Get ready for oil prices to go back upppppppppp

Discussion in 'General' started by dey know yayo, Mar 8, 2009.

  1. dey know yayo

    dey know yayo

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    Oil went up a lot 2002-2008 because of inflation. Sure, there were supply concerns (peak oil, geopolitics) and demand concerns (the myth of global wealthexpansion), but it was mainly inflation. From 2002 to the top in 2008, oil priced in US Dollars rose about 750%, but in that same timeframe, oil priced inEuros rose only 160% and oil priced in gold rose only 140%. Rising oil prices in the world's reserve currency (dollars) and in the world's biggestmarket for crude (united states) created a positive-feedback effect where demand outpaced supply at current prices, leading to speculative overleveragedbullish positions in crude by some of the same financial institutions that are now crashing. Bernanke's sale of $6 billion Euros through the ExchangeStabilization Fund in July to finance purchase of trillions in dollar derivatives is what caused the collapse of the oil bubble. The crash was going to happenregardless, but the US Fed intentionally catalyzed its timing to ensure the Dollar's status as premiere safe-haven as the impending financial crisis tookhold, which it was successful in doing.

    Oil crashed from its highs of $147/barrel in June through deleveraging and demand destruction deflation during the financial crisis. But the globallycoordination expansionary monetary policies of essentially all of the world's central banks puts long-term inflationary risk on the response to theshort-term deflation. Eurozone nations and the United Kingdom especially can't get away with this, asno one is willing tofinance their recoveries throughdebt purchases. America isn't immune either, and in fact, the entire world is going to witness a sharp global devaluation of fiat currencies against hardassets.

    But that isn't for a while. The financial crisis will not turn into a monetary crisis until at least middle of next year I'm guessing. The firstsigns of price inflation may show up as early as this fall, but it won't be an issue for the talking heads on CNBC and WSJ until maybe next summer at theearliest. But the monetary inflation has already started. The Bank of England just made quantitative easing its monetary policy for the first time in history.With ZIRP in the United States, we have resorted to QE as well.

    I made a lot of money betting on the collapse of crude markets this past summer. My target date was July 4 and I was off by about a week and abotu 2%. Lotsof libertarian Austrian School economists, who called this crisis but have seen their predictions for monetary crisis not unfolding as they wished, missed thisgreat opportunity to short oil. But now I am bullish on oil again, as the charts dictate so and the severe contango in crude markets is easing up. I expectbackwardation to return to oil within one or two months.

    Oil is ready to start rising again, strictly because of inflation. Peak oil is a very real phenomenon but it won't effect us in any real way because ofour ridiculous advancement of oil alternatives already. But it may again become a justification for higher oil prices once inflation kicks in, starting apositive feedback system in which oil rises, supply concerns re-arise, causing oil to go even higher in price, etc.. This also re-instates the demand concern,because there is an inherent demand for oil around the world, but the world won't be wealthy enough for oil at high prices, except for people heavilydivested from government-issued currencies and with large positions in precious metals.

    I don't expect a dramatic rise in oil prices until at LEAST next year, like I said, with 2011 and 2012 being big years resembling those of 2006-2008.But I think now is finally a great long-term buying opportunity for oil, although they could retrace to around the $40/barrel level during the deflationaryequity mini-crash I'm expecting in coming weeks.

    People to blame: Alan Greenspan, Bill Clinton, George W. Bush, Ben Bernanke, and Barack Obama

    People who will save it from being an unsustainable problem domestically (like it will be in possibly hyperinflationary nations, like Ukraine, Mexico,Iceland, and Latvia): Alexander Hamilton, Andrew Jackson, Paul Volcker
     
  2. toy collector123

    toy collector123

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    blah blah blah...

    won't happen. anyone who fundamentally understands what's going on in the economy know oil prices will continue to fall.
     
  3. dey know yayo

    dey know yayo

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    i understand why oil prices fell. i made a ton of money betting on that. but now that is over as inflationary risk is starting to be priced into the markets.equity values are down 50% in america in the same time as gold is up 15%. why? because of inflationary risk.

    when inflation actually arrives (like i said, late 2009-early 2010 at the very earliest), you'll see hard assets go up even more in value.
     
  4. ohsofresh75

    ohsofresh75 Banned

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    lol...fo real...cliffnotes plz..if u wanna get ur point across on NT!!!!...geeez..i thought they would learn by now
     
  5. toy collector123

    toy collector123

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    Well you do have a point. I'll be back tomorrow.
     
  6. abeautifulhaze

    abeautifulhaze

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    Blame Obama but Praise Volcker, his chief economic adviser?
     
  7. wallyhopp

    wallyhopp

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    is there any hope we reduce our dependency on oil. Alternative energy never seems to get a serious interest.. small talk when the "bad times" arethere and when prices drop, no more worries.

    lets PREPARE.. proactive steps.
     
