JREwing

Commodities: Bubble or Not?

Xyrus

Excuse me, fella. Since I am a German I know a little bit about Hitlers rise to power.

Journalists, who disagreed with the Nazi parties views were 'convinced' otherwise. As long as there was a parliament in place, the SA (a gathering of urban street thugs) prevented all MPs, who were likely to oppose the Nazi party, from entering the parliament.

After this 'parliament' gave Hitler absolute power, there was essentially only one newspaper, only one radio channel, only one party and everyone, who opposed Hitler was imprisoned and/or executed.

Excuse me again. But none of the above happened during the Bush administration. I guess, that about 90 out of a 100 journalists in the US share an intense hatred for Mr. Bush and criticize him on a daily basis. Of course they are well within their to do so and no one prevents them from exercising their rights.

So don't You ever compare Mr. Bush to Adolf Hitler, for You do not know what You are talking about. If You had to live under the rule of the Nazi Party, you would pray on your knees for a live under the Bush Administration.

Commodities: Bubble or Not?

To those above who blame the Iraq War for high oil prices should read one of the pieces on STRATFOR once in a while.

The real reason for the Invasion of Iraq was to make sure, that Iran never ever controls the oil reserves of Iraq, Kuwait, Saudi Arabia and the Emirates.

Iran obviously tries to gain influence over the countries of the region from Lebanon to Pakistan.

If you think the Invasion of Iraq is responsible for the rise in oil, think how high the oil price would be, if Iran would control the bulk of the worlds oil reserves.

Democratically elected governments don't go to war unless they absolutely have to, for the peoples of the world hate wars. Since the goal of every politician is to get reelected, it is illogical to think they go to war for the fun of it.

Commodities: Bubble or Not?

The price of oil is not determined from week to week. At the end of the year it will become clear, why oil is so expensive.(Remember Q$ 07/ 10 big ass draws in a row)

All those above, who call this a bubble based on the supply and demand of the last few weeks, have no idea whatsoever of how the oil markets works, how refineries work. Why and when they do their maintenance. And why they buy oil now, while they are doin' maintenance. Because fellas, when driving season is underway 125$ will be bargain.

Since markets discount future events, it is not surprising that oil goes up.
What is surprising is the extent of the move. May be they take 10 bucks of the price next week, who knows.

But the general trend is justified.

To all who complain about the price of oil. You all do still fill up your cars and heat your homes do you. So, it can't be too expensive.

And: The world is bigger than the United States. As in the Goldman&Sachs piece: gasoline is no longer the dominating factor in oil.

Commodities: Bubble or Not?

Excuse me?

Commodities: Bubble or Not?

blackbody

I am not saying, that prices will never come down. That would be illogical.

I am saying that the world is not used to the additional demand from emerging economies. If the entire world economy were in recession prices will come down. Since this not the case, as the Baltic Dry shows impressively, I will stick with my investments until I come to the conclusion, that the boom is over.

Considering, that the economic boom of Germany and Japan after WWII lasted more or less 20 or 30 years, I think, this one's gonna keep goin' for a while.

Hell, they are building almost a hundred major airports in China. Lots of stuff to be consumed there. Love it!

This is not house flipping. The Chinese fought with Rio and BHP for month now about the price for iron ore. And now they pay what Rio and BHP asked for anyway.

There is real demand. They are building actual stuff over there and not just the silly olympic crap.

I know, that this has never happened in our lifetimes, but nevertheless it is happening.

Many key minds throughout history predicted, that the world would tremble, when China awakes.

Commodities: Bubble or Not?

May be we are just not used to the demand from countries like China or India.

When I was a kid, and I've seen something on TV from China, all I have seen on their roads were scooters and old bicycles. When I see stuff from there now, all I see is traffic jams with lots of cars. I don't know about you guys, but I always thought that the average car needs more raw materials and once it's on the road more gas than the average scooter or bicycle. Since it takes years to develop new mining projects (The Rio Tinto website has interesting videos on stuff like that) or oil fields, I asked myself: 'Why wouldn't commodities appreciate in price?' Just because Jim Rogers says it? Hardly. It is just supply and demand.

Of course there are speculators involved, including myself. But I wouldn't invest in commodities, if it wasn't making sense to me.

There were lots of people, who told folks in October, that this was a once in a lifetime opportunity to buy financials. I didn't, because it just didn't make sense to me. Luckily so. Financials obviously were a bubble, back then.

What I am saying is: Speculators may jump on booms like the commodities boom. But they don't cause it.

This commodities boom is for real. Just because we didn't have a boom in commodities for so long doesn't mean this is a bubble.

Think about it. The last hundred years or so the western nations enjoyed the mineral wealth of the entire planet. Is that normal?? It's not. On the contrary: I think the way it is today, is normal. Demand from all parts of the world not just demand in the west and supply in the rest of the world.

The fact that this sucks for us here in the west, doesn't make it less true.

The Crude Oil Price Disconnect

This article is total crap and that NYMEX floor trader was probably short and got his ass kicked.

The author is another one of these 'Joe Kernen' types, who think that once an oil field is discovered, it produces instantly at an maximum daily rate and does so until the end of time. And anyhow, oil should be for free. People, who think that is true, probably believe in Santa Claus, too.

Yes, there are still nice discoveries made, and to be made. But new discoveries take a long time to come online. However,in the time new fields come online, existing field are being depleted. For the 'Joe Kernen' types, this means, that they run out of oil. So much for the supply picture.

Now for the demand picture. Just a few things here. China imports of diesel/heating oil quadrupled year over year. Even Japan import a lot more than the year before. India Up.... thailand up....... Australia up and so on. And to make bad things worse: There is no demand destruction in these emerging markets, because the millions and millions of people there don not feel the Pain at the pump, because they get a painkiller from the government in form of price controls. Just check out the Petrochina numbers from yesterday.

So, when you consider the above and the fact that US supplies are 30 million barrels less than last year at this time, THERE IS NO REASON, why OIL PRICES should not be higher than last year.

P.S. I stopped watching CNBC, because i couldn't stand the daily question: What is the 'real' price of oil? What are these people communists? The real price is the latest tick at NYMEX front month contract. Not what you wish for!!

In Oil we trust!