I dunno why, but Friday I sold my stock portfolio. For the past few months, I've been putting both feet into ASE sets, AGE sets, APEs, unc W eagles, and more. The weird thing about all this is - I have no qualms about not being diversified. Not one regret. You know it's getting dicey when you feel better in precious metals than you do in growth or income-producing vehicles.
Read the general tone of this whole thread, and you already know why. It's just a feeling - the same one I had in 1977-1979.
Oh, I have found the Mogambo Guru weekly blurb on Kitco to be quite entertaining and from an analytical point of view, very interesting. It takes a few minutes to see what he is doing, but it's become my No.1 read.
Q: Are You Printing Money? Bernanke: Not Literally
Just exactly who sold us on the idea of become a service economy?
Peter Schiff, Jan 5,2007 December’s larger than expected jump in non-farm payrolls is predictably being touted as evidence of a more vibrant U.S. economy. Unfortunately, the data does not support this conclusion. The bloated service sector added 178,000 jobs, while manufacturing shed another 12,000 jobs. What this means is that 178,000 more workers will be consuming goods while 12,000 fewer will be making them. The result will be larger trade deficits that merely compound already stretched global imbalances and exacerbate America’s inevitable day of reckoning.
A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them. Therefore they must rely on others, who presumably benefit from their services, to produce goods in their stead.
As an example, suppose that ten castaways were marooned on an island. What if on the day they washed up on shore they all decided to assume the following jobs; lawyer, accountant, banker, economist, actor, philosopher, astrologer, beautician, teacher, and nurse. How long do you suppose they would all remain alive without food, water, or shelter? Someone has to provide those things or everyone will perish.
In modern America, the goods shortfall is being made up by foreigner producers, who only derive a marginal benefit from the American service sector. In December, 43,000 new jobs were added in the education and health care sectors and 50,000 were added in business and professional services. What are all of these people going to export in order to pay for all the imported goods their paychecks will permit them to consume? Is there really that big a demand for American legal services in China? Do the Japanese really need our accounting advice? Do Saudi Arabian children benefit from pre-schools in America? How many sick Germans will seek treatment in American hospitals?
The fact that the U.S dollar rose in response to today’s jobs data is further evidence of how widespread this misunderstanding has become. Currency traders bid up the dollar because they assume a stronger jobs market will engender higher interest rates, which is perceived as dollar bullish. However, they ignore the longer term implications of the larger trade deficits that those service jobs will ultimately produce, which is decisively dollar bearish.
For now, all these excess dollars are being absorbed by foreign central banks precisely because foreign private consumers have little use for them. Today’s jobs data means that the resolve of foreign governments to continue accumulating additional dollar reserves will be that much harder to maintain.
3. Americans are losing high pay industrial jobs to third world countries.
4. America assumes the enormous burdon of policeman to the free world.
5. If the third word do not sell their crap to America, where are they gonna sell them?
6.Americas real standard of living has gone down as the third world standards of living rises. It happens in this manner:
in 1950, a factory could support and raise a family, buy a home and enjoy a pension and benefits while the wife, could stay at home and take care of the family.
Today, the husband works two jobs , the wife works and a home is now considered a luxery.
We are the first generation that must support our aging parents as well as our grown children. We do this by borrowing on our assets, to subsidize their existence.
7. Yes , America does consume more of the worlds raw resources then ther countries. All economies are really shell games, with unbacked currencies. When the games ends, world wars begin, over fuel, food, water, minerals and land. We are all living in a dream world and that world is ending as the disparity of wealth in our country and around the world, is ever expanding. The degree of the wealth in all nations is in the hands of a few. The amount of that wealth is obscene.
Is any CEO really worth 100,000,000 dollars a year? Is the head of Goldman Sachs really worth a 56,000,000 dollar annual bonus?Are stock brokers worth millions in bonuses?
Is it fair that the minimum wage is less now in real value then 1950?
Why are Americans showing such an increased desire to own precious metals? Perhaps, the answer is, its better then squeezing a lump of coal in a hot room and hoping it will turn into a diamond.
We are told that we are living in a new paradigme, the economic rules have changes, there is a safety net. In reality, pensions, where they still exist, are underfunded, FDIC is underfunded, American's as well as our government ,are under enormous debt that is increasing faster then revenues can mitigate. To all things there is a season, and the season of plenty, is approaching a horrific end. >>
I love you bear.....in a forum kind of way of course. Great succint points. I love this thread but sometimes I see these huge paragraphs full of great insight but half way through my eyes glaze over..."stupid soundbite world." (homer-esque)
I dunno why, but Friday I sold my stock portfolio. For the past few months, I've been putting both feet into ASE sets, AGE sets, APEs, unc W eagles, and more. The weird thing about all this is - I have no qualms about not being diversified. Not one regret. You know it's getting dicey when you feel better in precious metals than you do in growth or income-producing vehicles .........said on Dec. 31, 2006
That was a great move!
I went to cash on the 29th, too. I am holding off on buying any Gold (like ungraded Buffalos or GLD shares) until Gold prices reach $580-$570 and then I will begin to buy some.
Obviously, I am tracking the rising (of late) US Dollar against timing any Gold purchase:
This is where 950,000 jobs per year come from.....an estimate. Even if not one new job were created, this model would ensure a starting point of almost 1 MILL jobs.
Ever since gold first broke $320 I decided that something was amiss in our financial world. Real assets are where one should be...not in paper "wishful" assets. At least Casino chips can be turned in for cash.
"A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them"
What century is this guy living in? If anything the statement is backwards -- a vibrant manufacturing sector is not sustainable without a skilled service sector. In anycase, it is increasingly difficult to differentiate between the two. In the vignette, it is instructive to change the occupations.
Suppose your boat is marooned on an island with either:
Group A
- an architect - a software designer (eg - with experience in telecommunications) - a ship's captain - a highly skilled mechanic - a materials engineer - an expert in agribusiness
Group B
- six miscellaneous workers who grew up in poverty and for the past five years have manned assembly lines, moved boxes, swept up, etc.
The island is rich in resources, but your boat is severely damaged. You may be on the island for quite a while.
I had bought a Morgan dollar (a so called tough date) for a decent price, but when I tried to sell it, all the offers were 150 to 200 under what I paid. One person offered me Gold in trade, the exact amount of what I paid for the coin. So I took the deal, and got all American Eagles, a 1 ounce, 1/2 ounce and some cash for the difference.
I say if deals like that are out there, its good to buy gold ;-)
Its up $3 in the europe/asia market so far, lets see what the US market does.
AJ
All coins kept in bank vaults. PCGS Registries Box of 20 SeaEagleCoins: 11/14/54-4/5/12. Miss you Larry!
