Cash (the Dollar) Is King

[carseller]

I think we might have seen the top in gold prices for a while. I think commodity prices will cool off while the US slips into deflation (not stagflation). The reason for the cooling off in commodity prices is that the Chinese export will fall dramatically, and so will their appetite for commodities in the short to medium run. The commodities rally is a result of the bubble economy in China caused by cheap credit from the US, and now it will come crashing down. The ECB and BOE will probably start cutting rates not to far into the future. At that point the FED will be at around 0-1%, and the dollar will strengthen against all odds.

I think the oil price will go down to 20-30 dollar again. The deflationary bust that is coming now, will not be good for china and commodities that have been running high on our credit expansion.

[Bardon]

I think otherwise and the price of cars will drop

[Guest Steve Cook]

I think the oil price will go down to 20-30 dollar again.

in your dreams.......

[DabHand]

If it goes that low l might start putting it in my tea instead of milk. Like a sort of high energy carb drink.

However you never know, so l will gladly splinter my @rse on this one.

[beefheart]

in your dreams.......

of course.

Peak oil is here now. thats why oil is $100+

All these traders are just pricing in the fact that we are running out of oil next thursday.

Steve is sooooo right.

[drminky]

I think the oil price will go down to 20-30 dollar again.

LOL

and if that ever happens, all oil companies go bust (as the price falls below their cash cost of extracting oil) and the price of oil rockets back up due to supply falling off a cliff.

Are you prepared to put your money where your mouth is an open a nice big position shooting for $20 oil?..i couldn't personally recommend it..

[R K]

Cash is indeed king.

Near-term target for glod is 938. That's expensive metal depreciating in the cupboard.

[drminky]

Cash is indeed king.

Near-term target for glod is 938. That's expensive metal depreciating in the cupboard.

wiping off less than one whole month's gains! wooweee!

[drminky]

$20 or $30 oil might still be super-expensive in real terms if there is a mega-deflation. Deflation/hyperinflation is not for or against peak oil/shortages. It's monetary.

very true

..still not likely tho, IMO..

Edited March 19, 2008 by drminky

[Bardon]

$20 or $30 oil might still be super-expensive in real terms if there is a mega-deflation. Deflation/hyperinflation is not for or against peak oil/shortages. It's monetary.

Try explaing that to OPEC

[Bloo Loo]

Ive refurbished some old soveriegns I bought at auction.

Will I get more for them now as a sovereign developer?

Ill ask the BBC.

[drminky]

Try explaing that to OPEC

And try explaining to the average worker in the street, or on the oil platform that their wages will have to be cut nominally by 90% to account for the sudden lack of cash availability..

[carseller]

OP, I'm not saying you're not right (I think you might be), but this is also happening now:

http://uk.reuters.com/article/oddlyEnoughN...oddlyEnoughNews

The dollar is so undervalued now, nobody wants it, however as the trouble spreads to the UK, and Europe, those currencies will not look much better, and when they start to lower rates the dollar should be on the rise. Maybe Asian currencies or gold is even a better place when that happens, but I think the dollar will rise compared to the pound and the euro as the trouble spreads over to Europe, remember the housing bubble in the US is small compared to the one in the UK. The perhaps best thing going for the Euro is that Germany have been in a counter trend, like japan.

Think of the China bubble that could be ending somewhere around the Olympics, and remember the Asian crisis and 10 dollar oil. I don't find it unthinkable. 60 dollar oil is more easy to imagine, but if things get real bad, then 20-30 dollar is possible.

Another thing I like to mention is that the Japanese's yen made a very strong high when they were hit by deflation back in the ninties, if the same was to happen to the dollar it's value would almost double.

Yes cheap credit, Housing bubble, China bubble, Commodities bubble. After they all come down, deflation.

Edited March 19, 2008 by carseller

[teacher]

Gold falls as we speak - $973 and falling.

[Guest Steve Cook]

clothes...emperor....new.......geddit.....

[domo]

Oil has been rising to a record during a recession and massive surpluses of reserves in the US, so theres no way it is physical demand pushing oil up to its high, it is speculative demand, and the same is true of other commodities. You can see it in COT reports, its the hedge funds investing in this stuff.

[Sledgehead]

Gold falls as we speak - $973 and falling.

Down ~7% in two days - OUCH!

Incredible if you buy into gold being an inflationary hedge, with America pumping out dollars like sewerage.

If gold really is only a proxy for oil, the bugs could get their fingers burnt badly when recession hits.

Edited March 19, 2008 by Sledgehead

[Sledgehead]

Peak oil is here now. thats why oil is $100+

All these traders are just pricing in the fact that we are running out of oil next thursday.

So you don't think hedge fund purchases (against the dollar) have been at all influential?

[beefheart]

I was being sarcastic.

That fooking loony steve is telling anyone that will listen that the current crisis is caused by peak oil

The fact that there are a ton of people on here pointing out the insolvency of banks and the profligate printing by the FED , as evidenced by the bloody IRs being 2.25%.

