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Oil to $160 !!, Gold to ... where?

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Shortages of oil will come they have to peak oil means they must.

 

Oil will then go ballisitic - will gold follow?

 

Maybe.

 

Oil is the single most important commodity on this planet.

Once the peak is reached there is virtually no limit to how high oil can go.

 

Gold on the other hand is money and will do very well but, unlike oil, it has no intrinsic value.

My definition of "intrinsic" is something that has value in itself.

Take of loaf of bread - if you couldn't trade it, it still has value - you eat it.

The same is true of most commodities but gold has value in trade only (controversial I know)

 

Having said that the current deflationary environment is great for real money.

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Maybe.

 

Oil is the single most important commodity on this planet.

Once the peak is reached there is virtually no limit to how high oil can go.

 

Gold on the other hand is money and will do very well but, unlike oil, it has no intrinsic value.

My definition of "intrinsic" is something that has value in itself.

Take of loaf of bread - if you couldn't trade it, it still has value - you eat it.

The same is true of most commodities but gold has value in trade only (controversial I know)

 

Having said that the current deflationary environment is great for real money.

 

I would say that the 'intrinsic value of gold' is its unique properties (scarcity, chemically inert, durable, divisible, impossible to fake,cannot be created out of nothing, store of value, transportable etc...) it is these properties that make it suitable as money, if lead had the same properties then lead would be classed as a Pm or real money.

 

So pms may not seem to have any intrinsic value to people, unless they recognize the unique combination of intrinsic properties that pms have, it these properties that give PMs value.

 

We could discuss this more indepth, but probably best to do it in the gold thread, because it would take this thread way off topic.

 

http://en.wikipedia.org/wiki/Precious_metal

A precious metal is a rare metallic chemical element of high economic value. Chemically, the precious metals are less reactive than most elements, have high luster, are softer or more ductile, and have higher melting points than other metals. Historically, precious metals were important as currency, but are now regarded mainly as investment and industrial commodities. Gold, silver, platinum and palladium each have an ISO 4217 currency code.

 

 

--------------

 

 

An interesting case of a once-precious metal that is now common is that of aluminium. Although aluminium is one of the most commonly occurring elements on Earth, it was initially found to be exceedingly difficult to extract from its various ores. This made the little available pure aluminium which had been discovered (or refined at great expense) more valuable than gold. Bars of aluminium were exhibited alongside the French crown jewels at the Exposition Universelle of 1855, and Napoleon III was said to have reserved a set of aluminium dinner plates for his most honored guests. Additionally, the pyramidal top to the Washington Monument is made of pure aluminium. At the time of the monument's construction, aluminium was more expensive than silver, gold, or platinum. Over time, however, the price of the metal has dropped; the invention of the Hall-Héroult process in 1886 caused the high price of aluminium to permanently collapse.

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Maybe.

 

Oil is the single most important commodity on this planet.

Once the peak is reached there is virtually no limit to how high oil can go.

 

Sorry Bobbyald I should have added that I do agree that oil is the most important commodity on earth, and because its been so easily available for so many years people under value its utility. We take it for granted and under price it like we do with oxygen and water, when you don't have any left you start to realize how important it is.

 

I found this latest Zapata George interview in part 2 of Max Keisers latest Karmabanque radio podcast, He talks about the reasons why he thinks we may be at peak oil and why we could see $160+ a barrel, and also what effect the decline of North Sea oil will have on the Pound.

 

http://www.karmabanqueradio.com/

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Sorry Bobbyald I should have added that I do agree that oil is the most important commodity on earth, and because its been so easily available for so many years people under value its utility. We take it for granted and under price it like we do with oxygen and water, when you don't have any left you start to realize how important it is.

 

RIGHT.

And the rising price is a signal that people need to begin to think more about the price

and availability of oil. It will keep rising until they change their habits

 

CAVE: Citizens Against Virtually Everything

...are those good folks in the US who do not want to have refineries, windmills, oil wells, or other ways

of alleviating shortages in their "backyards" or otehrwise near their homes.

 

I think of the falling dollar and rising oil price as a way the rest of the global citizens (who can now afford

to compete with Americans for scarce commodities), saying "Fxxx Yxx" to the cavemen. If the cavemen

do not want to wake up, and change their oil use habits, the message will get louder and louder until they do.

 

$50 oil : f.u.

$75 oil : X.x

$100 oil : Xxxx Xxx

$125 oil : XXXX Xxx

$150 oil : XXXX XXX

$200 oil : XXXX XXX !

$250 oil : XXXX XXX !!

$300 oil : XXXX XXX !!!!