<< <i>The best time to buy gold is when you have cash that is looking for a home, and when stocks don't feel right. >>
And perhaps when you decide your assets need diversifying and you don't have enough of your net worth in the yellow metal.
To me, owning gold is like buying insurance against a falling dollar and global chaos. You hope you don't "cash in" on the policy (with very high gold prices) because of all the other problems it causes, but if it happens, at least you're "covered."
Hello friends: I thought you may find today's commentary interesting. I apologize for the TEXT ONLY version (no charts). There are a dozen charts to go with today's comments. He believes that commodity prices are heading for a very long (10-20 years) period of stability and narrow price ranges. This is all just fyi. Hays DJIA target for 12/31/06: 20,000
kaytsok
Hays Morning Market Comment
Commodities: Coming Home to Stay January 08, 2007 Don’t Count Your Chickens Before They Hatch
By Don R Hays
Summary: Friday’s action was perfectly primed for what we have been hoping for. We believe the “Denial” phase for the correction of the Commodity Bubble of 2006 is coming to an end. Commodities are in a new world, there is no doubt about it. It is going to take more copper, aluminum, nickel, oil, zinc, etc. to feed the growing demand of the new Flat World. But that is no different than soap and coke and toilet paper and dog food and computers and ……. We hope you get the picture. What determines price? In the long-term it is supply and demand. If the price is too low, as it has been for so much of the last 30 years of fighting inflation, you find suppliers closing production, but also putting maximum effort to increase productivity. Consolidation of firms becomes the watch word. This trend produces major efforts to improve labor relations and productivity. But then if the price gets too high—much higher than what it cost to produce, you see massive new capital allocated to finding and producing new supply. In these last four years we have seen the price of all industrial commodities soar to levels never seen before, with aluminum moving up from $0.58 a lb. to $1.23, copper moving up from $0.69 a lb. to $2.91, gold moving from $323 a Troy Oz. to $623, and silver moving from $4.56 to $12.83 an oz. Silver and copper have been the big winners, as speculators have really piled on as the price has continued to spiral. There’s that nasty word—“speculators.” And in today’s world of commodity-based ETF’s, the speculators have really had their impact. It is speculators that cause “bubbles,” as the speculative “hot air” is very fickle.
The Energy bubble started to leak air in September of 2006 when it broke under a key technical moving average. That break-down at $66 a barrel put a technical downside target in the high “40’s” to low “50’s.” Copper broke under that similar “technical” moving average the first trading day of the year when it penetrated the $2.90 a lb. level, setting up a “technical” target way down at $1.70 to $1.80. We think that there is no better way to predict possible targets than measuring technical chart action, but the real key is not some measurement of the wiggles on a chart, but the level at which sufficient supply is encouraged by profit potential to meet the rising demand of a new growing “Flat World.” So today, I hear ridiculous concerns about there being too much capital, and worries that a speculative bubble in stocks is imminent. The truth—according to Hays vision—is that it is a providential occurrence that just as the world is entering a massive growth that will incorporate 100’s of millions of new consumers, the capital is waiting at the door to finance just such as event.
The bond market has found its home, after 40 years of wallowing with the pigs. The U.S. Dollar in that same time frame has now fully digested all the shenanigans of the last 40 years. It’s Home. Now off there in the distance, who is it we see—the last Prodigal Son coming home? Commodity prices are going to find that “right” price in 2007, and settle in for a long and joyous span of stability.
I want to stress that no-one today can predict what that right price is. It’s a moving target with millions of variables, but if you look at all bubbles, you see virtually the same evolution of emotional response. Speculation serves a very important function, in that it moves that carrot up higher than the demand justifies, hastening the “catch-up” of supply. You only have to look at the number of oil rigs that have been put into service in the last few years to recognize this principle. This same principle applies to every product, whether it is soap or copper. So we now have a totally different motivation for metals and mining and energy companies than has ever existed, and the most money sitting on the sidelines starving for lucrative investment opportunities. At the same time, we have a public wanting to conserve their spending power, and every product is being optimized to cost the least, and to operate the most efficiently. I can’t say it loud enough,
PRICE CURES PRICE!!!
And here it comes. You see in the energy market, despite all those clamors about running out of oil, all the way up in price, there was not one day when the supply of oil did not exceed the demand for oil. The inventory of oil has continued to be so high that oil tankers were being parked, filled and brimming over, waiting on some place to unload. That differential of a price that was over and above the natural demand was pure and simple speculator driven.
That brings us to the next step when those last speculators recognize that they were the last bit of hot air to blow up the bubble, and that air begins to first seep out, and then gush out to bring supply and demand into balance. We believe that the seeping began in that May to December 2006 time-frame. That period injected the evolution of the typical bubble mentality into what we call the “Denial” phase. You can see what I mean on this graphic that we used extensively in the 2000 “Denial” phase of that bear market.
Let me refresh your memory on past “Denial” phases. Back in that 2000 “Denial” phase, we often did a little parody of some of the leading (in some cases only the loudest) Market Strategists of that time that were caught up in what we thought was the “Denial” phase of the bursting of that Technology bubble. If you check back the records, you will find that trio of “A, J, and T.” (I only gave their initials and you have to guess who they were”) were telling their audience with extreme confidence that this was an opportunity, a “golden opportunity,” to load up on these cheaper bargains. They were increasing their exposure to technology.
Let me refresh your memory about what was happening during that prior “Denial” phase with the technology heavy NASDAQ 100. The next graph shows the condition of the NASDAQ 100 in November 2000. Compare that with the price of copper only 5 weeks ago.
Now, let’s fast forward for the NASDAQ 100 two years later. Uh Oh! The denial left the sound of denials, and evolved very persistently to fear, desperation, panic, capitulation, despondency, and then depression.
Now, that 800 level on the NASDAQ 100 was ridiculous, obviously, as the very next year saw it rebound by a whopping 94%, but that is the way emotions swing the speculative crowd. I really don’t expect that kind of devastation to commodity prices, but I do expect lower prices. My best guess, and anybody’s else’s as well, will not come from some Sage trying to determine how much oil is in the ground, and how many Chinese will be driving “Hummers,” but will come from the charts. It is not magic, it is simply measuring the old Isaac Newton Principle that says for every action there is an equal and opposite reaction--or at least something like that. It measures the momentum of price action, and based on historical examples the kind of energy that is about to be expended—either on an upside catapult, or a downside deflation of the prior forces.
