Andy1234

High Gold Prices: It's the Oil, Stupid

The government can print a lot of money.....I wouldn't say the DJIA will not go over 11K or below 6.8K.......I have a feeling that the worse the economy is....the higher the market will go....but on an inflation adjusted basis....or the market priced in oil or gold.....the DJIA will continue to decline in purchasing power....although the dollar price will increase.

Mike does make some sense....as peak oil comes....more dollars will be exported.....if that money is not invested back into our debt....we could see massive inflation.......especi... if other countries use our dollars to buy assets or commodities....massive rise in the price of assets and commodities.


On Nov 24 08:05 AM Vodka wrote:

> On November 27, 2009 all of America will run to buy gifts for Christmas,
> this is already presented like a Gold Rush and shoppers are urged
> not to miss a thing on sale.
> Analysts are pushing sales estimates Sky High and accordingly Wall
> Street trading desks are buying, buying, buying.
> And all this markets buying in centered around one thing, which is
> YOU the shopper.
> I don't urge you not to buy, all I want to say is that whatever you
> will buy, it will be more things than last year but worth less money.
>
> When numbers will be revised, the selling panic will follow and you
> will have much less money and much more debt on January 1, 2010.
>
> Whatever will happen this shopping season, know one thing: DJIA will
> never break 11000 level, so if you are long stocks and I know you
> are long because you hold it since 2008, the maximum the market will
> go up is 6-8%, to the downside it will go below 6800 on the DJIA.
> Think if this risk/reward is right for your future. abrakadabra.notlong.com

Why Invest in Oil Over Alternative Energy

Well.......We know that energy is going to increase.....as long as the world population increases.

Rather than trying to determine which fuel source....or energy source is the best for the future.....wouldn't it be prudent to invest in companies that sell electricity......I mean.....they are going to sell more energy.....and they will more than likely always choose the best source of energy in terms of environment, cost, government regulations, etc. That seems to be the best play here. Even better....find one that will have a favorable currency exchange rate if you think the dollar is going to fall out.

I do play different energy sources......and I agree with the author.....but its always best to diversify amongst the energy sources....uranium, oil, coal, NG. There is bound to be some HUGE winners in this arena long term.

And if energy is going to become more scarce in the future (especially liquid fuel)...wouldn't it also make sense to look at vehicles which require liquid fuels of high energy density and look at these areas. Which industries use high amount of trucks or huge machinery that might not be able to operate any other way....its possible that if energy prices increase....the cost of mining, producing food, etc will increase substationally......even the cost to build homes. Its possible that investments directly into these commodities will do well in the long term as well. Lots of opportunities!

Oil Is Still the Key to U.S. Economic Future

We don't know the effects of solar on the environment.....while most think it has little effect.....we don't know for sure. I also have a brother who is in the business of electricty transmission. He likes coal and NG plants....because they build them and know what to expect in forms of output. As in....you build a 900MW plant...you can achieve 900MW of energy reliably...and consistently if needed.

If you have a demand for 900MW of wind or solar....you might need to build many times 900MW worth of wind in order to achieve that power output at a certain wind speed or solar output, etc.

He claims that energy from wind and solar cannot exceed more than 40% of our power source......for reasons he didn't explain.

I think in order to get a complete and whole picture of these things...research and development need to be completed....and the effects documented. We can sit here all day and say NG is our savior....but possibly the environmental effects of drilling tons of gas wells in shale locations will put us in a water shortage problem. I don't know....but someone needs to figure it out.

Oil Is Still the Key to U.S. Economic Future

Fitz,

I read your response. Those statements are more problems of our governmental system than energy in and of itself. While I don't agree or disagree with NG being the best alternative....we need to agree that our government has powers that it should not. That we don't need an energy policy....what we need is freedom from government. subsidies should not exist anywhere...because in essence they are choosing what is the cheapest or trying to influence what people use.

In essence....their energy policy is exactly what we have:)

I am advocating a completely free market where prices determine what we use.

You are saying you want NG...and the government should supply NG solutions.....possibly its not the best solution is all I am saying. We won't know until the government gets its hands out of everything.

