In October oil stooped briefly to touch $100. But it rebounded strongly, maintaining a flat-ish $125 through March (which I misread). The earlier assessment was the correct one: the distinct prospect of GlobalRecession2 has put a dent in commodities, even as producing nations are opening the taps; the Baltic Dry Index, that traditional coalmine canary, is in decline once more; and oil dipped back into double figures again this week. Since GR2 isn't remotely played out, we may expect more flirtation with $99.
Stock markets have found reasons for optimism just now, but overall it looks like another crisis brewing: number 94 in a long and tiresome series. And right on cue, for whatever you think it's worth, gold and silver have broken out of their 3-month-long down-trend. I'd assess that particular uptick as more meaningful than the stock markets' own burst of green.
I really can't see any news that justifies the stock market(short?) rally . I really can't. Pip dreams seem more likely.
ReplyDeleteAs for the baltic dry here is a chart that shows
the boom the bust and the continued slump
pipe dreams!
ReplyDeleteHaven't China just lowered rates? Maybe they'll lower bank ratios too and create lots more credit to buy gold with?
ReplyDeleteThat $25 drop in price is taking its time to get to the pumps...
ReplyDeleteGet on with you, ND. Oil and other commodities will remain high because China and the rest of the developing world need them. And they have a long way to go before they equal our consumption. Oil, minerals, water and food - they will all get more expensive.
ReplyDeleteAnyway, that's what my mate Bill d'Berg said and he's the one for screwing the peasants into the ground.
Budgie - oh certainly, in the medium / long-term I stand by the >$100 view, and all the rest of the commodities too
ReplyDelete... except gas, of course !
Steven - yes I reckon so
Timbo, thanks for link: (calling that Baltic 2008 collapse is one of the highlights of my C@W predictions career !)
and I am with you on the stock exchanges, but it's not my special subject - let's ask CU
Anon - now there's a thing ... actually, though I haven't worked the detailed numbers, given the huge % that is duty + VAT etc, 140 falling to 133 might not be far off the mark
Anon: "That $25 drop in price is taking its time to get to the pumps..."
ReplyDeleteOoooh big bad oil!!!
Let's just for a minute look at what the oil companies do for your £1.35 pump price.
Prospect for the oil.
identify viable reserves.
Extract the stuff.
Transport it around the world.
Refine it.
Distribute the refined products.
make a profit.
Now lets look at what the government does for the £1.20 pump price.
Tax everything the oil companies do.
Vilify the oil companies.
Spend the tax money in profligate and wasteful ways.
Waste more money.
Do nothing that couldn't be done cheaper in the private sector, cheaper or better.
And as Nick Drew points out, the result of the criminal exercise duty and VAT, (a tax on a tax) the drop in the price of a barrel of oil by $25 will barely show up in the high street price.
Although the supermarkets may not have yet decided to pass on the price reductions to their victims (aka customers) it is perhaps worth noting that overall commodities price indices e.g Dow Jones UBS Commodity Index Cash Index are now over 20% below what they were a year ago.
ReplyDeleteThose with a little knowledge of economic history might remember the last time we had a combination of low interest rates, falling commodity prices and muppets in charge who thought that the answer was to cut government deficits.
Gosh, it's a socialist troll back here!
ReplyDeleteThose with a little knowledge of economic history might remember that a government spent £1 actually equals as little as 50p. So when the socialist government (50% of GDP) takes money off us, it reduces GDP by up to 25%. So the answer is to cut government spending by as much as possible.