So as I look at the price of oil, I am using two chart techniques—both very good at pin-pointing targets. Let me begin by just taking the 55-week moving average. There has often been a trend that once a price action that has been maintained for a long period of time—like the red line above which is the 55-week moving average—is broken, then you can target the 200-week moving average as the target. Today that is at $50 a barrel. So that is my most logical target.
Now as I was sitting here pecking away, I see a trader on the Tube saying that the above chart looks very good. Is this the denial phase or what? I do know what he is talking about. Let me show you this one. Let’s go back to this weekly chart. Remember, the above chart is already giving strong vibes that the price of oil is going to $50, and we’ve been targeting that price since the break down back in September of last year. But when you are in denial, the fundamentals are typically still giving enough good news to encourage anyone to find a reason to buy the “weakness.” So let’s look at the weekly chart and see if we can find that excuse. I’m going to take away those moving average so we can follow the mindset. He is saying the $55 price level has provided support in the past…..and let’s be up-front, it has. I have just told you, just like we did in September of last year—before he hurricanes set in, that the price was headed to the high “$40’s” or the low “$50’s.” But I didn’t say when. Charts sometimes give hints as to timing, but admittedly, as I’ve drawn on the above chart, the tops made in October of last year at $55 does give some logic for his “denial.” And I would certainly not bet the house that the further break-down in oil is not going to first move back up to as high as the high-$60’s before it makes the final break-down. I wouldn’t bet the house on it, but I don’t like the odds of trying to play that “bounce” either. I simply think the risks are too high, and if I had to bet one way or the other, I would say the break is sooner rather than later. Before I leave this story, let me finish with that chart of copper—not in the denial phase of 6 weeks ago, but as of last Friday’s evolution into fear.
Now let’s quickly switch gears to the stock market. The action we’ve seen so far is just part of the process from a stock market stand-point. Friday actually produced very little needed fear. So our best guess is that this waffling around still has some more waffling to do, and we are still watching our overbought/oversold indicators as the best mechanism to gauge when the next optimal buying juncture is “just right.”
But with all that said, if you are sitting there in your bomb shelter, clutching your $zillions tightly to your breast, shivering in fear of the next “whatever,” then our advice is to move NOW, to get 90% of your assets invested in stocks. Keep a little dry powder, but not much.
That’s it for this Monday, we hope you have a great week my friends.
Man, it would be a lot easier to read a summary of a long article than having to read it. Then link the article for those who want to see it all. This might also prevent being accused of lifting someone's work w/o permission.
Oreville, I'm with you. Mary Anne always floated my boat. Ginger was too obvious. The old farmer's daughter.
Author explains the difference between "CPI inflation" (2-3%) and real inflation (10%) as shown by M3. A striking difference. A huge transfer of wealth is will be occuring in the near future as world fiat money runs its required course. We've already seen a huge transfer of wealth over the past 94 years as the trend of a "little" (2-3%) inflation per year has taken its toll on the dollar.
On a different note, Dr. Fekete recently posted some articles stating that unemployment is caused ultimately by fiat money (no gold standard). Check his articles for a further read.
Well the rare coin market, and even not so rare, keeps telling us something. I got Dick Osburn’s new list this morning and here is an interesting coin,
"1794 Bust Half Dollar $9750
Harshly cleaned, now lightly retoned. Bright gold surfaces. The retoning has made the coin attractive in spite of the problems. Very light adjustment marks in several areas. A good candidate for a budget-minded set, half the price of a problem-free VF"
Even the world gold coin market is moving up fast. All of the better gold in the N.Y. Heritage sale went way above estimates.
In addition every few weeks another country announces they are moving out of the dollar into gold or something else.
With world wide moves up in interest rates, I do not think there is any way to see the Fed drop rates anytime soon, and in fact they might be moving up.
This example of the English Pound gives us some idea how hard it is to find a safe place for some cash.U.S. T-Bills and C.D. S are losing money when you look at inflation and taxes.
Those running to the Euro are just leaving the frying pan for the fire. The entire world is going to go through this inflation era.
Mr. Van Eeden is missing a couple of very key points. I agree that Growing the money supply is generally inflationary but a 10% increase does not translate to 10% inflation. First and foremost the economy, infrastructure, population and need for money grows nearly every year. This growth needs to be subtracted from the money growth to forecast inflation. It's also true that the effects of money supply growth can be engineered to occur after the fact. There are con- plicated and poorly understood processes at work which will have a great affect on the inflation which results from simple growth of money supply. There are al- so pyschological factors at play because people tend to act in unison and they generally have access to the same information. The greatest danger is normally panic caused by a sudden change in sentiment and then everyone following the herd.
Those who are buying real assets aren't all doing it because of monetary concerns and some of those buying financial instruments are well aware of the monetary issues. This isn't a transfer of weath to the smart it is merely a case of many real assets increasing as many financial assets are decreasing.
Bernacke's points are really more troublesome but have been predicted for decades. The boomers are going to exascerbate existing trends toward higher taxes. There are almost certain to be increases in the age at which one can retire and this will have dramatic impacts on this problem. The current mess in the health care sys- tem can be stabilized in short order or repaired over several years if people wanted it addressed.
It is quite normal for the future to look very challenging. My primary concern is that we are rushing headlong into it and some of the more serious challenges are yet to be addressed at all or plans laid.
I can think of 10% inflation without using any goverment charts at all.....All I need to do is look at energy, housing, food, meds, and medical insurance the last several years and you can see the joke these figures bring to real Americans. "You can fool some of the people some of the time but you can't fool all of the people all of the time".
I'd sure like to see the American that didn't have goods and services increase by 10% last year. Look at my coin collection purchases they sure are vitial and they're out of control!
The greatest danger is normally panic caused by a sudden change in sentiment and then everyone following the herd.
Those who are buying real assets aren't all doing it because of monetary concerns and some of those buying financial instruments are well aware of the monetary issues. This isn't a transfer of weath to the smart it is merely a case of many real assets increasing as many financial assets are decreasing.
It is very instructive to Google "Weimar Republic" and do some casual reading. I had only a vague recollection of what happened in Germany prior to WW2, but it's fascinating stuff, especially in terms of the social, political and economic parallels that exist in our country today.
Q: Are You Printing Money? Bernanke: Not Literally
A comment regarding healthcare and your "The current mess in the health care system can be stabilized in short order or repaired over several years if people wanted it addressed. "
I fundamentally agree with this statement, but I am concerned that we may tend to look for a quick "fix" rather than a workable, long-term approach. With health care accounting for more than 15 % of the total US economy, and given the complexities of the issues involved (e.g. -- issues related to approach to our health care delivery, preventive versus acute care, degree of government involvement in funding and prescribing benefits, appropriate minimum benefit levels, what should be covered, views on distribution and redistribution of wealth, administration of insurance, risk management, fraud, litigation) I think the timeframe required to solicit ideas and craft them into a solution may be longer than our political system tends to permit. This is one of those (unusual?) problems whose solution is best developed by a very well run committee -- ideas need to percolate up from a very large number of experts/constituents, and be discussed in an open, bipartisan manner. This is in part because the issues are so complex -- we need a lot of creative thinking -- and in part because so much is at stake, we need as broad a buy in by the American people as possible.
