroline E. Mayer
Washington Post Staff Writer
Wednesday, October 5, 2005; Page A01
Two weeks before a new, more restrictive national bankruptcy law goes into effect, financially strapped Americans are rushing to file for protection from their creditors, with filings climbing to an unprecedented average of 13,000 a day last week.
Week after week records are toppled. Last week's 68,287 filings surpassed the record set the week before by 24 percent, and this week's total is likely to be higher, according to data released yesterday by Lundquist Consulting Inc., a financial research firm. Daily filings averaged 10,367 in September, compared with an average of 6,079 in September 2004.
since it would seem the correlation is so strong between these apparently unrelated
things as to imply they are essentially the same entities.
Very odd!
The only thing the U.S. manufactures these days are paper dollars.
I hope the folks btching and moaning on this thread are doing something productive with their lives to help and aren't just being negative.. I believe many hard working Americans would dispute your idiotic second sentence above.
I have to leave for work now (manufacturing cancer medicine) but I'll ponder your comment while I drive on new roads and pass several construction projects, new housing, and many businesses making products and creating value for our people. Maybe I'll buy something manufactured in America on my way home
Life can be good but it is up to the individual to make a difference. The government isn't God.
Liberty: Parent of Science & Industry
Man, it's just hell out there.
<< <i>Yeah, Bailey...I'm with you. Two articles in the news last week (can provide links if challenged) discussed the fact that there are one million millionaires now in the U.S., more than any time in history and the other is that there are not one million homes worth one million dollars or more...
Man, it's just hell out there. >>
Yes there's a million millionaires out there but how many are buying houses with no money down to rent and it's all on paper? I'd say a whole lot and if the market turns around they'll lose everything. Too much hype in the ecomony today IMO.
How many lost half their wealth in the last little stock market correction? A whole lot.
Be prepared
Pay attention
Have a plan
Enjoy
<< <i>A lot of you guys seem to be mistaking inflation for economic "growth" or a "strong economy".
The only thing the U.S. manufactures these days are paper dollars.
I hope the folks btching and moaning on this thread are doing something productive with their lives to help and aren't just being negative.. I believe many hard working Americans would dispute your idiotic second sentence above.
I have to leave for work now (manufacturing cancer medicine) but I'll ponder your comment while I drive on new roads and pass several construction projects, new housing, and many businesses making products and creating value for our people. Maybe I'll buy something manufactured in America on my way home
>>
You don't get it. I meant manufacturing as in exports. Ever check the latest numbers on the trade deficit? It ain't pretty.
As far as bogus fiat paper dollars go, why do you think the price of gold and silver are going up?
The foreigners are losing faith in U.S. paper and are bailing out as I post this.
And where are you gonna find something made in the U.S.A.? Walmart? Last time I looked mostly everything they have
on their shelves are made in China. Get a clue before you start ranting and raving.
Walmart
Liberty: Parent of Science & Industry
<< <i>Get a clue before you start ranting and raving
Walmart
You cant beat their prices on 12 ga 2 3/4 inch 1 1/8 dram #8 shotgun shells.
Knowledge is the enemy of fear
<< <i>...there are one million millionaires now in the U.S., more than any time in history... >>
There are more millionaires now in the Philippines than anytime in history...Hmmm...How about South Korea? Indonesia? Germany? Let's go even further, up until the end of last year, literally everyone in Turkey was a millionaire. What is the common denominator?
You guessed it, the ever-inflated fiat currency. Guess what? In the next decade there will be more millionaires and the decade after that and so forth.
Cohod, #4 shot are less messy.
“There are more millionaires now in the Philippines than anytime in history...Hmmm...How about South Korea? Indonesia? Germany? Let's go even further, up until the end of last year, literally everyone in Turkey was a millionaire. What is the common denominator?
You guessed it, the ever-inflated fiat currency. Guess what? In the next decade there will be more millionaires and the decade after that and so forth.”
Excellent Mark
Don’t forget China and the population changes!
