patrick.net

You don't hear a peep from ANY political leaders that what Saudi Arabia is doing is predatory and harming US industry.
I wonder why.

smaulgld says

(appreciation or wealth preservation)

Some of both for sure.....

Graybox says

smaulgld says

(appreciation or wealth preservation)

Some of both for sure.....

Fool hardy otherwise

smaulgld says

ou don't hear a peep from ANY political leaders that what Saudi Arabia is doing is predatory and harming US industry.

I wonder why.

- The Saudis own around 7% of U.S. equities, last I checked. Not that they could sell in a hurry, but still: we're handcuffed to them in the same way we're handcuffed to China, and we need them to stay wealthy.
- This screws Iran, Venezuela and Russia as well as some other regimes run by tin-pot dictators that have higher production costs than the Saudis.
- In the 1980s, when the Saudis cut production, oil prices kept dropping anyway, and they gave up market share.

HydroCabron says

- This screws Iran, Venezuela and Russia as well as some other regimes run by tin-pot dictators that have higher production costs than the Saudis.

That's probably the main reason but the US is harmed as well.
Perhaps the strategy is harm Iran Venezuela and Russia and bail out the US shale oil industry if necessary?

Saudi Arabia Can Hold Out Indefinitely As The Oil Crash Brings Pain
"with production costs at $4 to $5 per barrel, the Gulf countries can hold indefinitely with oil at current prices, or even if it fell to as low as $20 per barrel. "

Read more: http://blog.yardeni.com/2015/01/drowning-in-oil-excerpt.html#ixzz3O4le67uL

Read more: http://blog.yardeni.com/2015/01/drowning-in-oil-excerpt.html#ixzz3O4lTxKML

smaulgld says

Perhaps the strategy is harm Iran Venezuela and Russia and bail out the US shale oil industry if necessary?

This is about my 5th pass at deciphering the gurglings of the Saudi oil ministry. I would not put it past them, but things usually become clear only after 2 years have passed. One thing: they need to appear that they're in control, that they call the shots.

Russia is cranking out oil. Iraq is cranking out oil (this is only a recent development). Demand is slack in Asia and Europe. Did Saudi Arabia point this horse in this direction, or did they just leap on it as it galloped by, smooth back their hair, and strike a commanding pose?

The Saudis have such massive currency reserves that they could hold on for years, so I'd bet there's a point to this beyond cash flow today.

HydroCabron says

The Saudis have such massive currency reserves that they could hold on for years, so I'd bet there's a point to this beyond cash flow today.

no doubt

anonymous says

You really think they are going to bail us out and bankroll the U.S. getting back in the game?

No not S.A bailing out the US but the US bailing out the industry in "national interest"

HC said - In the 1980s, when the Saudis cut production, oil prices kept dropping anyway, and they gave up market share.

There you go again with your rational explanations. I much prefer smaulgld getting into bgamall territory.
As far as I'm concerned, hydrocarbons in the ground is money in the bank for my children. Hopefully never to be tapped, but I wouldn't bet on it...

EBGuy says

I much prefer smaulgld getting into bgamall territory.

Zionist Crisis Actor!

smaulgld says

Gold Crude Oil Ratio is at Alarming Levels

So ?

It might mean that gold is kind of overpriced now, or that oil is pretty cheap or both.

IT seems pretty irrelevant really. It's like plotting the spread between 2 random stocks or something. Doesn't seem all that meaningful to me.

Can you get a chart of this spread going back 100 years ?

I guess I can see that as an EXTREMELY long term trade, buying crude against gold is very likely to be profitable at some point.

marcus says

It might mean that gold is kind of overpriced now, or that oil is pretty cheap.

IT seems pretty irrelevant really. It's like plotting the spread between 2 random stocks or something. Doesn't seem all that meaningful to me.

It highlights a massive distortion- which usually precedes some type of shock.
In itself it doesn't prove anything.
Have access only to last ten years.
Of course oil was less important 75-100 year ago and gold was part of the US monetary system and capped between 20.67 until 1933 and at $35 an ounce thereafter

25 yr. crude
http://www.barchart.com/interactive_charts/futures/CLY00

This scenario is no blue print for sure but rather a monitor for myself to gauge and test price strength, providing some self guidance for buying back into oil investments.

Longer Term;
By the numbers until price closes above 55 and breaches what ever that high might be on the weekly, price has the probability of being range bound between 55-30. On the event price does react in the matter described above then I would have expectation of retesting the 45s (?), then giving price better odds of retesting the 72s after reloading buyers (45).

However the probabilities are much higher price will test the 31/28 before testing the 72s. Before heading back up to those lofty prices (72) I will be looking for some consolidation (43-34).

The way down to the 30s has some likelihood of reaching that target by the end of this qtr. and the range bound pricing combination of 55/30-43/34 has probabilities of lasting 6-12 qtrs.

A silver quarter for the longest time closely approximated the price of a gallon of gas.
In 1964 gas was about $.30 a gallon and the quarter in your pocket would almost get you a gallon.

This summer a quarter was worth about $3.50 or about a gallon of gas.

Today that quarter is worth about $3.00 and gas is $2.20

Did you really think $17/hr Walmart jobs in North Dakota were sustainable? But seriously, who wants to start buying up foreclosed rentals in ND? Pat.Net Shale House Fund -- what could go wrong?