Oil Is Still the Key to U.S. Economic Future

Again....what makes you think that your plan is better than some other ideas?

We still have a somewhat free market and we should keep it that way. I don't think the government should get involved with any of this, or health care, or bail outs, etc. I know you will completely disagree and thats ok.

But what if there are ideas out there that are two times as good as what you are recommending?

For instance, we travel to buy groceries and items from the store.....we travel to go to work..etc.

We have to move a 3000lbs vehicle and a 100-300lbs person.

What if we designed a system where all we had to move was the goods, not the person or the vehicle? What if we designed a system much like a bank has with air moving pods around? How about a small single track with little trains moving goods to each home? Why continue to think like we do today?

Why even have stores? Why not go virtual? Why are we spread out? etc etc etc.

I think we could easily cut 50% of the demand for oil in the USA if we had to....this could buy us time for something new.....and that something new shouldn't be decided by a group of individuals....but by the free market....this will also provide the most economically viable option.

Dr. Stephen Leeb on Commodities and Inflation - Is He a Genius or Alarmist?

Good article which basically describes my portfolio exactly. wow...its like Dr. Leeb looked at my portfolio and said these are the places to invest.

Stay Away from U.S. Treasuries - Invest in Energy Stocks

Agreed. Well said!




On Jun 15 07:25 PM kertch wrote:

> MF, the problem I have with the entire energy policy argument is:
> the energy policy! In your plan, and in the plans of most others,
> someone is always picking winners or losers. Didn't we learn our
> lesson from the corn ethanol fiasco? And by the way, I'm STILL waiting
> for my hydrogen-powered fuel cell vehicle. Everyone keeps saying
> "when we build out wind and solar...". Well everyone is making the
> same assumption about those 2 technologies as they made about ethanol.
> Wind is NOT, I repeat NOT a new technology. It's been around asa
> sounce of power for hundreds (if not thousands) of years. It's expensive
> and unreliable requiring conventionally powered backup generators
> for large istallations. The industrial revolution needed a better
> power source, and they found it in coal and hydro, not wind. Solar
> is increadably expensive and the infrastructure required to produce
> it in sufficient volume would require an investment of trillions
> of dollars. Not to mention all the nasty byproducts of semiconductor
> manufacturing. And what is to stop the Chinese from being the low
> cost producers and thus provider of choice for wind and solar power
> systems? The point is you and others are making predictions about
> a future that may never arrive (where's my flying car and my free
> nuclear power?). The free market doesn't need central planning. We
> made the choice long ago to subsidize oil and the oil based transportation
> infrastructure and look what that got us. Why make the same mistake
> again? If you build out an NG transportation infrastructure what
> is to prevent that from becomming obsolete as well? We don't know
> for certain if a hydrogen economy will ever exist within our lifetimes,
> so how can we "reuse" the NG infrastructure? When I say start now,
> I mean open the energy market to all competition and end all subsidies.
> That will mean a higher tax on oil to "recover" a century of subsidies.
> We really have to stop subsidizing other people's pipe dreams. Is
> "clean coal" a lie? Who cares! If it can't compete in the energy
> market it doesn't matter. If it really is the most economical solution
> then the market will bear this out. Is solar part of the solution?
> Perhaps, but not at 22 cents per KWh. Should we have the option run
> our cars on NG? Sure, but not if costs more than oil once the required
> infrstructure is built out. Should we import Brazilian ethanol? Sure,
> why not if it meets our requirements. The best energy policy is this:
> Let the market sort out the best combination of cleanliness (greeness?),
> infrastructure requirements, and cost.

Stay Away from U.S. Treasuries - Invest in Energy Stocks

Alright....suppose we make every car in the US Natural gas.

The government continues to grow government....and create money. The value of the dollar becomes worthless.


Why wouldn't these NG companies ship their NG overseas in the form of LNG if the dollar isn't worth anything?

We still need to import other commodities and items.....if the dollar plunges.....this will push up the cost to manufacture NG in the USA...still raising the price of NG.

