txpenguin

Beaten Down Natural Gas Likely to Stay Down, Making Producers a Short

No question for the time being that the trend is down for NG. One thing I found interesting was the recent DVN CEO's comments on the Obama administration's tax proposals. He said the drilling disincentives in them would accelerate the decline in the rig count, thus reducing NG supplies further than would otherwise be the case. The market is what it is, but hydrocarbon prices are notoriously volatile. In over 30 years in the O&G business, I have learned to expect the unexpected.

Gold: Not an Effective Hedge Against Inflation

In 1913 when the Federal Reserve was created by Congress, gold commanded a price of $20.67 per ounce. If one assumes a current gold price of $850 per ounce, that works out to slightly less than a 4% per year return over the last 95 years. That is a lot better than stuffing paper money in a mattress. Gold might or might not be a good investment at any given moment, but it has functioned very well as a store of value over the years. When its price falls to its cost of production, as it did in 1998 at around $280 per ounce, it is a good buy.

Madoff: One Bad Apple Should Not Deter Investors

"One bad apple should not deter investors". Maybe so, but Bernie was one big apple.

Oil Won't Stay Down for Long

I've been in the oil and gas production business for over 30 years, and I can say from some hard experience that there is nothing predictable about oil prices. The oil market will undershoot, overshoot and stay range bound for years at a time. Whatever advice the pundits and prognosticators have offered has been proven to be worthless more times than I care to think about. The market is bigger than any one person's opinion of where it might be going in a day, a year, or a decade. One lesson that has served me well is whether you produce oil, trade it, or whatever--keep the leverage as low as possible.

If Only Hope Were an Investment Strategy

Tax loss selling combined with hedge and mutual fund redemptions will make the going rough for a while longer. Eventually the bargain hunters will outnumber the distressed sellers.

The Shallowest Generation

Every generation has its own set of faults and problems. I am 59 years old, but if I recall my history correctly, it was my grandparents' generation who screwed up the economy in the 1920s and 1930s thereby bringing on the Great Depression. The greed, gluttony and sheer lawlessness of the Roaring 20s rivaled anything that came later. It was my parents' Greatest Generation who led the nation in the 1960s, a period that gave us the Vietnam War. That conflict was totally unnecessary and came very close to tearing America apart. The mistakes of presidents Johnson and Nixon gave us the runaway inflation of the 1970s and the devastating recession of 1972-1974. Now we are again in hot water with my generation justly being blamed for it. So what? Each generation strives to do the best it can, but human nature changes very little over long periods of time. There will always be those who are foolish and greedy. They are and have been in the minority, and we can only hope that such will be the case in the future.

Why Oil and Gold Are Headed Much Higher

From its current level of around $800 per ounce, gold will be $86,155,314 per ounce in the year 2400. That assumes a rather modest inflation rate of 3% per year for the next 392 years. Easily doable.

5 Reasons Why the $700B Bailout Could Translate to $250 Oil

There was quite a lot of demand destruction during the Weimar Republic days in Germany. It did not matter though, when the German government ran the printing presses in massive overdrive. The hapless German housewife still had to bring a wheelbarrow load of marks to the grocer store when she wanted to buy a loaf of bread.