“I hope the folks btching and moaning on this thread are doing something productive with their lives”
Baley,
I sincerely believe as a group of mostly Americans the folks on this forum are about as prepared as any group in the country. So we are really not preaching to each other, but making comments about what is happening all around us.
As far as your following statement,
“The government isn't God.”
This is exactly what we talk about here every week, problem is that no one told the guys in Washington, or all these State capitals that.
Looking at New Orleans will give you a good idea of how dependent huge parts of our populations are in our major cites. They rely on governments of every kind to take care of their every need. This was one storm, and hundreds of thousands of people knew how to do nothing, but hold out their hand waiting for some government to fulfill their needs.
What happens when the Bird Flu Pandemic comes?
RR
I meant to tell you I really enjoyed reading the The Long Emergency post you made. This gentleman has been doing some concentrated thinking!
<< <i>Cohod, #4 shot are less messy. >>
I know, but I usually dont bother to pick out the shot anyway
Knowledge is the enemy of fear
As the standard of living in China increases, and they can afford more and more of their own good, there will be less need to export them here for such a cheap price. The cheap imports are really the only thing that has been keeping our standard of living intact. If and when that goes away it will be a severe blow to everyone's income.
roadrunner
Knowledge is the enemy of fear
I hope your right and I'll buy another 30 to 40k worth if it drops enough but it doesn't seem your recent post of the stock market is posed to exploed is going to well right now.
My fuel oil company STILL has not promised us a price capped price. They are waiting to the bitter end to see if they can get a lower price.
Get one of those more modernized kerosene heaters and huddle back into one or two rooms? I once did that in the early 80's.
Or buy wood and heat my fireplace as I once did?
Or put in a coal stove into my fireplace as an insert?
Or just a coal stove inside my family room?
I already use a set back thermostat with three zones and keep most of the house quite cool. We use lots of sweaters and sleep with night caps.
I have a relatively small bi-level home 44x28 bi-level.
I am willing if I can do it to pad my coin budget?
What to do?
I was hunting in Manitoba a few weeks ago and met a fellow who works on an oil platform in the Gulf. I asked him if oil should be priced so high. His answer in a Texas drawl..."Hell no!!" His son in law is a driller in Alaska. His observation was that there is plenty of oil.
I believe oil prices are completely driven by hedge funds. There is a tremendous amount of money and limited investment choices. These funds chase performance. They all move on the same assets at the same time. This causes artificially wide trading ranges. IE-- Prices go higher and lower than they should. Just think if these funds discovered the precious metals market!!
Oreville,
I got a letter from my oil company yesterday saying they would not be able to offer price caps.
Knowledge is the enemy of fear
So is the market going up or down, I'm still in oils and metals mutal funds but have a lot of cash for the drop. I tend to look at Buffet, Gates, and Saros on this one. The central banks may only have half the gold they claim and when they sell it's being purchased by China, India, and Argentina among others. The games about over IMO. The ecomony looks good because of cheap interest rates where no one owns their home anymore. They tend to refi when it's value goes up to to buy vacations, cars, and toys. They don't understand that if the market drops 40 to 50 percent the bank will make a call rather your paying your morgage or not. May as well play the commodies on a day trader basis IMO.
Raw materials, defense, Cash, and maybe medical stocks are the best in theses times.
"A 48 jacket with a No. 4 lid!"
Research at the majors got hammered again and again in the 1980's and 1990s. When were you in it?
<< <i>known for their braun not there brain.
"A 48 jacket with a No. 4 lid!"
Research at the majors got hammered again and again in the 1980's and 1990s. When were you in it? >>
Actually Amoco was one of the best durning those times and were brought out by BP which brought other companies reserves and stripped all the research out when oil and their stocks were cheap. The reason it was bad times was easy oil was over but they had cash to spend. It's a lot harder today without going to unstable areas. Then you have to get it out by building high $$ pipelines and corupt goverments.
I was in Alaska for much of the 80's and part of the 90's with Russian and North Korean gun boats checking out our rigs in the Bering Sea. Camera's on them in case there was an issue. BP is living off of good assets purchased from Amoco. Arco, and Standard Oil of Ohio, not anything there finding today.