You guys have it wrong.....its the policies that the government has..fiscal/monetary etc that are killing us.....not necessarily the free market.

We need to export more useful things....and honestly....how sustaining is it for China to lend us money to buy Chinese made products?

At some point we will need to export our products/services in a greater amount then what we are consuming/using today....otherwise we just pay our creditors back with useless dollars which are redeemable in less products and services....and as any investor knows.....thats not investing if you are losing purchasing power over time.

They will stop investing in the US....or we will need to make drastic changes. The money will flow to the creditor nations.....not the nations that have no money and are in major debt. Thats called BROKE.

Stay Away from U.S. Treasuries - Invest in Energy Stocks

I think you guys are still focusing on the wrong things. You keep saying the price of oil or NG is a problem because it keeps going up in price.

The fact of the matter is.....the price of oil at $35/barrel this past year was one of the cheapest prices its been in its history of the past 50 years when compared to gold and was an excellent buying opportunity.

I think we have larger problems then energy......its the mindset of our people and government.

That needs to change first before we can work any problem anywhere.

The problem lies in how money is issued, government spending/budget, taxes, etc.

A large problem with the price of oil is money printing....NOT SCARCITY.

If scarcity was a true problem....the price of oil would GAIN in real terms against gold and other commodities in REAL TERMS.

You are looking at the price in dollars...and saying something is scarce because the price is going up. The fact is....scarcity never changed...the money supply did.

I agree peak oil exists.....it has to at some point.....but I would see substitution occuring or energy efficiency increasing if oil increased in real terms.


www.zealllc.com/2005/g...

In an inflationary fiat-paper regime such as the ones that exist in every country on the planet today, money supplies are guaranteed to grow faster than commodities supplies. As relatively more money bids for relatively less commodities, higher commodities prices are the inevitable result. To bet that the GOR is going to suddenly fail is not only to bet against six decades of history, but to somehow assert that fiat-paper inflation will miraculously cease so monetary pressures don’t push up gold and oil simultaneously.

Stay Away from U.S. Treasuries - Invest in Energy Stocks

I agree with your overall theme. Stay away from treasuries and buy energy stocks! Definitely agree.....but not sure if the causes of why energy prices and interest rates going up are correct.

Remember...we are the reserve currency. We set the price of oil in all reality with how much money is in circulation......and that gets bounced off how much is produced.

We went from 800 billion in circulation to something like 3-3.5 trillion dollars in circulation in a short time period. I don't even know what this is going to look like for interest rates on bonds and inflation rates for the future....but I am willing to bet it will be very high.

I am just saying that the government ultimately controls the price of oil through monetary measures......Price oil in terms of barrels per once of gold....and thats the true measure of how expensive or cheap oil or gold is. You cannot use the price in dollars since the currency is backed by nothing and the supply of that currency goes up and down very quickly.

If everyone spent 10% of their money on energy (oil) lets say...and they all made $10K/yr, they would spend $1K on energy.....if everyone made $100K a year, then everyone would spend $10K on energy. Nothing changed for demand or supply....only the money supply has increased.

Best Investments for Rising Oil

But the currency exchange does in fact directly effect the supply of any commodity.

As exchange rates go up and down....the operating costs from countries outside the USA go up and down........if the exchange of ones currency goes up 50% against the dollar while the commodity price does not.....their operating costs increase and they make a lot less profit or potentially lose money from currency exchange differences. weak dollar does affect commodity prices if the lions share of the certain commodity is produced in another country....or if the USA exports that commodity (the us dollar decreases and the purchasing power of other countries increase increasing demand for the commodity the USA produces).