$400 oil : XXXX XXX !!!!, you oil-greedy bastards.

$500 oil : XXXX XXX !!!!, you oil-greedy bastards. Don't you get it yet??

 

When will Americans (and some other big oil users) wake up?

 

The rising oil price is not a problem, it is the solution (to American over use of a scarce resource.)

 

As Jim Puplava puts it:

"It is a liquid fuels problem... If I were President, I would switch away from ethanol tomorrow...

The US government has been the big winner on rising oil prices. And you never hear about it."

 

Congress is sleep walking and obfuscating through this crisis.

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There are signs that the decline phase of post peak oil may start this year, at least for net importers.

 

Middle East oil flow may decline

Sat, 05 Apr 2008 13:50:21

 

Oil flow from the Middle East may decline by 1 million bpd this summer

<snip>

 

The oil supply to the international market may be reduced by 1 million barrels per day (bpd) as more oil and natural gas will be redirected toward producing electricity, Reuters quoted Morse as explaining.

 

When examining the oil situations of Saudi Arabia, Abu Dhabi or the Emirates and Kuwait, he predicts the 1 million bpd decrease to begin in May and continue through July and August.

 

If the region faces above-average temperatures this summer, greater consumption of electricity will lead to a tightening of the oil market and higher prices.

 

"There certainly should be enough crude oil, condensates and natural gas in combination to eventually catch up, and I think it is probably going to catch up in the summer of 2009," he said.

http://www.presstv.ir/detail.aspx?id=50340...ionid=351020103

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Oil price edges up on Opec stance

Monday, 7 April 2008 11:30 UK

http://news.bbc.co.uk/1/hi/business/7334284.stm

 

Oil prices have climbed towards $107 a barrel as the rally seen late last week continued.

 

The rises were helped as producer group Opec reiterated that it saw no need to increase output.

 

Investors have also been looking to move out of the weak dollar and into commodities, pushing up the oil price.

 

"Oil supply to the market is enough and high oil prices are not due to a shortage of crude but rather it is because of the decrease in the dollar's value, shortage of refinery capacity and some political tensions in the world," Opec secretary general Abdullah al-Badri said.

 

Commodities are viewed as an attractive alternative investment to dollars.

 

The dollar weakened in relation to the euro on Friday after official data showed US employers cut 80,000 jobs in March - the biggest monthly job decline in five years.

 

When the dollar weakens it becomes cheaper for foreign buyers to invest in commodities, which are priced in the US currency.

 

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There seems to be 2 topics running concurrently on this subject so I'll re-post one of my comments from there here !

 

Quick thought on oil:

 

Isn't it reasonable to think that prospects over the next 3 to 6 months could see oil developing somewhat of a 'win/win' situation for itself?

 

ie. recently (last 2 weeks) equity markets in a minor rally, positive sentiment being gushed at every opportunity by those with the 'traditional' equity interests to protect, and much of the mainstream media adding support to the 'worst is over' camp. If this bear market rally continues for a few months then we'd expect oil to do well wouldn't we? I mean no recession, no economic woes means no drop in demand, right?

 

Alternatively, the equity markets come to their senses, equities head for a new bottom and everything is all doom and gloom again, you never know there could even be a bank or two with a few $bn worth of margin calls again. We'd still expect oil to rise wouldn't we (along with gold and silver), as cash rushes for the exits and the (already overused) 'safe havens'?

 

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RIGHT.

And the rising price is a signal that people need to begin to think more about the price

and availability of oil. It will keep rising until they change their habits

 

It will keep on rising becasue they can't change their habbits. At least, not the fundamental ones. The vast majority of the World's population lives in urban areas. They cannot grow their own food. They must rely on long and indirect supply chains to keep them sustained. The food and supply chains require huge amounts of energy to keep going. This must come from oil. If oil gets more expensive, the urban poulations can do no other than to swallow the rise as best they can. This will initiallyinvolve the kind of change of habbits you mention. Thus, there will be demand destruction of luxury items. This will be followed by demand destruction items and activities that are not luxuries but are also not essential to living. At which point, demand destructioin hits a wall. People will still have to eat....

 

Steve

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Oil UP again - the usual seasonal pattern not working- ZG must be smiling...

 

Oil reaches $112 for the first time

A surprising drop in crude supply sends prices into record territory, and more gains may be on the way.

 

 

NEW YORK (CNNMoney.com) -- Oil prices surged to record levels Wednesday, topping $112 a barrel, after a government report showed an unexpected decline in crude supplies.

 

U.S. crude for May delivery climbed $2.37 to settle at $110.87 a barrel on the New York Mercantile Exchange, a new closing record.

