sorgmot

Bespoke's Commodity Snapshot (6/10/08)

Thanks for the charts. They are very useful in predicting mining company profits, all else being equal. The gold chart shows that that metal was being sold for $ 650 per oz. in the summer of 2007 and is now selling for $ 900 per oz. $ 250 per oz. more to the bottom line.

The Barrick president says the cost is $400 per oz. so profits should double in 2008 versus 2007. Perhaps, the stock value will double too.

See your investment adviser and always diversify your portfolio. This is not a recommendation to buy or sell any stock shares.

Why the Discrepancy Between Oil and Gold?

Gold bullion in US $ per ounce and the US $ share prices of common stocks of gold mining companies are subject to at least 3 cycles of differing periodicity. The seasonal cycle, the business cycle in the USA, and the long or multi decade liquidity or asset valuation cycle.

The seasonal cycle for gold and gold stocks in US $ runs up from the end of September to the following April and then goes level or sags until the next September..

The business cycle upswing in US $ for gold should start in late 2008 and run through 2009, and 2010 before pausing for 2 or three years.

The long, multi decade cycle, is currently in the collapsing liquidity phase (higher interest rates and lower unit prices for stocks, bonds, real estate, and even at some point commodity prices). Liquidity peaked in 2000 with high stock prices and has been falling ever since. It is now 1938 and commodities are recovering from there 1932 lows.

If the US $ keeps falling against foreign currencies which it will since the US is now the 1938 Brittan and Euro-Asia is now the 1938 USA, then commodities should rise as the US $ falls. Or one could buy Euro-Asia currencies. Euro-Asian stocks, bonds, real estate will fall in terms of their own currencies but not commodities which are in short supply.

Good luck.

Another Fed-Induced Bubble?

Yes, The Fed is and always has been and always will be (until its dissolution) in the bubble and bust business. The Fed runs the USA banking cartel. Please read Wealth of Nations to see what Adam Smith had to say about the reduction in the wealth of a nation when its government allows cartels to exist and ever dominate the nations economy. David Hume is another good source on the subject.