Keep in mind that expansion of M3 occurs substantially as a result of private sector acitivity, is affected by both domestic and global factors, and is quite far removed from "printing of money." The history of Germany is instructive, but is not particularly relevant to the current situation. With regard to inflation, the real test is down the road, as alluded to in Bernanke's presentation. In particular, at such point as foreign holders of US debt decide they want to unwind this debt, this can only happen (in a non-inflationary way) if the US reduces its consumption. The longer the current situation persists (ie, US accumulating debt to fund consumption), the more likely it becomes that inflation will become a politically expedient solution.
The challenge (essentially, impossibility) of predicting when this could occur is that it depends on a large number of geo-political factors that are simply beyond the scope of financial modeling. (for interesting reading take a look at The Misbehvaior of Markets by Mandelbrot.)
A 10% increase in the money supply is precisely the definition of 10% inflation. Inflation has always been associated with monetary supply changes. What varies is what extent prices increases due to the 10% monetary inflation. Typically, price increases lag the monetary inflation. And in the case of the US we've exported a significant amount of our problems by being able to buy inexpensive Asian goods made my inexpensive labor. This won't always be the case. What Van Eeden is saying is that the CPI is not the barometer of inflation. Money supply increases almost always come home eventually. There is no unlimited free lunch. Growing the money supply over the past 94 years has certainly been inflationary, esp. over the past 10 years. The interesting thing is that most of our competitor nations are pumping out money at rates higher than 10%.
RR -- no -- to give an example, if an economy is growing at a real rate of 5 %, then money supply needs to increase at 5 % in order to avoid deflation. (said slightly differently, if per capita real GDP is static, and the population of a country increases from 10 million to 11 million, you will need a 10 % increase in money supply to maintain stable prices -- this is not inflationary)
By buying inexpensive goods from China we hold our inflation down
however:
our balance of payments favors China
we help build the industrial might of China, and that power will eventually challange us.
Cheap products allow Americans to buy items that are not required, essential, or needed.Thereby increasing debt to our citizens.
By transfering this enormous industrial base to China we are destroying our own industrial power as well as the economic foundation of the middle class.
A nation in some ways is like a family, when it is no longer possible to service the debt, you give other people power over your lives. We as a Nation are mortgaging our future in the hope that some kind of miracle will bail us out.
The simple fact is that no ones knows what inflation has been created over the last several decades since we learned that printing cash to inject into the economy was not our only outlet for increasing our spending habits. Selling debt worldwide, and continuously rolling it, was a fine idea as long as the buyers out numbered the sellers, but that day is coming to an end. When the world decides that they want to cash in their debt for currency we will see how much inflation in the dollar is headed our way.
OPEC Dumps $10.1 Billion of Treasuries as Oil Tumbles (Update1) By Bo Nielsen and Daniel Kruger Jan. 22 (Bloomberg) -- OPEC nations are unloading Treasuries at the fastest pace in more than three years as crude oil prices tumble, sending bond yields higher.
Exporters including Indonesia, Saudi Arabia and Venezuela, sold 9.4 percent, or $10.1 billion, of their U.S. government debt securities in the three months ended in November, according to Treasury Department data. Members of the Organization of Petroleum Exporting Countries last sold Treasuries for three straight months in June 2003.
Oil producers have surpassed Asian central banks as the largest pool of global savings, acc umulating an estimated $500 billion in 2006 alone, according to research by Pacific Investment Management Co. The sales during those three months mark a reversal because OPEC countries have boosted their holdings of U.S. government bonds by 70 percent to $97 billion in the past 17 months, Treasury data show.
Posts: 2639 Joined: Feb 2004 Tuesday June 13, 2006 9:11 AM
I havent hear a single person say oil is going to fall. All I hear is Iran, China, inflation and hurricanes. Therefore I believe oil will be in the 40's before 07.
be thrown in jail. We have been ripped off to the tune
of trillions of dollars. "
I certainly agree with Bear on this. Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53? Oh and don't tell me a mild winter, perhaps this is true in N.Y., but the winter in the west and the south so far as been pretty rough.
Thanks for the clarification. Sounds like the oil guys are pretty smart. Perhaps I should divert some of my gold funds to Big oil...Exxon Mobile, Texaco, etc.
Mark Piersall Random Collector www.marksmedals.com
<< <i>Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53? >>
A couple of things happened. The election was the first. In order to drop the price of oil Goldman Sachs, the US investment partner changed their index weighting to lower oil futures and this forced many smaller funds that follow their index to dump also, this caused the big drop in oil futures in August/Sept. These were futures for delivery in this year.
Next is a very interesting scenario. The story goes back to the fall of the USSR in 1989. The only thing that kept their economy afloat was the income from oil. The US military protection for the Saudi rulers came with a price. They agreed to flood the market with oil effectively bankrupting the Soviets and causing the collapse of their government.
Now we are in 2007. The only thing keeping the Iranian ruler in power is the billions from oil that support the vast social programs. They are the #2 oil exporter. Also, Venezuela , a new socialist regime is getting vast amounts from oil. There is reason to believe that this may be the same squeeze play coming on the Iranians as they continue to defy the calls to end their nuke plans.
The Saudi's don't want a nuclear Shiite Iran. Dropping the oil prices will cause a major drop in Iranian revenue. The Saudis can afford to miss a llittle income, Iran cannot. It's already starting to cause major unhappiness in Iran.
Comments
Read the general tone of this whole thread, and you already know why. It's just a feeling - the same one I had in 1977-1979.
Oh, I have found the Mogambo Guru weekly blurb on Kitco to be quite entertaining and from an analytical point of view, very interesting. It takes a few minutes to see what he is doing, but it's become my No.1 read.
I knew it would happen.
Happy new year!
Liberty: Parent of Science & Industry
Peter Schiff,
Jan 5,2007
December’s larger than expected jump in non-farm payrolls is predictably being touted as evidence of a more vibrant U.S. economy. Unfortunately, the data does not support this conclusion. The bloated service sector added 178,000 jobs, while manufacturing shed another 12,000 jobs. What this means is that 178,000 more workers will be consuming goods while 12,000 fewer will be making them. The result will be larger trade deficits that merely compound already stretched global imbalances and exacerbate America’s inevitable day of reckoning.