 

Oil also set a new intraday high of $112.21 earlier in the session. The previous intraday high of $111.80 was set March 17, while the previous closing high of $110.33 was set March 13.

 

In its weekly inventory report, the Energy Information Administration said crude stocks fell by 3.2 million barrels in the week ended April 4. Analysts had been expecting an increase of 2.4 million barrels, according to a Dow Jones poll.

 

The EIA said gasoline supplies fell by 3.4 million barrels. Analysts had only expected a drop of 2.3 million barrels. Distillates, used to make heating oil and diesel fuel, fell by 3.7 million barrels, more than the expected drop of 1.2 million barrels.

 

Record gas prices. The supply report comes on a day when average gasoline prices hit a new record high of $3.343 at the pump, according to AAA. Prices are up nearly 20% from what they were last year.

 

This was despite the fact that demand for gasoline was up just 0.3% compared to the same period last year, according to the EIA report. Gasoline demand usually grows at about 1.5% per year, but the slowing economy and rising prices have led consumers to cut back on driving.

 

Analysts said refiners are making less gas, and that's contributing to the pump price surge, especially as the warm weather driving season approaches.

 

Refineries are running at 83.1% capacity, according to the EIA. They should be running at 89% to 90% this time of year, said Mark Waggoner, president of Excel Futures, a California-based commodities trading firm.

 

"Oil companies need to ramp up ... fast," he said

 

/more: http://money.cnn.com/2008/04/09/markets/ei...oney_topstories

 

== ==

 

ARE US CAR OWNERS beginning to get it??

 

In the article on $112 oil they said:

"demand for gasoline was up just 0.3% compared to the same period last year, according to the EIA report. Gasoline demand usually grows at about 1.5% per year, but the slowing economy and rising prices have led consumers to cut back on driving.

 

The same article has a very interesting poll

 

1. What would it take for you to drive less?

 

: $4-a-gallon gas......... 9%

: $5-a-gallon gas........ 10%

: I’ve already cut back 69%

: I’ll drive at any cost. 12%

 

total responses to this question: 72170

 

WOW. They have cutback already?? But gasoline use is still way too high.

Something bigger needs to be done !! A merely slowing of growth in demand is not enough

 

I think Americans don't understand THE EXTENT to which they need to cut back

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Oil UP again - the usual seasonal pattern not working- ZG must be smiling...

I suspect he is, but the $160 prediction was for a week, then 90 days, which is it? His general assessment was probably correct, but I don't think we should overlook the fact that he expected things to happen fast and they haven't. In fact, you could argue that given all the news on decline in crude supplies, as well as the fibbing that ZG talks about, why are we not much higher right now, say $125? Perhaps next week.

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I suspect he is, but the $160 prediction was for a week, then 90 days, which is it? His general assessment was probably correct, but I don't think we should overlook the fact that he expected things to happen fast and they haven't. In fact, you could argue that given all the news on decline in crude supplies, as well as the fibbing that ZG talks about, why are we not much higher right now, say $125? Perhaps next week.

Nothing goes up in a straight line right?

It set a new record yesterday...lets see. ;)

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Nothing goes up in a straight line right?

It set a new record yesterday...lets see. ;)

True, but if someone makes a prediction that doesn't work out then I see no reason to applaud them for it. I see oil going up in price, but I think ZG went out on a limb this time, and certainly on his initial prediction and the timeframe, he was wrong.

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Oil UP again - the usual seasonal pattern not working- ZG must be smiling...

 

Oil reaches $112 for the first time

 

Hilarious thing I saw on Bloomberg today was some old'ish American bint presentor comment that "we're in a recession and oil is still going up - huh?" They still think what they do matters to the commodities complex? The US don't understand that that the ARE NOT the driving force anymore...

 

crude.

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Hello I'm new here and have a question for everyone, What do you think will happen to the price of oil as Iraqi oil production grows stronger Mr Soros reckons they have 300 million barrels will this cause a drop in price? I know they still have security issues but things are getting better (I'm also invested in the Iraqi Stock Exchange and Iraqi Dinar as I do believe they will become a very wealthy nation) Would be interested in everyones opinion. Great site by the way.

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Hello I'm new here and have a question for everyone, What do you think will happen to the price of oil as Iraqi oil production grows stronger Mr Soros reckons they have 300 million barrels will this cause a drop in price? I know they still have security issues but things are getting better (I'm also invested in the Iraqi Stock Exchange and Iraqi Dinar as I do believe they will become a very wealthy nation) Would be interested in everyones opinion. Great site by the way.