There really is no solution for fuel prices this winter. People are going to get cooked, that's all there is to it. I don't see why it should improve any over future winters either.
roadrunner
Actually, that is pure speculation. The great depression reduced the number of millionaires by a good number, as did the dot.com bust, as will other events that may lie in our future...time does not make a millionaire and the ultimate test is that you still must get the buks into your holdings to count. Just because there are more buks or any type of currency floating around doesn't necessarily mean there are more millionaires.
And then there's Turkey...as follows:
"literally everyone in Turkey was a millionaire. What is the common denominator? "
"Number's up at last for Turkey's lira millionaires
MERIEL BEATTIE
IN ANKARA
TURKEY was a land where almost everyone was a millionaire - until today.
In the country with the dubious distinction of having the highest-denomination bank- notes in the world, one million lira was worth a mere 40p.
Monthly wages were paid in billions, the state budget was calculated in quadrillions and cash registers and calculators had to be adapted to cope with the baffling ranks of zeroes.
But at midnight last night, all that was to change. "
But your point is well taken.
Good old Islam, the war continues……….
I agree with cladking -- interesting graphs on correlations with Japanese equities.
The five-year treasury yield is particularly interesting, and seems to provide a striking confirmation of intuition -- ie, the Japanese are extremely influential players in the US treasury market, and are moving positions between treasuries and local Japanese equities. When they favor equities, the price of US treasuries falls, so interest rates rise, and vice versa.
Gold may be less correlated than it looks at first glance from these graphs, since our eye tends to go to the latter part of the graph, where both gold and equities rise. Prior to that, there seems to be considerable independence.
<< <i>The current administration has temporarily eased some supply issues by releasing oil from the strategic reserves. Once this is backed off there ought to be a corresponding move back upwards for gas prices, etc. >>
The other reason for the downward movement is that demand fell. I also read were bike sales are going crazy. As gas prices continue increasing demand will fall, people may even start getting rid of their gas sucking SVU's.
<< <i>
<< <i>The current administration has temporarily eased some supply issues by releasing oil from the strategic reserves. Once this is backed off there ought to be a corresponding move back upwards for gas prices, etc. >>
The other reason for the downward movement is that demand fell. I also read were bike sales are going crazy. As gas prices continue increasing demand will fall, people may even start getting rid of their gas sucking SVU's. >>
Of course. This in not an inelastic thing we are dealing with. Oil prices have risen dramatically many times in the past. This time is no different. Just the numbers are higher and after inflation it is all relative.
I wouldn't put too much stock in a rig hand there known for their braun not there brain
In many cases I trust the guy in the field more than the pencil pusher. The scientist geeks said oil would run out 20 years ago. I'm still waiting.
Knowledge is the enemy of fear
I think oil is walking around carrying a big neon "I'm not going higher" sign.
Now gold is a bit more interesting, as more and more people are let in on the "Hey, gold doesn't stink" secret, investment will rise.
(including the dollar). Lots of catching up still to do.
Considering that since we came off the gold standard in 1971, the money supply has increased by 13X since then. Just based on $35 gold x13 you would get $455/ounce. But this is a foolish approximation considering that gold was not allowed to "rise" in market value from 1934 to 1971. One could easily come to the conclusion that gold ought to be at $700-900 today just to account for the M3 increase and what gold should have been valued at in 1971 to account for the previous 37 years of inflation. There is no doubt in my mind it has been "managed" very well by the FED, Central Banks, JPM, GS, and others. Considering that M3 has increased 4X since the gold peak of 1980, you could forecast a gold spike as high as 4x$875=$3500 based on what gold has done over the past 35 years.
Money supply graph
Of particular note on the graph (2nd page or so) is the increase that occurred in 1996 and has added 1 trillion dollars to the money supply every year since. Yowser. Pure Nasdaq fuel.