  8. kidufc

    kidufc

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    just shut up with this oil %%%$..

    before ppl said it will continue to fall and reach about a buck per gallon at the pump by summer.. they were wrong.. it went up about $.50 but now went down afew pennies..

    just shut the +$!# up and lets see what happens.
     
  9. dey know yayo

    dey know yayo

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    the big issue isn't dependency on oil. it is inflation. alternative energy has already expanded much farther than in previous scenarios of "necessityis the mother of invention" because people overly ascribed the rise in oil prices to supply/demand issues that were grossly exaggerated, though quiteexistent.

    want to prepare for this rise in oil prices? divest your 401k's, IRAs, CDs, bonds, and savings accounts and throw that liquidity into gold and silvercoins, perth mints, bullion, and other insured precious metals holdings. i expect gold to actually outpace oil in dollar terms during the inflationary wavethat will commence as the financial crisis turns into a monetary crisis in coming years, so if the majority of your wealth is denominated in gold rather thanDollars (or Euros or Yen, etc etc), oil prices will actually continue to go DOWN relative to your worth.
     
  10. dey know yayo

    dey know yayo

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    well "people" were wrong.

    i, on the other hand, said the commodity bubble would begin collapsing in early july. which was right. and now i am saying leading commodities are ready toturn bullish again. and i will be right.
     
  11. dey know yayo

    dey know yayo

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    guess what volcker is there for... to stave off hyperinflationary threats to the dollar the same way he staved it off in the early to mid 80s. to think obamaknows the least bit about economics is absurd. his policies are very expansionary but his advisors are smart enough to recommend volcker because they know thatall of this printing will have to be fixed once obama is gone and lauded as the man who prevented the deflationary spiral.
     
  12. kidufc

    kidufc

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    work for cnn.. deliver thew news.
     
  13. dey know yayo

    dey know yayo

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    work for comedy central... deliver the comedy.
     
  14. kidufc

    kidufc

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    ^ good one, but i wasnt being sarcastic.... if u can predict oil prices.. then you should work for cnn or something.. and deliver something accurate .. insteadof these "experts" just blabbing about something that they know nothing about since 80% of what they say doesnt turn out to their favor
     
  15. dey know yayo

    dey know yayo

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    that's why they work for CNN and aren't multimillionaire commodities traders.
     
  16. abeautifulhaze

    abeautifulhaze

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    Ummm....who said that he was an economic genius?

    Volcker was his unofficial economic adviser before he was elected or able to formally appointed any economic team. Does he or "his people" get nocredit for that?
    How can you demonize the President's economic actions but laud the man that is guiding his actions? Seem a little hypocritical to me. Like you just neededto find someone to blame and some one to praise based on your personal ideologies...even if they are essentially one in the same.
     
  17. atlien seeko

    atlien seeko

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    Thanks for the heads up DKY. I really appreciate all the economic advice you bring to the board. I feel like our government along with other governments areplaying games with our lives. No.. I KNOW they're playing games with us.
     
  18. dey know yayo

    dey know yayo

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    Volcker isn't guiding any of these actions, he is extremely critical of monetary expansionism. Obama keeps making government bigger and bigger and callsfor the printing of more and more money. Volcker is there to mop up his mess in the end.

    Don't get me wrong-- Obama is the perfect man for this crisis. You want an image of confidence and hope, even if it's completely irrational andwronglyjustified in false pretenses. You have to assume the idiocy of the masses. Surely, a great limited government structural reformer to sound moentary policywould be ideal, but we don't have many Jeffersons left. If Ron Paul left his radical idealism for Jefferson's pragmatism and got Obama's swag andspeechgiving abilities, he might be a better replacement for Obama. But he doesn't.

    Obama's policies WILL cause oil prices to rise to levels unsustainable to American incomes again through his inflationary policies and Volcker will bethere to disinflate once again. If Obama were running the UK or a Eurozone nation, he would issue the same policies but would cause hyperinflation as thosenations don't have reserve currency and trillions of sovereign debt outstanding held by other nations who are locked in because of the threat of mutuallyassured economic destruction.

    Again, you can thank Hamilton for the fundamental structure behind America being immune from the hyperinflation many other nations will face.
     
  19. dwyanewadeog

    dwyanewadeog

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  20. dey know yayo

    dey know yayo

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    correct, holding gold and oil will both increase your purchasing power-adjusted wealth. i'm just saying that oil prices rising won't affect youadversely if most of your holdings are in gold because oil won't be outpacing gold so gas prices, for example, won't be an issue for you to reallyworry about.
     
  21. dwyanewadeog

    dwyanewadeog

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    I don't know if you've covered this at all in your previous posts, but what is your opinion on mining warrants?
     
  22. dey know yayo

    dey know yayo

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    interest in mining warrants should go up once inflation sets in. fundamentally warrants are no different than call options really, but they are more tangibleof a security so later-maturing warrants are worthy of bullish bets in coming months.
     
  23. mangudai954

    mangudai954

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    This is one of the reason ive started to go out every week end. I'm trying to enjoy myself before it all falls down, no Kanye