EBGuy says

Did you really think $17/hr Walmart jobs in North Dakota were sustainable? But seriously, who wants to start buying up foreclosed rentals in ND? Pat.Net Shale House Fund -- what could go wrong?

I hear there is a active elk population there

This guy sure predicted it well !

That is he predicted the spread going up, but he was wrong about how it would happen. He said gold would go up, rather than oil go down. Doh !

Also includes some data going further back.

http://srsroccoreport.com/the-gold-oil-ratio-forecasts-a-much-higher-price-for-gold/the-gold-oil-ratio-forecasts-a-much-higher-price-for-gold/

I just found an older chart too!
http://kingworldnews.com/gold-silver-soaring-global-stock-markets-plunge/

marcus says

This guy sure predicted it well !

That is he predicted the spread going up, but he was wrong about how it would happen. He said gold would go up, rather than oil go down. Doh !

Also includes some data going further back.

http://srsroccoreport.com/the-gold-oil-ratio-forecasts-a-much-higher-price-for-gold/the-gold-oil-ratio-forecasts-a-much-higher-price-for-gold/

LOL I like the annotations on the charts

HA! Bloomberg covered the gold crude oil ratio today too! http://www.bloomberg.com/news/2015-01-06/gold-oil-ratio-shows-crude-drop-tied-to-supply-chart-of-the-day.html

What a coincidence.

Printing money has consequences. Gold easily above $1200 again.

mell says

Gold easily above $1200 again.

Keep on reading Kings World News

$1200 means nothing except if price does not close above the last high more bargains to come. This round will attribute to the 2nd stage failure to break into the area your looking for. If by a slim chance it does some real resistance comes in the $1325+/- area.

http://www.visualcapitalist.com/what-is-the-cost-of-mining-gold/

mell says

Printing money has consequences.

More money for the pro/smart money to trade the markets with....

marcus says

What a coincidence.

It is because they draw no conclusions, just presented it. I was thinking about the dollar going up with gold (something that doesn't normally happen) and oil going down

I'm 1 of the few who are looking for USD and US equity markets going up. Gold and Oil going down which isn't as much as a surprise as USD, USDMXN, S&P and DOW basically all going up.

Correlation is skewed for sure.... Lots of traders are likely to lose similar to the old divergence/convergence trades of the past that killed many account.

smaulgld says

The advantage of gold is it is easy to store (

Easy to counterfeit, too. And a terrible medium of exchange.

S&P is a sell by the majority.
http://www.barchart.com/opinions/futures/ESY00

Price is in a terrible spot to try and determine those sentiments.
So far it's a simple retest.

smaulgld says

Not only will high paid jobs be lost, but bonds will default and derivatives on those bonds will go bust.

But that is great news! The Fed needs more and more "assets" to buy at face value. And underwater derivatives are just the ticket. Derivatives in the money - Wall Street wins. Derivatives out of the money and Wall Street wins. And QE wins. It is basically a money creation machine.

smaulgld says

Not only will high paid jobs be lost, but bonds will default and derivatives on those bonds will go bust. No one knows what the ultimate impact will be but 20% of the junk bond market is energy related so its pretty big.

A very sad reality for sure.....

Blurtman says

And a terrible medium of exchange.

For that reason, no longer a currency

Graybox says

USD, USDMXN, S&P and DOW basically all going up.

Here we disagree, without Fed support your friends above will crater as the economy can't support them.

smaulgld says

Graybox says

USD, USDMXN, S&P and DOW basically all going up.

Here we disagree, without Fed support your friends above will crater as the economy can't support them.

That's exactly whats been happening, "risk off" due to other countries monetary policy and the wars cycle far more takes the place of the fed currently...

smaulgld says

Blurtman says

And a terrible medium of exchange.

For that reason, no longer a currency

Indeed, and hopefully that may be solved. But there is also the issue of asymmetry. The USG has a vested interest in cracking down on fiat counterfeiting and have the muscle to do it. Not gold, however.

Counterfeiting is relatively easy to detect in gold and silver if each bar is reviewed
Counterfeits pass in volume when no or only spot checks are made
Tungstein is the only metal that approximates gold's density so it is often used and easily detected if you do more than just look at it and weigh it

Also counterfeiting dollars is not much of a problem b/c up to 80pct of the dollars printed according to the fed exist outside the US
Most americans hold and spend their dollars in digital form

All the "bad things are going to happen is a reality", however the current trends have room and can stretch out much more the most can consider or will consider. The markets trending in the direction they are and I suspect will continue are confirming the end game being discussed and split a 1000 ways by most will happen at "some point of time".

Due to the fact it will end up far from what is expected by most, are we truly ready for the Apocalypse being explored? As far as my understanding and concern this all will come far to fast for me, rather it's this yr the next or 10 yrs from now. My only recourse is to play whats on the table today and hope I am prepared the best I can be in the mean time.

Yes the boogie man is making his appearance however we don't know when he will say "BOO".

smaulgld says

Counterfeiting is relatively easy to detect in gold and silver if each bar is reviewed

Counterfeits pass in volume when no or only spot checks are made

Tungstein is the only metal that approximates gold's density so it is often used and easily detected if you do more than just look at it and weigh it

Which the average consumer will not do.

Blurtman says

Which the average consumer will not do.

The majority who buy gold will know.... Very few cases where the consumer is the bag holder of counterfeit gold.