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Old 06-23-2008, 11:08 AM
 
Location: Charlotte, NC (in my mind)
7,946 posts, read 15,413,409 times
Reputation: 4544

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Quote:
Originally Posted by Mathguy View Post
Other than the 137 number above, you are just making up numbers out of thin air without thought or analysis.

I've seen the fever of speculation before:
Guys talking about Amazon.com hitting 1,000 a share.
Houses in California would go from 400,000 in 2007 to a million by 2009.
Siver at $35 an ounce? Sillyness...with the actions of the Hunt brothers it will be $100 an ounce before Nixon leaves the Whitehouse.
Daytrading is easy, anyone can do it. Quit your job as a chef or HR manager or do it on your breaks from waiting tables.

I hope you're right. Traders are saying with peak oil on the horizon, its different this time. Of course, thats what they always say during bubble hysteria. People have been calling for oil's collapse however since it ran up to $50 in 2004 from $17 in 2001, so we CANNOT hold our breath this is indeed a bubble and is sure to collapse. Its really too soon to tell.

Quote:
Gold will catch up to oil rather than oil coming back and we'll see both charge full steam ahead in a spectacular bull market, IMO.
And the US consumer will have to deal with food shortages, starvation/malnutrition, 30-50% unemployment, civil unrest, riots, famine, etc, etc, etc while the few get extremely wealthy. Peak oil or not, traders like the idea and will bid up the price accordingly.
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Old 06-23-2008, 11:15 AM
 
717 posts, read 630,868 times
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Quote:
Originally Posted by KevK View Post
Oil is about to crash. Bet on it! The Saudis have made it clear they want a target price of $80 a barrel and they will do whatever is necessary to get it there.
I hope you are right. I am waiting for the greed of the speculators to hit them hard. I work on Wall st and am rooting for a gigantic Commodities bubble burst. It is a huge drag on our economy.
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Old 06-23-2008, 11:25 AM
 
Location: Charlotte, NC (in my mind)
7,946 posts, read 15,413,409 times
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Quote:
Originally Posted by AJGIANTS View Post
I hope you are right. I am waiting for the greed of the speculators to hit them hard. I work on Wall st and am rooting for a gigantic Commodities bubble burst. It is a huge drag on our economy.
Our economy would be booming right now if oil was trading somewhere between $50 and $80 per barrel. The housing bust is bad, but its dwarfed by the economic problems created by these gas prices. The fact that we aren't yet in another 1930s style Great Depression shows how strong our economy really was. However, I don't think it can last much longer.

I want to see these oil speculators who are living the high life now working at Wal-Mart or better yet a gas station after the bubble bursts - much like the Internet startups back in 2000.
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Old 06-23-2008, 11:34 AM
 
5,090 posts, read 10,049,893 times
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Quote:
Originally Posted by Mathguy View Post
Also realize how much of the "run up" in gold and oil that has been related to the US dollar falling in value.
Not into any magic ratio, but you are actually hitting the point.

Oil is the "New" Gold -- If you consider the last 50 to 60 years or more "new." Wars were fought to steal Gold from the Natives here in the Americas back when. We are killing the locals in Mideast for Oil, now. Trading the world oil market is what gives the basic value to the dollar.

Thing to watch in all this is that Saudi cannot actually deliver straight up the "promises" being made. Any adds they actually manage to put on the market will not be extra "light, sweet" which is easy to refine, but rather "heavy, sour" which is more difficult to handle and produces less end product.

Maybe think of this like your Cocaine dealer telling you he can get more coke, but in truth, it is going to be stepped on, thinned, and cut. Saudi aint dummies. The market aint dummies. They are all just hoping the customers are.
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Old 06-23-2008, 11:36 AM
 
Location: Raleigh, NC
9,043 posts, read 11,829,498 times
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Quote:
Originally Posted by Mathguy View Post
Could you share support showing that these ratios should be relatively constant over a long period of time. Supply and demand can impact various commodities independently and extraction costs for the 3 resources would not seem to follow similar patterns.

Also realize how much of the "run up" in gold and oil that has been related to the US dollar falling in value.
If you look at David Tice's prudentbear website, seekingalpha, or others, you can see a Gold/Dow ratio. The Dow has been in a bear market from 2000 to present as the ratio has dipped from 20/1 to about 14/1. In the 70's when inflation was rampant gold and the Dow were 1/1. While I don't expect 1/1 since the Dow components are more globalized and will maintain exports to countries with richer citizens, I do expect 2/1 or 3/1. Could that mean Gold 2,000/Dow 4,000? Gold 4,000/Dow 8,000? Gold 10,000/Dow 20,000? Depends on the amount of inflation generated. In Zimbabwe, gold is millions of Zimbabwe dollars per ounce. Gold is not an investment, gold is MONEY.