BUT THATS NOT THE CAUSE no siree. steve sez its cos the oil is running out.

[carseller]

Gold falls as we speak - $973 and falling.

The run in commodities since last year, largely based on the thought that lower interest rates by the fed would ignite an already inflationary environment. The money that is already printed, and is in the stock market, valued at trillions, are simply moving over to commodities, boosting inflation, that way greenspans bubble is boosting inflation long after the actual artificial buildup of values in the stock market occurred. Just look at the US TIPS bonds for 5 years. Some are selling with negative yield, that means people think they will loose control of inflation, or using it as a hedge that works in both deflation and inflation. But it is a poor hedge against inflation, it works best for someone thinking we will have deflation but want some protection against inflation.

Some of the arguments used to boost commodity prices is not that different from the ones used to support the housing boom.

However long term interest rates are on the way down, and the bubbles in housing, commodities and china seems like a excess from the last boom, meaning that gold should hit new lows, below 250 dollars.

I find that the natural way, and reading the charts also show that the way to go for gold (the same way as interest rates, down) but who knows, maybe creative central banking will break the cycle. But the inverse V pattern in interest rates since the early eighties is still not at a bottom, it is not ready to turn up before the debt levels and the credit bubble are cleared out.

Speaking of history we are not in the seventies, I think what happens in the markets is similar to 1929 and there will be a very long time before interest rates go upwards.

Edited March 19, 2008 by carseller

[Guest Steve Cook]

I was being sarcastic.

That fooking loony steve is telling anyone that will listen that the current crisis is caused by peak oil

The fact that there are a ton of people on here pointing out the insolvency of banks and the profligate printing by the FED , as evidenced by the bloody IRs being 2.25%.

BUT THATS NOT THE CAUSE no siree. steve sez its cos the oil is running out.

At the risk of using a subtlety of argument that is almost certain to be lost on you, please allow me to "clarify" my position Beefheart by repeating it (yet again) in terms that, hopefully, even you might be able to digest.

Ready?.....

In the immediate sense, peak oil is obviously not responsible for the stupid decisions made by bankers to invent ever more exotic financial instruments (remember me saying that a few posts back Beefheart?).

However, I would suggest that the implicit in principle assumption that growth will always occur, allows lenders (and governments), in the first place, to feel able to borrow so heavily from the future (which is what lending on the scale of a whole economy actuality is).

There is now a growing body of evidence from a variety of sources that suggests that we have hit the peak of production on oil (and indeed most other fossil fuels). If this is true, then it's downhill from here on in. Less energy available to an economy means that less work gets done. Less work done means that growth stagnates at best and goes into reverse at worst.

One of the consequences of the current fiscal crisis is potentially a commensurate contraction of the money supply (all other things being equal).

However, all other things are not equal and so our central banks are trying to inflate the currencies to make the nasty deflationary recession go away. I think that they will amost certainly fail at some point.

Feel free to disagree with any or all of the above. Do try, however, to ensure that you are disagreeing with the above . Also, it would be terribly nice if you perhaps attempted to use logical argument in this regard.

For you to promote your "position" via the use of argument by extremis, by personal abuse, and by setting up Aunt Sallys that you then proceeed to knock over makes you look like the intellectually dishonest charlaton I am now certain that you are.

Now is that clear?.....because this time I really am done with you. You, unbelievable, deeply intellectually challenged cretin

Edited March 19, 2008 by Steve Cook

[Guest Steve Cook]

$20 or $30 oil might still be super-expensive in real terms if there is a mega-deflation. Deflation/hyperinflation is not for or against peak oil/shortages. It's monetary.

I take this point on board. That being the case, perhaps I should re-phrase my position as being along the lines of saying that oil will never again be the real equivalent of $20-$30 in today's money, whatever the nominal effect of inflation/deflation.

Edited March 19, 2008 by Steve Cook

[R K]

Cash is indeed king.

Near-term target for glod is 938. That's expensive metal depreciating in the cupboard.

[carseller]

I take this point on board. That being the case, perhaps I should re-phrase my position as being along the lines of saying that oil will never again be the real equivalent of $20-$30 in today's money, whatever the nominal effect of inflation/deflation.

I think it could go between 20-30 dollar, if the dollar makes a strong rebound, in a global deflationary environment. Not as a long term price, but as a move, like similar to 10 dollar in the Asian crisis.

So how weak is the dollar?

If commodities are in a bubble, and china are in a bubble phase ending now creating temporary demand, you clearly cannot use commodities to measure dollar weakness. Maybe the bubble phase china are in could end in something similar to the Asian crisis, only bigger, more like the World crisis.

I think realities can change fast. Not long ago 110 dollar oil would be unthinkable.

[Guest Bart of Darkness]

clothes...emperor....new.......geddit.....

cygno has always struck me as being symbol minded.