On Jun 07 09:25 PM BrotherMaynard wrote:

> RE: Nelsanity
>
> "Oil being priced in dollars is not comparable to your house (assuming
> you live in the US). When Saudi Arabia sells a barrel of oil in dollars
> what are their costs in?"
>
> Look...the currency markets are seperate from the commodities markets,
> fundamentally speaking.
>
> There is no fundamental reason for the commodity/currency trade other
> than speculators think it is a better store of value than the dollar
> (or whatever currency happens to tickle everyone's fancy).
>
> The dollar movement has nothing to do with fundamental supply and/or
> demand for the commodity, any more than it does any other asset on
> the planet.
>
> The dollar can go all over the place, but commodity prices are ultimately
> a function of supply/demand, not currencies, despite their obvious
> correlations. Somebody must buy or sell the actual commodity to set
> the prices...the prices just aren't "adjusted" by a market maker.
>
>
> Again, the dollar/commodity trade Its merely a speculative store
> of value. It is not an axiomatic price-setting mechanism like supply
> and demand, and therefore buying/selling commodities becuase of currency
> movements is more noise than signal. And if it goes on long enough,
> you start to get large dislocations.

My Thoughts on Oil

Corrected below.


On Jun 04 03:34 PM Andy1234 wrote:

> I haven't tracked the difference in oil price and currency exchange
> difference and drawn any conclusions. Short term price fluctuations
> mean little significance.....using the stock market for any form
> of argument should not be used.....because as we know....markets
> are manic depressive and are often times emotional and irrational.
> Value investing would never exist if markets were 100% correctly priced...the warren buffets of the world
> and others investors wouldn't be who they are.....because everything
> would have a true reflection of the true intrinsic value. What actuality
> comes about is the market does not know the future like any of us.....and
> I am 100% sure that todays prices will be different 10 yrs from now...saying
> that at any static moment in time the market is 100% of the time wrong....otherwise
> you would NEVER have a stock move up or down since all cashflows
> are already reflected in the stock price:)


If the market was a good indicator of value.....then we would cease to have moves greater than a couple of percent.

My Thoughts on Oil

I haven't tracked the difference in oil price and currency exchange difference and drawn any conclusions. Short term price fluctuations mean little significance.....using the stock market for any form of argument should not be used.....because as we know....markets are manic depressive and are often times emotional and irrational. Value investing would never exist...the warren buffets of the world and others investors wouldn't be who they are.....because everything would have a true reflection of the true intrinsic value. What actuality comes about is the market does not know the future like any of us.....and I am 100% sure that todays prices will be different 10 yrs from now...saying that at any static moment the market is 100% of the time wrong....otherwise you would NEVER have a stock move up or down since all cashflows are already reflected in the stock price:)


On Jun 03 01:14 PM Michael Fitzsimmons wrote:

> Andy: did you compare the oil companies i mentioned? did you notice
> today when the US dollar was stronger how STO and BP were down more
> in comparison to XOM and CVX? these stock movements (when the US$
> is both up and down) over the past few years prove my point better
> than any other argument. so, i suppose we agree to disagree.
>
> Crocodillian: glad you brought up chu's exact quote, because it is
> a perfect example of his wrong-headed thinking and why he should
> be fired:
>
> first he says he is "agnostic" about using the most abundant, clean,
> and cheap energy resource in the US (natural gas) for transportation.
> nothing "nuanced" there. BAD ENERGY POLICY.
>
> second: he wants to develop biofuels. ethanol?? switch grass? terrible
> use of increasingly vital water supplies not to mention the distortions
> in the food market resulting in inflation across that sector. didn't
> 2008 teach him anything? not only that, biofuels is just another
> way to keep us addicted to *liquid* fuels (i.e. gasoline derived
> from foreign oil imports) when we should be transitioning to gaseous
> fules (i.e. natural gas) once again, BAD ENERGY POLICY.
>
> lastly, he uses the same old excuse XOM used to scare the hell out
> of congress in the 1970's: that using natural gas for transportation
> will strain the other uses (oh no!! we wont have gas to heat our
> homes!!). it's like a bush fear tactic! the truth is, US nat gas
> reserves are abundant, clean, and cheap. for a sitting secretary
> of energy to not understand the fundamentals behing the US's best
> weapon against foreign oil imports is almost criminal considering
> what is at stake. once again, BAD ENERGY POLICY.
>
> *** ENERGY SECRETARY CHU SHOULD BE FIRED ***
>
> oldwizard: to answer your question about auto companies and nat gas
> conversions, i think you would like to read hefner's book "the grand
> energy transition" where he describes how we could save the US auto
> manufacturers, dealers, and hundreds of thousands of jobs by converting
> existing american's SUV's (investments worth $30-50k) over to natural
> gas rather than expecting them to just junk them and buy EV's (a
> ludicrous expectation when all middle class americans are currently
> suffering mightily due to the oil crisis to begin with! i'm either
> very dense, or this is simply a no-brainer. it is so clear to me,
> yet our energy secretary, president, and auto companies just don't
> see it...one side is very wrong, and one is very right. i've been
> wrong before, but on this issue, i am like abraham lincoln once said:
> this is my opinion, and i am sticking with it until someone can convince
> me i am wrong. well, secretary chu's weak arguments are not convincing
> to me at all, and i would LOVE to debate him on CNN for a half an
> hour on the issue. after that half-hour, about more americans would
> have my opinion that he should be fired and go back to studying particle
> physics or whatever.