A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them. Therefore they must rely on others, who presumably benefit from their services, to produce goods in their stead.
As an example, suppose that ten castaways were marooned on an island. What if on the day they washed up on shore they all decided to assume the following jobs; lawyer, accountant, banker, economist, actor, philosopher, astrologer, beautician, teacher, and nurse. How long do you suppose they would all remain alive without food, water, or shelter? Someone has to provide those things or everyone will perish.
In modern America, the goods shortfall is being made up by foreigner producers, who only derive a marginal benefit from the American service sector. In December, 43,000 new jobs were added in the education and health care sectors and 50,000 were added in business and professional services. What are all of these people going to export in order to pay for all the imported goods their paychecks will permit them to consume? Is there really that big a demand for American legal services in China? Do the Japanese really need our accounting advice? Do Saudi Arabian children benefit from pre-schools in America? How many sick Germans will seek treatment in American hospitals?
The fact that the U.S dollar rose in response to today’s jobs data is further evidence of how widespread this misunderstanding has become. Currency traders bid up the dollar because they assume a stronger jobs market will engender higher interest rates, which is perceived as dollar bullish. However, they ignore the longer term implications of the larger trade deficits that those service jobs will ultimately produce, which is decisively dollar bearish.
For now, all these excess dollars are being absorbed by foreign central banks precisely because foreign private consumers have little use for them. Today’s jobs data means that the resolve of foreign governments to continue accumulating additional dollar reserves will be that much harder to maintain.
<< <i>1. We do not live on an island.
2. Americans work longer hours then europeans.
3. Americans are losing high pay industrial jobs to
third world countries.
4. America assumes the enormous burdon of policeman
to the free world.
5. If the third word do not sell their crap to
America, where are they gonna sell them?
6.Americas real standard of living has gone down as the third world
standards of living rises. It happens in this manner:
in 1950, a factory could support and raise a family, buy a home and
enjoy a pension and benefits while the wife, could stay at home and
take care of the family.
Today, the husband works two jobs , the wife works and a home is now
considered a luxery.
We are the first generation that must support our aging parents as well as
our grown children. We do this by borrowing on our assets, to subsidize their
existence.
7. Yes , America does consume more of the worlds raw resources then ther
countries. All economies are really shell games, with unbacked currencies.
When the games ends, world wars begin, over fuel, food, water, minerals
and land. We are all living in a dream world and that world is ending as the disparity
of wealth in our country and around the world, is ever expanding. The degree of the
wealth in all nations is in the hands of a few. The amount of that wealth is obscene.
Is any CEO really worth 100,000,000 dollars a year? Is the head of Goldman Sachs
really worth a 56,000,000 dollar annual bonus?Are stock brokers worth millions in bonuses?
Is it fair that the minimum wage is less now in real value then 1950?
Why are Americans showing such an increased desire to own precious metals?
Perhaps, the answer is, its better then squeezing a lump of coal in a hot room
and hoping it will turn into a diamond.
We are told that we are living in a new paradigme, the economic rules have changes,
there is a safety net. In reality, pensions, where they still exist, are underfunded, FDIC
is underfunded, American's as well as our government ,are under enormous debt that is
increasing faster then revenues can mitigate. To all things there is a season, and the season
of plenty, is approaching a horrific end. >>
I love you bear.....in a forum kind of way of course.
Great succint points. I love this thread but sometimes I see these huge paragraphs full of great insight but half way through my eyes glaze over..."stupid soundbite world." (homer-esque)
That was a great move!
I went to cash on the 29th, too. I am holding off on buying any Gold (like ungraded Buffalos or GLD shares) until Gold prices reach $580-$570 and then I will begin to buy some.
Obviously, I am tracking the rising (of late) US Dollar against timing any Gold purchase:
11 month Chart Gold vs. US Dollar
Nah. America provides handouts, not quips about getting to work.
(aka "block box estimate") accounts for over 60,000 of them
BLS jobs BD model spreadsheet
This is where 950,000 jobs per year come from.....an estimate.
Even if not one new job were created, this model would ensure a starting point of almost 1 MILL jobs.
Ever since gold first broke $320 I decided that something was amiss in our financial world. Real assets are where one should be...not in paper "wishful" assets. At least Casino chips can be turned in for cash.
roadrunner
"A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them"
What century is this guy living in? If anything the statement is backwards -- a vibrant manufacturing sector is not sustainable without a skilled service sector. In anycase, it is increasingly difficult to differentiate between the two. In the vignette, it is instructive to change the occupations.
Suppose your boat is marooned on an island with either:
Group A
- an architect
- a software designer (eg - with experience in telecommunications)
- a ship's captain
- a highly skilled mechanic
- a materials engineer
- an expert in agribusiness
Group B
- six miscellaneous workers who grew up in poverty and for the past five years have manned assembly lines, moved boxes, swept up, etc.
The island is rich in resources, but your boat is severely damaged. You may be on the island for quite a while.
Would you rather be a part of Group A or Group B?
>>>My Collection
I would choose to be with a
Carpenter, fisherman, medic,
Naturalist /herbalist
Hunter/trapper. Boatbuilder
Perhaps enough georgious women
for all of us.
Camelot
Since I'm not, I'm doing my best to pay down the national debt.... they're spending it faster than I can make it. DOH!!!
-David
Edited to add:
In responce to Higashiyama's post. I'd take group B.
"If I was on a desert island
I would choose to be with a
Carpenter, fisherman, medic,
Naturalist /herbalist
Hunter/trapper. "
Bear -- smart choices, but still, you're somewhat of a pessimist -- I'm hoping to get off the island at some point.
PS -- in my example, the island has a wealth of resources!
<< <i>Bear said:
"If I was on a desert island
I would choose to be with a
Carpenter, fisherman, medic,
Naturalist /herbalist
Hunter/trapper. "
Bear -- smart choices, but still, you're somewhat of a pessimist -- I'm hoping to get off the island at some point.
PS -- in my example, the island has a wealth of resources! >>
Hell, just get marooned with some hotties and don't leave.
Camelot
If I was on a deserted island, I would want 'Ginger' with me.
Proud recipient of two "You Suck" awards
<< <i>If I was on a deserted island, I would want 'Ginger' with me. >>
Me? No way, I want MaryLou or MaryAnne with me. You can have Ginger.
Name incorrect? You think I care?
The best time to buy gold is when you have cash that is looking for a home, and when stocks don't feel right.
The best time to be stranded on an island with Ginger or MaryAnn is in 1961.
I knew it would happen.