 

I believe the figure is 300 billion though I haven't read this stuff in detail. 300 million barrels is just under 4 days worth of global consumption ;) I can't see the country (or region) stabilising any time soon. Oil will get well over $200 IMO, probably more, before any political/peace progress enables siginificant production increases to have an impact on reducing prices. Still , who am I to argue with GS?

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I believe the figure is 300 billion though I haven't read this stuff in detail. 300 million barrels is just under 4 days worth of global consumption ;) I can't see the country (or region) stabilising any time soon. Oil will get well over $200 IMO, probably more, before any political/peace progress enables siginificant production increases to have an impact on reducing prices. Still , who am I to argue with GS?

 

My mistake your are right it is billion (Lack of sleep and way to much coffee) I agree security is everything however I think as more and more money comes in the pace of peace will quicken bringing in more investment creating more stability etc etc. I wouldn't want to be on the other side of a trade against GS very smart guy indeed. Thanks for your thoughts.

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Saudi to leave some oil finds for future

By Agencies on Sunday, April 13 , 2008

http://www.business24-7.ae/cs/article_show...HeadlineID=5523

 

Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations, the official Saudi Press Agency (SPA) reported.

 

"I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said in remarks made late on Saturday.

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Chinese fund builds up £1bn stake in BP

Last Updated: 2:23am BST 15/04/2008

http://www.telegraph.co.uk/money/main.jhtm.../15/cnbp115.xml

Beijing's share-buying in Britain's largest company, which has so far reached nearly 1pc, is being closely watched by Downing Street. Katherine Griffiths reports

 

A Chinese sovereign wealth fund has built up a stake of about £1bn in BP, in a move which has caused a stir within the British Government.

 

The sovereign fund is understood to have quietly acquired the shares in the market over a period. It has accumulated just under 1pc of BP, which is the UK's largest company with a capitalisation of £104bn.

 

A BP spokesman said: "We are aware of the Chinese holding and we welcome all shareholders."

 

The Chinese fund has also built up a stake in France's oil giant Total worth about £1bn.

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...

"I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said in remarks made late on Saturday.[/indent]

Clever, if true. Who knows how much they have left.

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Nothing goes up in a straight line right?

It set a new record yesterday...lets see. ;)

 

I dont remember Zap mentioning an actual timeframe - although I was listening on my MP3 on the tube. Did get the impression he meant that when the "fibbing" comes out as broad knowledge then the price would shoot up.

 

I see oil has crept up to Nymex Crude Future $113.26. While not 100% convinced I am watching with interest.

 

I had to smile when I heard Dr Bubbs reaction to Zap's forecast, folks on the Tube must think im nuts!

 

Oh yes came accross this website http://www.oil-price.net/ which has some interesting stuff on it

 

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Hello I'm new here and have a question for everyone, What do you think will happen to the price of oil as Iraqi oil production grows stronger Mr Soros reckons they have 300 million barrels will this cause a drop in price? I know they still have security issues but things are getting better (I'm also invested in the Iraqi Stock Exchange and Iraqi Dinar as I do believe they will become a very wealthy nation) Would be interested in everyones opinion. Great site by the way.

The US has also got some spare oil - if they ever allow the oil companies near it - parts of Alaska + California - see

 

http://www.anwr.org/features/akeval.htm

California Surprises

The MMS Pacific OCS report documents the oil and gas commodities, resource categories, data and methodologies of the assessment of the federal offshore area of California, Oregon and Washington.

Its significant findings include:

• Nearly 11 billion barrels of undiscovered oil and 19 trillion cubic feet of undiscovered gas in the region may be recoverable using existing technology.

• Relatively large volumes of undiscovered oil may exist offshore central and southern California, due largely to the presence of Monterey-type strata, which are potential source and reservoir rocks.

• Half of the undiscovered, conventionally recoverable oil and gas in the region may be economically recoverable under existing conditions.

 

IF (and its an IF but quite possible on a long term view) things in the US get as bad as Jim Pupulva suggests then surely 1. sooner or later out of economic need if nothing else then they will have to ALLOW access the Californian/Alaskan oil and 2. it might mean the end of the US as a World SuperPower!

 

Yyes I have started listening to financialsense, quite enjoyable and is useful even for a Brit - maybe this is proof of a bear market!

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This might put the knackers on Zaps $160 oil theory

 

http://www.guardian.co.uk/business/2008/apr/16/oil.brazil

 

Carioca oil discovery

 

Excitement about the potential of Brazil as a massive new source of oil and gas intensified yesterday after a senior energy ministry official declared that the newly found Carioca field could have 33bn barrels in place.

------

Then agan it will take some time to put it into production and that 33bn is not yet substantiated......

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