Commodity Bubble Proponent

Oil Won't Stay Down for Long

Davy,

want to talk about your earlier predictions about how oil wasn't a bubble?

Once again, you are wrong.

Readers: If you followed this guy's advice over the past year, you'd be down 65% over the last 6 months, just like Boone Pickens.

This is just another commodity bubble guy who wishes for the good old days of $200 oil and $4 copper.

Is the Commodity Bull Market Over?

We haven't topped out yet. But we're getting close.

Some interesting signs:

1. Iran has doubled the amount of crude oil sitting in tankers waiting to be delivered, creating a ship shortage (20 million barrels as of today). If demand was so hot as everyone is claiming, that should be gone.

2. Saudi Arabia just cut it's benchmark discount on all of its varieties of crude. Why would they do that if the demand was as hot as everyone claims? (source: Bloomberg)

Burst Bubble? Commodities' Long-Term Story Remains Intact

I'd like to see how much "demand" there really is if buying on the margin was discontinued. Would you really want to pay full face value for a futures contract for 110 oil and 1,000 gold?

To me, most of the arguments for the commodity super cycle are bs. for the following reasons.

1. The Inflation Story: The popular hoards think that since the fed is pumping money into the system, it will lead to inflation. The reality is that the inflation was already built into the system with derivatives that dwarf that real money supply (est. 515 trillion dollars). When looking at the fed liquidity injects, they are miniscule compared to the deflationary impact of these illiquid investment vehicles falling apart. This is why a couple of bad mortgages are destroying the housing industry

2. Oil supply has "peaked" in 2005 and will inexorably decline: Not true according to the EIA. We have had several instances of supply over the "peak" in 2005.

3. Oil/commodity demand will march onwards and upwards unto eternity: Not true again. See declines in OECD consumption. As the US/EU slows down, less demand for cheap Chinese goods, reduced Chinese incomes, and less commodity demand. Total OECD petroleum consumption DOWN over the last 2 years and stagnant since 2004.

4. Emerging markets will grow forever and ever and ever. These markets are most prone to crisis.