I say if deals like that are out there, its good to buy gold ;-)
Its up $3 in the europe/asia market so far, lets see what the US market does.
AJ
PCGS Registries
Box of 20
SeaEagleCoins: 11/14/54-4/5/12. Miss you Larry!
<< <i>The best time to buy gold is when you have cash that is looking for a home, and when stocks don't feel right. >>
And perhaps when you decide your assets need diversifying and you don't have enough of your net worth in the yellow metal.
To me, owning gold is like buying insurance against a falling dollar and global chaos. You hope you don't "cash in" on the policy (with very high gold prices) because of all the other problems it causes, but if it happens, at least you're "covered."
Hays DJIA target for 12/31/06: 20,000
kaytsok
Hays Morning Market Comment
Commodities: Coming Home to Stay
January 08, 2007
Don’t Count Your Chickens Before They Hatch
By Don R Hays
Summary: Friday’s action was perfectly primed for what we have been hoping for. We believe the “Denial” phase for the correction of the Commodity Bubble of 2006 is coming to an end. Commodities are in a new world, there is no doubt about it. It is going to take more copper, aluminum, nickel, oil, zinc, etc. to feed the growing demand of the new Flat World. But that is no different than soap and coke and toilet paper and dog food and computers and ……. We hope you get the picture. What determines price? In the long-term it is supply and demand. If the price is too low, as it has been for so much of the last 30 years of fighting inflation, you find suppliers closing production, but also putting maximum effort to increase productivity. Consolidation of firms becomes the watch word. This trend produces major efforts to improve labor relations and productivity. But then if the price gets too high—much higher than what it cost to produce, you see massive new capital allocated to finding and producing new supply. In these last four years we have seen the price of all industrial commodities soar to levels never seen before, with aluminum moving up from $0.58 a lb. to $1.23, copper moving up from $0.69 a lb. to $2.91, gold moving from $323 a Troy Oz. to $623, and silver moving from $4.56 to $12.83 an oz. Silver and copper have been the big winners, as speculators have really piled on as the price has continued to spiral. There’s that nasty word—“speculators.” And in today’s world of commodity-based ETF’s, the speculators have really had their impact. It is speculators that cause “bubbles,” as the speculative “hot air” is very fickle.
The Energy bubble started to leak air in September of 2006 when it broke under a key technical moving average. That break-down at $66 a barrel put a technical downside target in the high “40’s” to low “50’s.” Copper broke under that similar “technical” moving average the first trading day of the year when it penetrated the $2.90 a lb. level, setting up a “technical” target way down at $1.70 to $1.80. We think that there is no better way to predict possible targets than measuring technical chart action, but the real key is not some measurement of the wiggles on a chart, but the level at which sufficient supply is encouraged by profit potential to meet the rising demand of a new growing “Flat World.” So today, I hear ridiculous concerns about there being too much capital, and worries that a speculative bubble in stocks is imminent. The truth—according to Hays vision—is that it is a providential occurrence that just as the world is entering a massive growth that will incorporate 100’s of millions of new consumers, the capital is waiting at the door to finance just such as event.
The bond market has found its home, after 40 years of wallowing with the pigs. The U.S. Dollar in that same time frame has now fully digested all the shenanigans of the last 40 years. It’s Home. Now off there in the distance, who is it we see—the last Prodigal Son coming home? Commodity prices are going to find that “right” price in 2007, and settle in for a long and joyous span of stability.
I want to stress that no-one today can predict what that right price is. It’s a moving target with millions of variables, but if you look at all bubbles, you see virtually the same evolution of emotional response. Speculation serves a very important function, in that it moves that carrot up higher than the demand justifies, hastening the “catch-up” of supply. You only have to look at the number of oil rigs that have been put into service in the last few years to recognize this principle.
This same principle applies to every product, whether it is soap or copper. So we now have a totally different motivation for metals and mining and energy companies than has ever existed, and the most money sitting on the sidelines starving for lucrative investment opportunities. At the same time, we have a public wanting to conserve their spending power, and every product is being optimized to cost the least, and to operate the most efficiently. I can’t say it loud enough,
PRICE
CURES
PRICE!!!
And here it comes. You see in the energy market, despite all those clamors about running out of oil, all the way up in price, there was not one day when the supply of oil did not exceed the demand for oil. The inventory of oil has continued to be so high that oil tankers were being parked, filled and brimming over, waiting on some place to unload. That differential of a price that was over and above the natural demand was pure and simple speculator driven.
That brings us to the next step when those last speculators recognize that they were the last bit of hot air to blow up the bubble, and that air begins to first seep out, and then gush out to bring supply and demand into balance. We believe that the seeping began in that May to December 2006 time-frame. That period injected the evolution of the typical bubble mentality into what we call the “Denial” phase. You can see what I mean on this graphic that we used extensively in the 2000 “Denial” phase of that bear market.
Let me refresh your memory on past “Denial” phases. Back in that 2000 “Denial” phase, we often did a little parody of some of the leading (in some cases only the loudest) Market Strategists of that time that were caught up in what we thought was the “Denial” phase of the bursting of that Technology bubble. If you check back the records, you will find that trio of “A, J, and T.” (I only gave their initials and you have to guess who they were”) were telling their audience with extreme confidence that this was an opportunity, a “golden opportunity,” to load up on these cheaper bargains. They were increasing their exposure to technology.
Let me refresh your memory about what was happening during that prior “Denial” phase with the technology heavy NASDAQ 100. The next graph shows the condition of the NASDAQ 100 in November 2000.
Compare that with the price of copper only 5 weeks ago.
Now, let’s fast forward for the NASDAQ 100 two years later.
Uh Oh! The denial left the sound of denials, and evolved very persistently to fear, desperation, panic, capitulation, despondency, and then depression.
Now, that 800 level on the NASDAQ 100 was ridiculous, obviously, as the very next year saw it rebound by a whopping 94%, but that is the way emotions swing the speculative crowd. I really don’t expect that kind of devastation to commodity prices, but I do expect lower prices. My best guess, and anybody’s else’s as well, will not come from some Sage trying to determine how much oil is in the ground, and how many Chinese will be driving “Hummers,” but will come from the charts. It is not magic, it is simply measuring the old Isaac Newton Principle that says for every action there is an equal and opposite reaction--or at least something like that. It measures the momentum of price action, and based on historical examples the kind of energy that is about to be expended—either on an upside catapult, or a downside deflation of the prior forces.
So as I look at the price of oil, I am using two chart techniques—both very good at pin-pointing targets.