I don't know which analysts have predicted oil to run "out" by now but the study by Hubbert in 1956's predicted peak US oil by the late 60's or early 70's. It occurred in 1970. It would not seem unreasonable to me that world peak oil is around the corner since all the Saudi's major wells are over 20 years old with no major discoveries since. One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
roadrunner
Fed's Fisher Says `Inflation Virus' Must Be Stopped
Oct. 6 (Bloomberg) --
Federal Reserve Bank of Dallas President Richard Fisher said policy makers must prevent an ``inflation virus'' from disrupting the U.S. economy and financial system.
Fisher, in the text of a speech in Waco, Texas, today also repeated earlier comments that inflation shows ``little inclination'' to slow and is moving closer to the ``upper end of the Fed's tolerance zone.''
Fisher and other Fed policy makers suggested earlier this week that the central bank may have to raise interest rates further to tame inflation.
Stocks Face the Rare Danger of a Declining Decade: Chet Currier
Oct. 7 (Bloomberg) --
Slightly more than four years in the future lurks an unfamiliar peril for the U.S. stock market.
It's the very real possibility that the market indexes will finish the decade of the 2000s, counting from the end of 1999 through the end of 2009, with a loss.
More than halfway through the Double-0s -- five and three- quarters years, to be exact, as of the end of September -- the index tables are dotted with minus signs. The Standard & Poor's 500 Index is down 1.5 percent a year, including dividends, and the Nasdaq Composite Index shows an annualized loss of 10.1 percent.
So to reach the ignominious outcome of a declining decade, these indexes don't have to do anything special -- just stay right about where they are.
How unusual would this be? You have to go back to the 1930s to find the last stretch of 10 calendar years in which the S&P 500 posted a loss.
The nearest thing in modern times came from the end of 1964 through 1974, when the S&P 500 scratched out a 1.2 percent annual gain including dividends, and the Dow Jones Industrial Average rose a mere 0.3 percent a year (the Nasdaq Composite didn't come into existence until 1971). Without dividends, both the S&P 500 and the Dow would have posted losses.
> Dare we say you heard it here first?
Fisher is the same guy who a few weeks back said there is no inflation and nothing to worry. Unless he is trying to act all independent and is vying for greenspan's position, he has lost his credibility. But offcourse, the market rallied when he said there is no inflation and three weeks later he says inflation is in the danger zone and the market falls. There is something fundamentally lacking in the equities market. Original thinking by traders.
China says trade surplus to triple to $ 100 Billion this year
I agree. It is nowhere near its inflation adjusted highs. It can also be manipulated very easily.
One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
I just dont buy this peak oil arguement. The Canadian oil sands reserves are much larger than Saudi Arabia. This area is just being developed.
The new energy bill also set aside money to explore the development of US oil shale in Wyoming, Utah and Colorado.
I think we have only found the "easy" oil. However we really must explore alternative sources.
Knowledge is the enemy of fear
<< <i>Gold is incredibly underpriced compared to oil and most other things
I agree. It is nowhere near its inflation adjusted highs. It can also be manipulated very easily.
One Saudi oil well contributes close to 1/2 their total production. As Saudi Arabia goes, so goes peak oil.
I just dont buy this peak oil arguement. The Canadian oil sands reserves are much larger than Saudi Arabia. This area is just being developed.
The new energy bill also set aside money to explore the development of US oil shale in Wyoming, Utah and Colorado.
I think we have only found the "easy" oil. However we really must explore alternative sources. >>
Let’s clarify “Peak oil”. Some seem to think that means were running out of oil, not true we’ll have enough oil for the next century. The argument is the cost and oil shale and oil sands is a very dirty process that is more strip mining than drilling. The good news is there are new technologies to process both if oil stays over $60 a barrel but you have to pass the environmental test as well as building an infrastructure to transport it to market.
Amoco had plenty of Oil shale and couldn’t make it work when a barrel of oil was $20 to $30 a barrel. They also brought out Dome (Canada) that had vast oil sands and we worked on that issue for a couple of decades.