Oil prices haven't increase substantially since 1971 in relation to gold either. Perhaps there's a supply/demand issue, but that can mostly be attributed to the raw money growth 'round the world. Money growth spurs consumption and hampers savings, bidding prices up in relation to fiat money. When currencies de-peg from the dollar, or central banks start raising rates, we'll see the real effects in gold/oil prices.
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Old 06-23-2008, 11:38 AM
 
55,257 posts, read 44,015,757 times
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Quote:
Originally Posted by bchris02 View Post
Our economy would be booming right now if oil was trading somewhere between $50 and $80 per barrel. The housing bust is bad, but its dwarfed by the economic problems created by these gas prices. The fact that we aren't yet in another 1930s style Great Depression shows how strong our economy really was. However, I don't think it can last much longer.

I want to see these oil speculators who are living the high life now working at Wal-Mart or better yet a gas station after the bubble bursts - much like the Internet startups back in 2000.
I agree with you about speculators but I think they are the 3rd biggest problem.

1) If the US dollar was worth 1.40 canadian (like it used to be)....oil would be <$100 a barrel.
2) Increased global demand vs. supply

The was a vast extension of BAD CREDIT leading back to the 1990's where it started with credit cards and then moved on into HELOC's etc. We have killed the value of the dollar and the average American has no understanding that this is a huge contributor as to why oil/gas *costs more*.

The American people have done the bulk of the damage to themselves via overspending and overconsumption. It's a free country, we need to take some personal responsibility.
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Old 06-23-2008, 11:40 AM
 
5,090 posts, read 10,049,893 times
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Quote:
Originally Posted by AJGIANTS View Post
I hope you are right. I am waiting for the greed of the speculators to hit them hard. I work on Wall st and am rooting for a gigantic Commodities bubble burst. It is a huge drag on our economy.
How do you figure oil is a bubble? Every drop pumped gets burned -- there is no real surplus. Even the Saudi pumping "more" (not really) will not create a surplus.

Leaves the only smart path out is to quit using it.
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Old 06-23-2008, 11:49 AM
 
Location: Raleigh, NC
9,043 posts, read 11,829,498 times
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Quote:
Originally Posted by Philip T View Post
How do you figure oil is a bubble? Every drop pumped gets burned -- there is no real surplus. Even the Saudi pumping "more" (not really) will not create a surplus.

Leaves the only smart path out is to quit using it.
110% correct.

No one is hoarding or speculating on oil. The price is correct for all the "virtual dollars" introduced into the money supply.
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Old 06-23-2008, 11:49 AM
 
55,257 posts, read 44,015,757 times
Reputation: 34537
Quote:
Originally Posted by ViewFromThePeak View Post
If you look at David Tice's prudentbear website, seekingalpha, or others, you can see a Gold/Dow ratio. The Dow has been in a bear market from 2000 to present as the ratio has dipped from 20/1 to about 14/1. In the 70's when inflation was rampant gold and the Dow were 1/1. While I don't expect 1/1 since the Dow components are more globalized and will maintain exports to countries with richer citizens, I do expect 2/1 or 3/1. Could that mean Gold 2,000/Dow 4,000? Gold 4,000/Dow 8,000? Gold 10,000/Dow 20,000? Depends on the amount of inflation generated. In Zimbabwe, gold is millions of Zimbabwe dollars per ounce. Gold is not an investment, gold is MONEY.

Oil prices haven't increase substantially since 1971 in relation to gold either. Perhaps there's a supply/demand issue, but that can mostly be attributed to the raw money growth 'round the world. Money growth spurs consumption and hampers savings, bidding prices up in relation to fiat money. When currencies de-peg from the dollar, or central banks start raising rates, we'll see the real effects in gold/oil prices.
Good points.

I was more focused on the Gold to Oil ratios than to the stock market. I can more easily see a case for the gold/stock ratios having some constance. I'm just a little hung up on the issue of gold/oil ratios having any historical constance since oil is consumed upon use where gold and silver have more persistance in circulation.

I'm hesitant about gold, I'm already seeing the direct adds in the newspapers imploring YOU John Q. Public not to miss out on the virtually guaranteed continued run-up in gold. (Translation: Buy now at record highs so that you don't continue to miss out on the recent huge gains )

My opinion is that gold is currently the new fad following in the footsteps of real estate (2000's), the new dot-com (1990's), the new silver (1970ish) etc etc etc. too much hype, too much herd running that direction.
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Old 06-23-2008, 11:55 AM
 
8,956 posts, read 7,913,041 times
Reputation: 7326
The Saudi press release is old news that's been recycled many times over the last year. The 2 mbpd production increase by 2009 was announced numerous times since last year. They announced the 500K increase in early May. It's interesting that it's now turned out to be only 300K and the remaining 200K won't be available till sometime in July. It appears that Saudi capabilities are far less than they would have you believe.
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