Let me begin by just taking the 55-week moving average. There has often been a trend that once a price action that has been maintained for a long period of time—like the red line above which is the 55-week moving average—is broken, then you can target the 200-week moving average as the target. Today that is at $50 a barrel. So that is my most logical target.
Now as I was sitting here pecking away, I see a trader on the Tube saying that the above chart looks very good. Is this the denial phase or what? I do know what he is talking about. Let me show you this one. Let’s go back to this weekly chart. Remember, the above chart is already giving strong vibes that the price of oil is going to $50, and we’ve been targeting that price since the break down back in September of last year. But when you are in denial, the fundamentals are typically still giving enough good news to encourage anyone to find a reason to buy the “weakness.” So let’s look at the weekly chart and see if we can find that excuse. I’m going to take away those moving average so we can follow the mindset.
He is saying the $55 price level has provided support in the past…..and let’s be up-front, it has. I have just told you, just like we did in September of last year—before he hurricanes set in, that the price was headed to the high “$40’s” or the low “$50’s.” But I didn’t say when. Charts sometimes give hints as to timing, but admittedly, as I’ve drawn on the above chart, the tops made in October of last year at $55 does give some logic for his “denial.” And I would certainly not bet the house that the further break-down in oil is not going to first move back up to as high as the high-$60’s before it makes the final break-down. I wouldn’t bet the house on it, but I don’t like the odds of trying to play that “bounce” either. I simply think the risks are too high, and if I had to bet one way or the other, I would say the break is sooner rather than later. Before I leave this story, let me finish with that chart of copper—not in the denial phase of 6 weeks ago, but as of last Friday’s evolution into fear.
Now let’s quickly switch gears to the stock market. The action we’ve seen so far is just part of the process from a stock market stand-point. Friday actually produced very little needed fear. So our best guess is that this waffling around still has some more waffling to do, and we are still watching our overbought/oversold indicators as the best mechanism to gauge when the next optimal buying juncture is “just right.”
But with all that said, if you are sitting there in your bomb shelter, clutching your $zillions tightly to your breast, shivering in fear of the next “whatever,” then our advice is to move NOW, to get 90% of your assets invested in stocks. Keep a little dry powder, but not much.
That’s it for this Monday, we hope you have a great week my friends.
Oreville, I'm with you. Mary Anne always floated my boat. Ginger was too obvious. The old farmer's daughter.
roadrunner
The new politics in DC will boost "high tech" California stocks while sinking Texas oil.
Hope gold decides to track the Nasdaq.
Author explains the difference between "CPI inflation" (2-3%) and real inflation (10%) as shown by M3. A striking difference. A huge transfer of wealth is will be occuring in the near future as world fiat money runs its required course. We've already seen a huge transfer of wealth over the past 94 years as the trend of a "little"
(2-3%) inflation per year has taken its toll on the dollar.
On a different note, Dr. Fekete recently posted some articles stating that unemployment is caused ultimately by fiat money (no gold
standard). Check his articles for a further read.
Fekete - Real Bills
roadrunner
Well the rare coin market, and even not so rare, keeps telling us something.
I got Dick Osburn’s new list this morning and here is an interesting coin,
"1794 Bust Half Dollar $9750
Harshly cleaned, now lightly retoned. Bright gold surfaces. The retoning has made the coin attractive in spite of the problems. Very light adjustment marks in several areas. A good candidate for a budget-minded set, half the price of a problem-free VF"
Even the world gold coin market is moving up fast. All of the better gold in the N.Y. Heritage sale went way above estimates.
In addition every few weeks another country announces they are moving out of the dollar into gold or something else.
With world wide moves up in interest rates, I do not think there is any way to see the Fed drop rates anytime soon, and in fact they might be moving up.
This example of the English Pound gives us some idea how hard it is to find a safe place for some cash.U.S. T-Bills and C.D. S are losing money when you look at inflation and taxes.
Those running to the Euro are just leaving the frying pan for the fire. The entire world is going to go through this inflation era.
money supply is generally inflationary but a 10% increase does not translate to
10% inflation. First and foremost the economy, infrastructure, population and
need for money grows nearly every year. This growth needs to be subtracted
from the money growth to forecast inflation. It's also true that the effects of
money supply growth can be engineered to occur after the fact. There are con-
plicated and poorly understood processes at work which will have a great affect
on the inflation which results from simple growth of money supply. There are al-
so pyschological factors at play because people tend to act in unison and they
generally have access to the same information. The greatest danger is normally
panic caused by a sudden change in sentiment and then everyone following the
herd.
Those who are buying real assets aren't all doing it because of monetary concerns
and some of those buying financial instruments are well aware of the monetary
issues. This isn't a transfer of weath to the smart it is merely a case of many real
assets increasing as many financial assets are decreasing.
Bernacke's points are really more troublesome but have been predicted for decades.
The boomers are going to exascerbate existing trends toward higher taxes. There
are almost certain to be increases in the age at which one can retire and this will
have dramatic impacts on this problem. The current mess in the health care sys-
tem can be stabilized in short order or repaired over several years if people wanted
it addressed.
It is quite normal for the future to look very challenging. My primary concern is that
we are rushing headlong into it and some of the more serious challenges are yet
to be addressed at all or plans laid.
I'd sure like to see the American that didn't have goods and services increase by 10% last year. Look at my coin collection purchases they sure are vitial and they're out of control!
panic caused by a sudden change in sentiment and then everyone following the
herd.
Those who are buying real assets aren't all doing it because of monetary concerns
and some of those buying financial instruments are well aware of the monetary
issues. This isn't a transfer of weath to the smart it is merely a case of many real
assets increasing as many financial assets are decreasing.
It is very instructive to Google "Weimar Republic" and do some casual reading. I had only a vague recollection of what happened in Germany prior to WW2, but it's fascinating stuff, especially in terms of the social, political and economic parallels that exist in our country today.
I knew it would happen.
by the total bankruptcy of the government and the printing presses.
Inflation got so bad, that workers were paid twice a day, so that they
could spend their money before it devalued. 100 million mark notes were printed
on plain white paper like a laundry ticket. How would you like to
wheel around 100 billion Marks to buy lunch ? Money was so useless, people
burned it for heat, since it was cheaper then buying logs to burn.
Camelot
A comment regarding healthcare and your "The current mess in the health care system can be stabilized in short order or repaired over several years if people wanted it addressed. "
I fundamentally agree with this statement, but I am concerned that we may tend to look for a quick "fix" rather than a workable, long-term approach. With health care accounting for more than 15 % of the total US economy, and given the complexities of the issues involved (e.g. -- issues related to approach to our health care delivery, preventive versus acute care, degree of government involvement in funding and prescribing benefits, appropriate minimum benefit levels, what should be covered, views on distribution and redistribution of wealth, administration of insurance, risk management, fraud, litigation) I think the timeframe required to solicit ideas and craft them into a solution may be longer than our political system tends to permit. This is one of those (unusual?) problems whose solution is best developed by a very well run committee -- ideas need to percolate up from a very large number of experts/constituents, and be discussed in an open, bipartisan manner. This is in part because the issues are so complex -- we need a lot of creative thinking -- and in part because so much is at stake, we need as broad a buy in by the American people as possible.
