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5 Comments

    • ON: Wed Feb 27th 11:31 AM
      Commented on:
      Too Much Money Chasing Too Few Commodities
      Excellent article, Gary.I came to the same conclusions 6 months ago and moved the entirety of my cash and investments out of US stocks except for miners and drillers into commodities, energy and shippers and all my cash into other currencies.It pains me making money betting against my country. Pull up a 5 or 10 year graph of the S&P and it will make you seasick.Superimpose it with say the drop in value of the dollar and you see real negative returns.
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    • ON: Wed Feb 27th 11:06 AM
      Commented on:
      Why $100+ Oil is Here to Stay
      Don,Thank you for your clean graphs. You cited the key production data but inadvertently left out the most important factor:transportation which is 95% driven by oil and only by oil. Nuke plants and wind farms don't move cars, planes and trucks. There is no substitute for oil in the transportation sector and you are probably correct on the floor price. The government and CNBC bobbleheads who say oil will go to $60 are the same folks who say there is minimal inflation. Even my dog walks out of the room when george bush comes on the tv. Who knows what the ceiling is.I was recently in Europe and it's over $7.00/gal
      there and the highways are plugged with trucks and cars, many of them big BMWs and MBs. If oil goes to $200 then fuel will go to about $10(US)/gal over there.If $7.00 doesn't slow traffic, would $10? $15?$300 would bring fuel to $13 or so unless they tax it at a higher rate. My gut is that consumption here wont drop very much until fuel gets above $300/barrel. When we were there the Euro cost us $1.34. It hit $1.50 today. Thank the guvment and the Fed for putting the US into a flat spin. For those of you who are not pilots, that's a bad predicament.
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    • ON: Sun Feb 24th 14:16 PM
      Commented on:
      Commodity Analysts Believe the Party's Over
      Wow people. What do you really think?!!!I think the key to understanding the commodities is understanding the underlayment to commodities and that is the energy used to extract them and the financing behind the extraction.If the cost of the energy goes up, the commodity goes up and/or becomes scarce. The outlier factors influencing price are many and varied and of course include obvious things like analysts recommendations fatuous and otherwise, futures markets, sociopolitical events, investors expectations, etc blah blah. Most commoditites are oil driven, some coal or gas(electricity). If commodities are abundant and energy is cheap it stands to reason that there is price elasticity influenced by supply/demand factors. If lots of land can be planted to expand the crop base, elasticity. That is not the case, people. Something is different now and until it becomes common knowledge that the cost of energy is what drives these things, Oil(energy) will fluctuate in price but oil will never go down for any sustained period ever again.The truly essential commodities probably wont either and I wouldn't begin to guess on the specific ones like rare metals. If we enter a period of deep or sustained industrial downturn some will drop. We wont need as much platinum or palladium when basket case corporations like GM stop building 6000 lb suburbans and pickemup trucks that need big catalytic converters. But it's hard to bet against grains; we'll never see $2/bushel wheat again. People who watch the bubbleheaded bobbleheads on CNBC and Fox etc are wasting their time.
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    • ON: Sun Feb 10th 12:36 PM
      Commented on:
      A Housing Bubble Within a Bubble
      Mark, you have a smart head on your shoulders. Be careful where you buy esp if it's a distant suburb. When energy starts to get pricey in the next 10 years, those distant suburbs will become mighty cheap meth slums. The exodus from them could start sooner than any of us think. The first step will be declining property values, perhaps grid interruptions a la South Africa or China(I don't want no stinkin nuke or power plant in my neighborhood!!) Try to look ahead.
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    • ON: Tue Jan 8th 10:05 AM
      Commented on:
      Recession Fears Will Bring Oil Down to $70
      Vahan's comment of oil price heading to $70 is an unlikely scenario for some of the reasons posted above. For an exercise take a blank sheet of paper, draw a vertical line. Left column is factors driving oil price down, right column factors driving price up. The factors in the right column are myriad. The obvious left column entry of a recession tamping demand is the only dominant factor I can come up with. There are others but oil is a different commodity. It is not chocolate or wheat or pet food. Production is inelastic. If oil goes to $70, not only will I mortgage my house but I will sell the furniture on ebay to raise cash!
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