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FTBagain

Gold, Oil And Stocks All Up

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The rises could be explained by many factors:

1. From creation of money- by increasing the money supply without the back up of gold or foreign currencies

2. Economy fuelled by debts

3. Cheap credit makes consumer spending higher, increasing the prices of commodities

4. Booming Eastern economies- some of their money will come to the Western Stockmarkets

5. Oil shortages due to various factors like Katrina, Middle East conflicts etc, stockpiling, China and India's demand

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Oil prices have increased $5.59 ($57.85 to $63.44) in the last week or so, an increase of some 10%. The surprise (since it was widely acknowledged that prices would increase with the suspension of IEA reserve drawdown) is the lack of media coverage. Is it really the case that the media only care about new record prices and ignore dramatic changes below this threshold?

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No guarantees as to what happens from now on, but a general lack of attention whilst the price moves significantly up is typical of a market which is heading much higher to my understanding.

One of the motoring organizations in Australia was even talking about petrol prices being about to [/i]fall as crude oil was heading up. And everywhere you look there are both amateur and professional economic commentators saying things to the effect that "well thankfully the oil price rises are over so we don't have to worry about that anymore...". Typical stuff when the market is going to rise IMO just like everyone takes ongoing rises for granted and ignores any falls when it's about to crash.

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Here's the wonderful graph (a little outdated, as house prices in gold have crashed a little further) from BayAreaBear.

Durch, thaks for the link, interesting thread.

Oil prices have increased $5.59 ($57.85 to $63.44) in the last week or so, an increase of some 10%. The surprise (since it was widely acknowledged that prices would increase with the suspension of IEA reserve drawdown) is the lack of media coverage. Is it really the case that the media only care about new record prices and ignore dramatic changes below this threshold?

clv101,

Thanks for the reminder, I had forgotten the IEA were drawing own reserves. That would clearly explain the 'stable' prices so far this winter, despite the cold weather. Do you know by how much the reserves were drawn down and are they likely to be replaced in thefuture?

The answers to these two questions would give a wonderful insight to the near / medium term movement of the economy.

I would say, however that I am still of the opinion that the big impact of this oil price rise is likely to be a quicking of the unemployment rates around the globe. At least until the level of competition is reduced by the weaker companies going bust. Then we will see general inflation rise quicker.

Re: Hyper-inflation

The surfeit of goods is coming from China etc., while the excess supplies of cash are being created in Western economies like the US. So we have stable prices as long as those dollars are recycled back through Far Eastern economies , with the Far East reinvesting their dollar surpluses in Dollar debt.

GrnsMM2.jpg

If the chain is broken, and they reinvest those surpluses in another currency, or in gold, the dollar falls sharply. Huge inflation in dollar prices would surely be a consequence. We may have seen the beginnning of that process, and as the dollar falls, we need to watch US inflation, and not just the figures reported in the rigged CPI.

Over this year:

the Dollar, US Bonds, and the US stock market may all be good shorts

Joe Granville said:

"The Fed has added $1.5 Trillion reserves in the past year."

I am fascinated by his comparison of 2006 with 1973.

thread on Advfn: http://www.advfn.com/cmn/fbb/thread.php3?id=10656555

Dr Bubb,

Nice diagram, thanks. I had kind of figured that something like that must be keeping the whole thing going.

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Thanks for the reminder, I had forgotten the IEA were drawing own reserves. That would clearly explain the 'stable' prices so far this winter, despite the cold weather. Do you know by how much the reserves were drawn down and are they likely to be replaced in thefuture?

The answers to these two questions would give a wonderful insight to the near / medium term movement of the economy.

Despite the cold weather and the hurricane damage in the Gulf of Mexico. IEA initially said 60 million barrels I think but I don't think there is any information about how much was actually drawn down. I think Japan said their reserves had gone from 70 days to 67 days (or it might have been 60 to 57 I forget). But yes the last few months the price has been lower than it should be based on supply and demand due to reserve draw down. Now that that has stopped we'll find a new true supply/demand price, then this will be pushed even higher as the reserves are replaced. I think we're going to see some crazy prices in 2006 for these reasons.

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Sounds like it, and if we do then the Western economy is going to be in serious trouble. High inflation and high unemployment together. That is virtually impossible for the central banks to deal with using just IR's.

I hope I am wrong but this could get very bad this year.

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The banks, all money comes from banks, the central banks the international banks the merchant banks retail banks they are all just banks banks banks. and we pay them we pay them in inflation and we pay them interest. you work your whole life to get a number on a computer in the bank and that number represents what the bank will buy for you. you can borrow money from the bank but the bank will ask for more money back.

"Give me control of a nation's money and I care not who makes her laws." Mayer Amschel Rothschild

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Wouldn't high inflation erode debt ?

Comments?

High *wage* inflation erodes debt... In our current Globalised Economy I cannot see that happening. So basically I think that your signature has hit the nail on the head.

Shame my oven is electric :lol:

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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