Keep in mind that expansion of M3 occurs substantially as a result of private sector acitivity, is affected by both domestic and global factors, and is quite far removed from "printing of money." The history of Germany is instructive, but is not particularly relevant to the current situation. With regard to inflation, the real test is down the road, as alluded to in Bernanke's presentation. In particular, at such point as foreign holders of US debt decide they want to unwind this debt, this can only happen (in a non-inflationary way) if the US reduces its consumption. The longer the current situation persists (ie, US accumulating debt to fund consumption), the more likely it becomes that inflation will become a politically expedient solution.
The challenge (essentially, impossibility) of predicting when this could occur is that it depends on a large number of geo-political factors that are simply beyond the scope of financial modeling. (for interesting reading take a look at The Misbehvaior of Markets by Mandelbrot.)
roadrunner
Proud recipient of two "You Suck" awards
however:
our balance of payments favors China
we help build the industrial might of China,
and that power will eventually challange us.
Cheap products allow Americans to buy items that are not
required, essential, or needed.Thereby increasing debt to
our citizens.
By transfering this enormous industrial base to China
we are destroying our own industrial power as well as
the economic foundation of the middle class.
A nation in some ways is like a family, when it is no longer possible
to service the debt, you give other people power over your lives. We
as a Nation are mortgaging our future in the hope that some kind of
miracle will bail us out.
Camelot
OPEC Dumps $10.1 Billion of Treasuries as Oil Tumbles (Update1)
By Bo Nielsen and Daniel Kruger
Jan. 22 (Bloomberg) -- OPEC nations are unloading Treasuries at the fastest pace in more than three years as crude oil prices tumble, sending bond yields higher.
Exporters including Indonesia, Saudi Arabia and Venezuela, sold 9.4 percent, or $10.1 billion, of their U.S. government debt securities in the three months ended in November, according to Treasury Department data. Members of the Organization of Petroleum Exporting Countries last sold Treasuries for three straight months in June 2003.
Oil producers have surpassed Asian central banks as the largest pool of global savings, acc
umulating an estimated $500 billion in 2006 alone, according to research by Pacific Investment Management Co. The sales during those three months mark a reversal because OPEC countries have boosted their holdings of U.S. government bonds by 70 percent to $97 billion in the past 17 months, Treasury data show.
Gold Accounting by Central Banks
Kitco
I missed it by 3 weeks.
cohodk
Expert Collector
Posts: 2639
Joined: Feb 2004
Tuesday June 13, 2006 9:11 AM
I havent hear a single person say oil is going to fall. All I hear is Iran, China, inflation and hurricanes. Therefore I believe oil will be in the 40's before 07.
Knowledge is the enemy of fear
to the disadvantage of the Nation and
our people. A whole bunch of crooks should
be thrown in jail. We have been ripped off to the tune
of trillions of dollars.
Camelot
<< <i>Oil prices have been MANIPULATED. >>
By whom and why?
Please explain...
OPEC regularly increases or decreases production to influence the price of oil. Is there someone else we need to worry about?
Random Collector
www.marksmedals.com
to the disadvantage of the Nation and
our people. A whole bunch of crooks should
be thrown in jail. We have been ripped off to the tune
of trillions of dollars. "
I certainly agree with Bear on this.
Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53?
Oh and don't tell me a mild winter, perhaps this is true in N.Y., but the winter in the west and the south so far as been pretty rough.
To raise the price of oil, untold volumes
were stored on cargo ships thruout the world.
Further oil was stored at refineries which were then
shut down for routine maintenance. Further oil was loaded
into pipelines and rerouted, in order to create regional shortages.
A large amount of oil was sold to overseas clients, to exacerbate our
own artificial oil shortage. American oil is most successful in capping proven oil
wells on American soil and hampering the developement of alternative fuels unless
they can control that alternate totally. The oil companies now control the productio, refining
and distribution of oil in this Nation. We have allowed the old cartel of Standard Oil, to slowly recreate
itself thru mergers that violate the anti trust laws of the Nation. We have been had and royaly by big oil.
The Oil Companies have learned how to squeeze
the most money out of the American citizen. Oil companies may have different retail names, but all are owned
by a few giant Corporation. MANIPULATION, RESTRAINT OF TRADE, PRICE FIXING, ILLEGALLY CREATING SHORTAGES
PAOLA OF BOTH POLITICAL PARTIES, MANIPULATION OF NEWS MEDIA TO CREATE FEAR IN THE PUBLICS MIND OF A SHORTAGE.
yOU NAME IT AND bIG oIL HAS DONE IT, IS DOING IT OR WILL DO IT IN THE FUTURE.
Camelot
<< <i>Oil companies thru options.
To raise the price of oil, untold volumes
were stored on cargo ships thruout the world.
The Oil Companies have learned how to squeeze
the most money out of the American citizen. >>
I agree 100%, we basically being screwed by 'Big Oil' on a consistant basis.
Perhaps I should divert some of my gold funds to Big oil...Exxon Mobile, Texaco, etc.
Random Collector
www.marksmedals.com
<< <i>Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53? >>
A couple of things happened. The election was the first. In order to drop the price of oil Goldman Sachs, the US investment partner changed their index weighting to lower oil futures and this forced many smaller funds that follow their index to dump also, this caused the big drop in oil futures in August/Sept. These were futures for delivery in this year.
Next is a very interesting scenario. The story goes back to the fall of the USSR in 1989. The only thing that kept their economy afloat was the income from oil. The US military protection for the Saudi rulers came with a price. They agreed to flood the market with oil effectively bankrupting the Soviets and causing the collapse of their government.
Now we are in 2007. The only thing keeping the Iranian ruler in power is the billions from oil that support the vast social programs. They are the #2 oil exporter. Also, Venezuela , a new socialist regime is getting vast amounts from oil. There is reason to believe that this may be the same squeeze play coming on the Iranians as they continue to defy the calls to end their nuke plans.
The Saudi's don't want a nuclear Shiite Iran. Dropping the oil prices will cause a major drop in Iranian revenue. The Saudis can afford to miss a llittle income, Iran cannot. It's already starting to cause major unhappiness in Iran.
Camelot