Engineer

Global Financial Crisis Makes Oil a Great Hedge

It seems like there's always something missing in these analyses: there is a price point at which the producers will simply stop producing.

Why on earth would I produce oil if I'm losing money on each barrel? I'm going to shut in my wells and tell everyone to go home.

Oil is NOT getting cheaper to produce. It is getting more and more expensive to produce. The world is still dependent on it for virtually all of its transportation needs. Go short if you must, but only on a short term basis, please.

Magazine Covers as Contrarian Indicators

I used to believe in the "magazine cover theory" once upon a time too.

Then I investigated my own preconceived notions, and looked at the covers of "The Economist" going back to 2000. Interestingly, many of the covers were right! See for yourself: www.economist.com/prin....

Covers might be an indicator - they might not be.

Serendipitously, my colleague just walked into my office with a fortune cookie from lunch that advised "Don't worry about the stock market. Your investment is good."

He asked me "how often should one take investment advice from baked goods?" I had to laugh.

The Gold-Oil Ratio Approaches All-time Lows

I would argue that gold would have to rise in this current environment. I disagree with those who argue that gold has no value. Physical gold has value as a STORE of energy in that 1) it takes a discrete amount of energy to extract and refine (which is becoming more expensive incidentally), 2) it resists corrosion, 3) it is easily divisible, 4) it is recognizable worldwide and is to some extent incorruptible and 5) it is beautiful. I challenge you to find me another store of energy accessible to everyone on the planet that has these unique qualities (aside from other PMs).