My Thoughts on Oil

you must be talking about thermal efficiency......an internal combustion engine is around 36-40% or so from the numbers I have heard and read.

an all electric system might add complexity to the system and may or may not be more efficient.......I guess it depends on what the electric cars look like....and what fuel is being burned/used for electricity....because I highly doubt that all energy could be gathered from alternative sources in any meaningful way.

I suggest becoming more efficient.....it seems being more efficient in anything is always a benefit........with little to no downside. Forcing people to change or doing something completely different based on faulty reasoning or logic may not be the answer. I am not convinced of global warming causes.....while the earth may very well be warming.....what makes us so sure of the causes of the warming? Its difficult enough to prove simple problems in the engineering world....yet you take something very complex and draw direct correlations to something......yet its quite possible that CO2 is a byproduct of global warming...not the cause. Methane and other CO2 molecules are trapped in snow and ice....yet when this is melted its released into the earth. More and more CO2 is released from population growth and more cows, auto's etc....but we also have more rooftops, black driveways, roads, wtc radiating heat everywhere......I havne't seriously looked into global warming....but I highly doubt you can draw any conclusions with much confidence in any design of expirements.

On Jun 03 02:38 PM user396040 wrote:

> That was my initial reaction - but the electric engine is sooo much
> more efficient - especially for stop and go city driving that the
> plug in hybrid may turn out to be a compelling solution for suburban
> commuters. As I understand it, the gasoline engine is about 18 percent
> efficient(much less so in city driving) and the electric engine is
> about 88 percent efficient. This compensates for the large loss of
> energy assoicated with the generation of electricity. It should also
> be noted that utilities have improved plant heat rates (how many
> btus necessary to generate a kwh) and may do more in this direction
> as time passes. Another factor to consider is that electricity can
> be generated a number of ways and so, as technology develops, new
> energy sources can be readily harnessed as transportation fuels.
> I am not sure how this all nets out but I think it is a key question
> to be analyzed as we go forward.

My Thoughts on Oil

The problem with our system is every heartbeat has a vote. Those who have little to no stake in society have a vote.....and can literally vote in ways that have effects on people who have large stakes in society.....and this is ass backwards. The people who pay the most amount in taxes should have the higher voting power.

The way the system was intially set up was only male white land owners could vote. I don't agree with this.....but we could set up a voting method where only people who pay taxes would have a vote....and possibly the more taxes you pay...the higher the voting power. I haven't thought in depth about it....

but when you can vote for money....it will be the end of the republic (ben franklin)

The constitution is shit on by government officials.....we need to change government and get a ligit one set in place who actually follows the rules.







On Jun 03 05:51 PM elcopone wrote:

> Very interesting article and comments. Thanks.
>
> To me it's all very sad that our elected officials are still acting
> in the best interests of special interests and not for the country
> as a whole. Obama promised change. Each and every day that is turning
> into an empty promise. Not that I think McCain would have been one
> ounce better. Both parties really have much more in common than they
> would lead on - self preservation and special interests drive all
> their decision making.
>
> How much longer can this go on? When will a legitmate alternative
> to the Blues and Reds come along that will actaully receive public
> support. It's all very disheartening.