Tag: Guest Bloggers

U.S. Energy Self-Sufficiency Nothing But 'Feel-Good BS'

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The Energy Report: In September 2012, you described $100/barrel (bbl) as the new normal. What market factors are behind today's price of $93/bbl?

Bob Moriarty: If the new normal is $100/bbl in any given market, the price should be as high as $115/bbl and as low as $85/bbl. The price will continue to swing around that. Even with the Bakken coming on-line and other domestic U.S. production occurring in the U.S., cheap oil is gone.

TER: So when you look at oil consumption, do you look just at the U.S. or do you look globally? For example, what role does China play?

BM: I am concerned with U.S. consumption as a measure of how the economy is doing. Oil use in the U.S. has been declining since 2008 because economic activity has been declining since then. I think oil consumption in the U.S. is the best indicator of economic activity because there is direct correlation between the two. [See first chart below]

China is an indicator of global consumption. I am not concerned with global consumption. But if you want to measure what is happening in China, look at the spot price of copper, which is hitting new lows. China is slowing down. [See second chart below] Continue reading "U.S. Energy Self-Sufficiency Nothing But 'Feel-Good BS'" →

Gold's Plunge Ultimately Healthy for the Sector: Michael Gray

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The Gold Report: On April 15, gold dropped to a two-year low as panic selling set in across many mined commodities. Was this the larger players showing the retail market who is in control or was it inevitable?

Michael Gray: Several firms have been predicting a mid-cycle correction for gold; it just happened faster and with more volatility than expected. It also seems to be a very well-timed short-selling trade, especially on the back of the positive gold price correlation with quantitative easing (QE) breaking down and reversing post-QE3. In addition, there was no response in the gold price to the debt crisis in Cyprus or political concerns with North Korea. This was an opportunistic time for the shorts to come in, and they did, forcefully.

TGR: Does this indicate that investors prefer equities to gold? Continue reading "Gold's Plunge Ultimately Healthy for the Sector: Michael Gray" →

Will Gold Fall Further?

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By: Street Authority

Imagine a bullet fired at the sky.

It climbs higher and higher until gravity overcomes its upward momentum. The bullet begins to fall.

Now, imagine small wings on the bullet that flap while it is falling. The wings are just enough to create a series of slight upswings while on the downward trajectory.

Known as "bear flags," this wavelike cycle recurs until the momentum ends and the bullet drops to the ground. Bear flags are thought to signal additional downward moves to come.

This is exactly what has happened with the price of gold since it hit its high near $1,900 per ounce in August 2011. More recently, this action has been exaggerated, with gold trending downward since striking highs in the $1,800 range back in October. Continue reading "Will Gold Fall Further?" →

Here's How To Profit From The Disconnect In Natural Gas

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By: Street Authority

A rising tide doesn't always lift all boats. The major stock indexes are up 10% or more this year, but as I recently noted, it has been a brutal few months for commodities. But at the time, I saw a small silver lining.

"These are the kinds of commodities you need to keep tracking, because lower prices counterintuitively set the stage for the next bull market in commodities," I wrote, citing iron ore as an example. However, I overlooked an even more glaring example of how slumping commodity prices can impair production, which leads to an eventual pricing rebound.

I'm talking about natural gas, which has been on fire in the past year.

Simply put, in the spring of 2012, few people saw this kind of move coming. Continue reading "Here's How To Profit From The Disconnect In Natural Gas" →

The Next Country To Collapse Isn't In Europe

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From Street Authority

Despite the recent market correction threatening the four-year bull market, investors should be partying like it's 2006.

Easy-money programs from the world's central banks and a recovering global economy could push stocks and other assets higher. So why is the comparison to 2006 relevant?

September 2006 was two years before the collapse of Lehman Brothers and a 28% drop in the markets in the span of less than a month. And two years is about the amount of time we may have until the next great market crash.

So what will be the proverbial straw that breaks the market's back? Europe? China? Market contagion from a collapse in commodities prices? Continue reading "The Next Country To Collapse Isn't In Europe" →