Peak oil is very simple it’s the amount of oil a company produces a year (bench mark). All of the known reserves are excluded. It’s the amount of oil a company can find a year to replace there demising assets. If they are producing less than that company in the last year it’s past peak for that year and almost all companies have hit this for quite some time. If they were to find some big oil fields than the assumption would not be valid but the experts fell that the big fields are found and they must look into the secondary recovery methods to have a chance for it’s replacement. In common talk expect gas to rise because coal, sands, and shell are an expensive way to produce oil.
away. Oil production will drop and will fall sharply causing enormous change in
the world.
Oil prices to date have not been caused so much by a shortage as the change in
psychology by users, drillers, and speculators. Now that most of us are on the
same page the price will settle toward where supply and demand equalize under
the new changed conditions. This will likely be somewhat lower but there can
be enough speculative buying to keep it at current levels or even push it higher.
Prices will head up sharply though even shortly before peak oil production is reached.
Until recently, silver prices (like gold) have been relatively depressed since 1980, when gold traded briefly above $700 and silver topped at $50. While the media has been touting gold as the obvious inflation hedge as it rallied to 17-year highs, we believe silver is quietly starting to garner interest. While silver should be helped by a weakening dollar, there is also a favorable demand factor here. In Aug, precious metal and commodities consultant CPM Group forecasted a supply deficit of 43.4 mln ounces when combined with coinage and changes in inventories, with total supply of silver estimated at 774.3 mln ounces for 2005 vs expectations industrial demand for silver will total 805.7 mln ounces. From a technical perspective, silver recently took out two key resistance levels ($7.25 and $7.50). While a case can be made that silver is being used less in the photographic sector, the use of the metal has risen in the electronics market and is now used in cell phones, military technology, a host of new healthcare applications, alternative energy technology and as a safeguard for superconductive wire. Silver stocks worth watching are PAAS (unhedged, co produces more than 13 mln ounces of silver annually and expects to become the largest primary silver producer in the world), SIL (operates in San Cristobal, a region considered one of the world's largest open-pit silver deposits), SSRI (controls the world's largest published in-ground silver resources of any publicly-traded silver co, and according to the co, offers high leverage to silver prices), SLW (unhedged, and the only mining co with 100% of its revenue from silver production), and HL (unhedged, the lowest-cost primary silver producer in North America, which mines both silver and gold).
Knowledge is the enemy of fear
If You Like Gold Buy Silver
Sean Rakhimov
October 10, 2005
The world is running out of silver. Or is it? Let us qualify that: the world is running out of cheap silver. And how, you ask, we arrive at such conclusion? And I turn it right back at you, and say – show me the silver!
As we look around the world we find all but two dozen silver companies. That’s against a backdrop of hundreds of gold, oil, natural gas companies.
Why is gold in the news the last few weeks? Because gold price just made a 17-year high. It crossed the $470 mark recently. Where is that relative to the bottom? Not even a double. But gold, oil, uranium are highly political resources. That’s why the media tends to focus on them. What else is in the news? Natural gas. What about lead, zinc, copper, timber, iron-ore, nickel, etc? Are they not worthy of a discussion? Jim Rogers thinks they are. But I would like to zero in on another ignored metal – silver.
Silver is bulky, I hear. Hmm. Buffett didn’t think so. He didn’t buy gold, he bought silver. Why is it bulky for the average Joe? Because SILVER IS CHEAP!! Because you can still buy quite a bit of silver for your investment dollar. I will bet my rent money that at $50/oz silver won’t be bulky at all, and those who didn’t want to hear about it at $7 and $8 will be lining up to get some, because at $50 they will be carrying home a substantially lighter load.
Silver is not money, they tell me, it’s a commodity. Duh! Is that supposed to be bad for silver? Are we not in a commodities bull market? Oil is a commodity and you don’t see the oil price suffer from it.
You have to laugh at gold bugs that shun silver. They know all the reasons why gold will go up, but they can’t muster a couple for silver. “This time it’s different”, isn’t it? Is it different for silver? Which part is different? As of this writing gold/silver ratio stands at 62. I am betting that before this bull market is over you’ll see that number slashed at least in half. My message to gold bugs is - if you like gold, buy silver.