Before I get into what others are saying about Oil, here is some information about Gold and Silver via a quote from Mike Maloney, founder of Goldsilver.com that apppeared in a Casey Daily Dispatch. (this is NOT an endorsement of his company).
"What investors need to be aware of is that we are on the last legs of our currency system. History shows that the world sees a brand-new monetary system every 30-40 years – and ours is 40 years old. Right now all currencies on the planet are backed by debt. All of the previous transitions were baby steps from something (gold) to nothing (debt). In order to give confidence back to the currencies, we’ll have to go from nothing (debt) to something (most likely gold again) in one big, huge, gigantic leap. This will cause an economic convulsion the likes of which the world has never seen."
Oil - what's the deal?
According to Casey Research
Here is an excerpt of what Vedran Vuk from Casey Research had to say:
"One way to describe the year in oil would be as a wild swing from irrational exuberance in the first half of the year to increasingly irrational pessimism now" ..."The threat of outright recession has risen, to be sure, and in response investors are becoming more and more risk averse. However, a recession is not yet a certainty. Current indicators are mixed, generally suggesting the economies of the United States, the United Kingdom, and the eurozone are struggling for traction rather than shrinking. Nevertheless, the more the markets fall, the more investors seem to be fearing an even deeper pullback. The markets are extrapolating recent movements rather than making a calm assessment of what is likely to happen in the future."
Here is a Daily Dispatch about the Brent-WTI divide. This is a must-read for anyone who is trying to understand why WTI prices are lower than Brent prices.
The CR Energy Team writes, "All of this crude from the shales and the oil sands needs to be refined. Only one pipeline connects the oil sands to the west coast, which means the rest of the bitumen has to go to [land-locked] Cushing; within the last year two new pipelines increased the flow of bitumen into Cushing by one million barrels of oil a day. Shale oil from the Bakken only adds to the supply problem." ... Furthermore, "it will be some time before the supply glut at Cushing is relieved. In the meantime, WTI prices will continue to suffer." The Take-away, they write, is this: "The WTI-Brent price disparity will persist for the foreseeable future, [pending the approval of the Keystone XL pipeline]."
Yet another Casey Gem on falling oil prices. Martin Katusa writes the following:
"oil prices have to correct when economies slow down, or else high energy costs drag things down even further. And the current relationship between oil prices and global economic output is not pretty. In fact, every time the cost of oil relative to global production has hit current levels – and that’s after the sharp corrections earlier this month – an economic slump, if not a recession, has followed ... [but] remember that there are many forces at play in the oil markets, not the least of which is supply."
Finally, The Casey Research Energy team believes that an Oil panic developed this summer.
"The long and short of it is that oil prices have corrected – significantly and dramatically – amidst a global economy that is terrified of another U.S. recession and seriously concerned that the European Union will crumble because a few strong countries cannot save a raft of bankrupt ones ... However, in the long term we remain bullish on oil, and falling crude prices will create buying opportunities for investors willing to take on the risk. The world’s population is growing and demanding more energy every day; the two main sources of that energy are crude oil and coal. As such we see strong futures for both, even if the present is far from bright. (We also believe in uranium, as we’ve written about several times in these pages, but that is a story for another day.)"
"What investors need to be aware of is that we are on the last legs of our currency system. History shows that the world sees a brand-new monetary system every 30-40 years – and ours is 40 years old. Right now all currencies on the planet are backed by debt. All of the previous transitions were baby steps from something (gold) to nothing (debt). In order to give confidence back to the currencies, we’ll have to go from nothing (debt) to something (most likely gold again) in one big, huge, gigantic leap. This will cause an economic convulsion the likes of which the world has never seen."
Oil - what's the deal?
According to Casey Research
Here is an excerpt of what Vedran Vuk from Casey Research had to say:
"One way to describe the year in oil would be as a wild swing from irrational exuberance in the first half of the year to increasingly irrational pessimism now" ..."The threat of outright recession has risen, to be sure, and in response investors are becoming more and more risk averse. However, a recession is not yet a certainty. Current indicators are mixed, generally suggesting the economies of the United States, the United Kingdom, and the eurozone are struggling for traction rather than shrinking. Nevertheless, the more the markets fall, the more investors seem to be fearing an even deeper pullback. The markets are extrapolating recent movements rather than making a calm assessment of what is likely to happen in the future."
Here is a Daily Dispatch about the Brent-WTI divide. This is a must-read for anyone who is trying to understand why WTI prices are lower than Brent prices.
The CR Energy Team writes, "All of this crude from the shales and the oil sands needs to be refined. Only one pipeline connects the oil sands to the west coast, which means the rest of the bitumen has to go to [land-locked] Cushing; within the last year two new pipelines increased the flow of bitumen into Cushing by one million barrels of oil a day. Shale oil from the Bakken only adds to the supply problem." ... Furthermore, "it will be some time before the supply glut at Cushing is relieved. In the meantime, WTI prices will continue to suffer." The Take-away, they write, is this: "The WTI-Brent price disparity will persist for the foreseeable future, [pending the approval of the Keystone XL pipeline]."
Yet another Casey Gem on falling oil prices. Martin Katusa writes the following:
"oil prices have to correct when economies slow down, or else high energy costs drag things down even further. And the current relationship between oil prices and global economic output is not pretty. In fact, every time the cost of oil relative to global production has hit current levels – and that’s after the sharp corrections earlier this month – an economic slump, if not a recession, has followed ... [but] remember that there are many forces at play in the oil markets, not the least of which is supply."
Finally, The Casey Research Energy team believes that an Oil panic developed this summer.
"The long and short of it is that oil prices have corrected – significantly and dramatically – amidst a global economy that is terrified of another U.S. recession and seriously concerned that the European Union will crumble because a few strong countries cannot save a raft of bankrupt ones ... However, in the long term we remain bullish on oil, and falling crude prices will create buying opportunities for investors willing to take on the risk. The world’s population is growing and demanding more energy every day; the two main sources of that energy are crude oil and coal. As such we see strong futures for both, even if the present is far from bright. (We also believe in uranium, as we’ve written about several times in these pages, but that is a story for another day.)"
