patrick.net

Here is the ten year chart

smaulgld says

The U.S. economic growth is a temporary mirage

Which can last far longer than most will comprehend.

Graybox says

smaulgld says

The U.S. economic growth is a temporary mirage

Which can last far longer than most will comprehend.

As long as there are no external events. If there are all bets are off.

smaulgld says

As long as there are no external events. If there are all bets are off.

There are external events blasted from every side all the time, China QE for instance.

The boogie man is coming, when and where no 1 knows. The problem with fundamental anything we rarely get the whole story or picture. The DXY is the strongest currency by the numbers on the globe. Even with the "buck"ed teeth dxy is the beauty queen of the mirage contest.

Hard assets like gold have their place however there are a # of other hard assets with a better ROI to invest.

Graybox says

Hard assets like gold have their place however there are a # of other hard assets with a better ROI to invest.

Yep gold is not the solution for all investment issues.
Actually I disagree that the dollar is the strongest. If you take away the reserve status, its as flawed as most in terms of inability to pay back debt or to protect it by raising rates.
Ironically the Yen and dollar are considered the strongest and because of that they have been able to monetize debt like no two other nations on earth.

Compare Russia's one trick economy-it had enough reserves and limited debt that it was able to defend its currency by massively raising rates. Do you think the US could raise rates 17% today?

Until That reserve status is removed it trumps JPY and RUB.

I would not like to be a regular Joe citizen of Russia and at the same time neither would Japan work for me. (Fukushima Daiichi nuclear disaster)

http://www.worldlifeexpectancy.com/world-happiness-map

All the boogie mans fundamental cards are not on the table.
Just think of how many stories of Japans emanate collapse if this happens or that over the last 20-30 yrs.

anonymous says

I was looking at the headlines for oil going into the 40s, and another one with stating the North Dakota producers are looking at a fall to the $30 range.

This will absolutely screw North Dakota and large swathes of the mountain time zone.

The whole gang is going to suffer. You can change the time periods and get some indication of cause and effect. Consider natural gas which appears to be 1 of the benefactors.

http://www.barchart.com/commodityfutures/leaders?type=pl&view=chart&note=1

HydroCabron says

This will absolutely screw North Dakota and large swathes of the mountain time zone.

Yes it's simple minded to think that this drop is all good- just like many commentators have characterized it -like your favorite- "a tax cut"

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.

Many companies will also go under and cripple the fracking shale oil industry in the US. Depending on your point of view this could also be a huge negative (or positive is you are a booster of green energy or that famous pipeline)

Even if all that was happening was an innocuous tax cut, it wouldn't last long as Congress would raise gas taxes to gain revenue to take advantage of the lower price.

Graybox says

The whole gang is going to suffer. You can change the time periods and get some indication of cause and effect. Consider natural gas which appears to be 1 of the benefactors.

http://www.barchart.com/commodityfutures/leaders?type=pl&view=chart&note=1

Natural gas suffers from cost to ship. It CAN be shipped by sea but it is expensive. Pipelines are also expensive.

Graybox says

Until That reserve status is removed it trumps JPY and RUB.

I would not like to be a regular Joe citizen of Russia and at the same time neither would Japan work for me. (Fukushima Daiichi nuclear disaster)

http://www.worldlifeexpectancy.com/world-happiness-map

All the boogie mans fundamental cards are not on the table.

Just think of how many stories of Japans emanate collapse if this happens or that over the last 20-30 yrs.

The status may never get officially removed. What IS happening is that the dollar is used in an ever decreasing percentage of international trade.
Also keep in mind, lower gas prices means countries have to keep fewer dollars in reserve to fund their international purchases

Graybox says

Until That reserve status is removed it trumps JPY and RUB.

I would not like to be a regular Joe citizen of Russia and at the same time neither would Japan work for me. (Fukushima Daiichi nuclear disaster)

http://www.worldlifeexpectancy.com/world-happiness-map

All the boogie mans fundamental cards are not on the table.

Just think of how many stories of Japans emanate collapse if this happens or that over the last 20-30 yrs.

If Joe citizen of Russia had gold last year instead of Roubles he would have been unaffected by the drop in the rouble.
https://smaulgld.com/gold-vs-world-currencies/

smaulgld says

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

Yeah, a lot of the fracking is wildcatters financed by high-risk debt.

Anecdotal: I have driven I-70 between Vail and Grand Junction during daylight hours possibly 10 times in the past couple of years, and I see roughnecks in pickup trucks full of oil and gas gear every time. Not a few of them, either: stop at the gas station in Rifle and you'll see 6-8 of them in 5 minutes. They're all over the interstate, going back and forth.

For a large demographic in Western CO, it's the only job right now.

If the drilling stops, Grand Junction and all the other non-resort cities go "boom" and become basket cases for a few years. This will bear heavily on the state as a whole.

http://www.barchart.com/commodityfutures/leaders?type=pl&view=chart&note=1

Yep they are sending them here for better ROI and other investments in liquid as well as hard assets.

smaulgld says

If Joe citizen of Russia had gold last year instead of Roubles he would have been unaffected by the drop in the rouble.

His life would of sucked just a little bit less...

HydroCabron says

For a large demographic in Western CO, it's the only job right now.

If the drilling stops, Grand Junction and all the other non-resort cities go "boom" and become basket cases for a few years. This will bear heavily on the state as a whole.

And Saudi Arabia is on record as saying they will NOT cut production even if the price drops to $20!

Profit is clearly not the reason for that decision

Graybox says

http://www.barchart.com/commodityfutures/leaders?type=pl&view=chart&note=1

Yep they are sending them here for better ROI and other investments in liquid as well as hard assets.

Bookmarked! Thanks

The advantage of gold is it is easy to store (hard to take possession and/or store oil or corn in large amounts) and over time more stable than most on the list. Silver right now is a better play as it spikes and dives and is probably ready to spike again.

It all depends on whether you want a paper asset, a future contract, a physical asset, why you want it (appreciation or wealth preservation) etc.

Graybox says

smaulgld says

If Joe citizen of Russia had gold last year instead of Roubles he would have been unaffected by the drop in the rouble.

His life would of sucked just a little bit less...

He'd still be able to get vodka, cigarettes and other necessities of life

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.