Oil: How low can it go?

Oil: How low can it go?

Article found on CNN Money

With the little bit of relief that we’ve all experienced at the pump, it is easy for people to lose sight of the fact that six months ago we all would have thought that $3.75 was high. (at about $108 a barrel, the price of oil is around 50% higher than it was a year ago). Referring to this recent CNN Money article, although the article is extremely pessimistic, I do agree with the Resler’s insight about the proliferating effects of the higher prices on the consumer mindset, “even if they (oil prices) continue to fall, consumers may be wary for the next few months.”

Any thoughts or comments on this?

http://money.cnn.com/2008/09/03/markets/thebuzz/index.htm?postversion=2008090311 Read more!

Slight Reprieve in Oil Prices Won’t Last Long

I observed an interview of Robert Kiyosaki this week in regards to oil/fuel prices and the long term forecast. Kiyosaki claims that the primary reason for our current oil price situation is the devaluation of the dollar. Oil is purchased in dollars and as the United States continues to print more dollars the value declines which directly results in escalating oil prices. There are obviously other factors that cause the price of oil to rise including demand and oil speculators, however, the primary culprit is the declining value of the dollar. Kiyosaki also says to enjoy the slight reprieve we've observed over the past couple of weeks because in the long term, if the dollar continues to decline in value, we can expect to see gas prices well over $6.00 or $7.00 a gallon.

Posted by Glenn Crawford of Project Liberty Read more!

Urgent Alert: Why Gold Will Jump $200 in One Day

I am sounding a "trading alert" in this column. The alert is cheap gold. Dirt-cheap gold.

As any contrarian knows, the biggest, fastest payoff a speculator can earn is when an extreme situation corrects itself.

For instance, betting against tech stocks was unbelievably profitable in 2000. This was one of the greatest extremes in the history of finance. Techs traded for 100+ times earnings (many had zero earnings), so the likes of Cisco, Yahoo, and JDS Uniphase had tremendous distances to fall.

The same goes with homebuilding and mortgage stocks in 2007. "Extremely" stupid lending practices helped send mortgage giant Countrywide Financial from $43 per share to $5 per share in just 12 months. Shorting Countrywide and homebuilding shares was like sitting down at a broken slot machine.

Right now, we have an extreme situation in the commodities market… one you can use to make a lot of money in gold. It all comes down to the gold/oil ratio. Because gold and oil respond similarly to inflationary pressures, the two tend to trade in a predictable range.

Over the past 25 years, one ounce of gold has bought, on average, 15 barrels of oil. When an ounce of gold can buy 20 barrels of oil, it's expensive and due for a fall. When an ounce of gold can buy less than eight barrels of oil, it's cheap and due for a rise.

Right now, gold buys you just 6.5 barrels of oil – less than half its traditional purchasing power. The tremendous rise in crude oil prices is the cause of this situation. Crude has gained 155% in the last 18 months. Gold has gained "just" 50% in the same time. As you can see from the chart below, this disparity has left the rubber band pulled extremely tight.

There's no guarantee this extreme will work itself out quickly. But this is one trade worth keeping on the radar. If oil stubbornly refuses to correct from its levels above $140, gold could easily pop to $1,000 and beyond in just a few days. In 2005, a similar extreme reading preceded gold's rise from the mid-$400s to the mid-$600s.

If you haven't bought gold as "catastrophe insurance," now is a great time to do so. If more cockroaches crawl out of the mortgage debacle and into mainstream headlines, you'll likely get a $100-$200 per ounce jump in your investment. Whether it's through buying bullion, gold stocks, or an ETF, right now is an extreme opportunity in gold.

Good investing,

Brian Hunt,
Editor in Chief, DailyWealth Read more!

GASOLINE IS ACTUALLY CHEAPER TODAY THAN IT WAS 45 YEARS AGO!

What if I told you gasoline is cheaper today than it was 45 years ago! Its true and I can prove it!!

In 1963 gasoline was about $0.30 to $0.35 per gallon. Back then there were these things called silver dollars and they were interchangeable with paper dollars. So one dollar would buy you about 3 gallons of gasoline. (By the way when was the last time you received a piece of real silver as change?) Today that same silver dollar worth $17.50 will buy you over 4 gallons of gas! What's going on?!?!!

Any comments?

Posted by Eric Malachowski of Project Liberty Read more!