Monday, 31 January 2011

Trading / Predictions Update: Oil, Gold, Silver

So Brent hits $100 for the first time since the 2008 silly season. Thinking back to Predictions time, this sits nicely with:

"Oil to be in 3-digit territory by year-end - and to stay there forever. It will cross the 100 line earlier than that, but there is scope for some dithering on either side initially."

So my $98 March is looking OK.

How about the bullion ? Noticeably down since year-end and I have taken that as a cue to move in, to silver. For the record my average buy-in price was £585/kilo. Don't see any near-term shortage in the Bad News that is my rationale.

ND

13 comments:

Sean said...

Copper?

Nick Drew said...

yup & tin looks interesting too

Barnacle Bill said...

If you're going into silver you might want to check this guy out -

http://tfmetalsreport.blogspot.com/

Anonymous said...

Would that be paper silver, or real silver metal in your hand?

Nick Drew said...

physical silver, anon (in a vault, allocated - retail phys silver would have cost more), I am not interested in paper

see these recent posts & comments threads, here and here

of course, others are happy with paper, DYODD

Scan said...

Gold seems pretty good at the minute...relatively. The uncertainty in the middle east doesn't really seem to have affected things in a significant way. If you look back at the last five/ten years it seems that in 2006/07 quite a few people - in fact many, many people - saw the proverbial hitting the fan, giving the lie to the neo-labour line that no-one saw it coming.

Talking to a few Americans it seems that Barry Obama will possibly get tooling at the next election; but strangely enough people see Palin as too green to elect "next time". However, I get the feeling that Palin or her fluffer will the be in the white house next time round; which is bad news for the world, but good for speculation and investment.

Weekend Yachtsman said...

Just wondering why oil continues its climb when we are reading all this stuff about shale gas?

Is it that the gas is in fact nowhere near economically extractable? Or that the greenies won't let us extract it even if it is economical?

Or that substitution between the two is more difficult than it seems?

Nick Drew said...

you've got me started now, Mr Yachtsman !

shale gas is extremely economic in some areas & has already transformed the US gas market from being a net importer to a net exporter - helping us directly all this winter, as LNG otherwise destined for the US has been plentiful in European markets

there is more being found all over the world (a huge recent find in France, e.g.) & being explored for here in the UK

the greenies feel v. threatened by this as it will undermine their assertion that energy prices will continue to rise indefinitely & that renewables are economic / will be soon

so they do & will try to stop shale being exploited (fat chance in a highly prospective country like Poland where they are desperate to diversify away from lignite and Russian gas)

it has long been know that there is vastly more gas in the ground than oil. they are substitutable to a degree - and are extracted by the same companies, so each commodity is competing for the same development dollar: if the price of oil rockets & gas doesn't, everyone will go looking for oil & neglect gas

however, linkage between oil and gas prices has been stronger historically than is strictly logical, by virtue of the common practice of selling gas under long-term contracts with oil-indexed prices

this has been fundamentally (and I reckon permanently) subverted over the past 2 years by (a) shale (b) collapse in gas demand due to recession

we have written about this quite a lot since 2008 ..! search this blog under "energy and Industry"

Jan said...

I was all for shale gas until I saw Bruce Parry in the arctic on Sunday. The shale gas operation in Canada is huge and laying waste to great swathes of land and displacing local indigenous peoples but they are too few to do anything about it. Also according to Bruce it takes one barrel of oil to extract every 2 (or was it 3...can't remember) so hardly very efficient either way.

The greens definitely have a point.

Nick Drew said...

Jan, I think you mean shale oil ?

that is a very different (& ugly) kettle of fish

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