Precious metals will appreciate for another decade, and this will prove to be a great investment opportunity. Along the way, there will be plenty of other opportunities. Many of them have to do with the destruction of the fiat ponzi.
On the Fall solstice the Federal Reserve will show their hand, and begin to implement further easing. How fitting that this will happen on the solstice! The pagan alchemists will grow their fiat from their tree of knowledge. Unfortunately for them the tree is not real and soon the world will know what this false worship will beget.
The dollar will be weakened further. Rates will be held low so that the Federal Reserve can make as much as possible when bonds come due. The Treasurie also needs this premium. With European bonds collapsing European investors will go to cash, and that means Euros, as dollars will not store wealth with Bernanke and Geithner at the helm.
So the EUR/USD will go to $2.00 during the next year, just as the Mark once did. Greece and other small States will leave the Euro, and this will make the Euro more expensive. This is will help keep US rates low, and will keep the dollar low too.
With the dollar dropping, oil will rise. Because the Euro will gain, Brent should come back to a more normal price vs. WTI. I think by late winter we could be looking at $150 per barrel. I think that due to price action of fiat, but also because of supply. OPEC is 'cutting' supply. What this really means is that OPEC has peaked production.
With supply dropping prices are set to increase, for oil and precious metals. This will squeeze the dollar. So the dollar is getting squeezed on all sides. Equity looks weak, and will not make real gains, but it will either rise marginally or trade sideways while the dollar flounders. This will provide perfect cover for finance to continue to loot the system with Keynesian policy.
Monetary solutions are QE. Fiscal solutions are Stimuluses. These measures will continue until the system falls apart. Once again, the fiat ponzi is getting squeezed from all sides, and it is only a matter of time before it explodes.
Hello,
ReplyDeleteSo if you believe oil to hit $150/barrel in late 2011 or early 2012, would you say investing in oil companies would be a solid investment now?
Thanks,
JM
Good question! The problem with buying equity is that it is up to the whim of the individual balance sheet. Is it a hedge? Yes, but in the gambling sense of the word. If I am 100% correct, and I could not believe that would ever be the case, then oil corporations would make a lot of money for share holders.
ReplyDeleteThe way I see it is, maybe there is equity out there that is a good investment. Oil corporations are at the top of the list, along with miners, but would it not be better to hold your own wealth? In the form of a hard asset? Like gold and silver and platinum? I would say it would be. Maybe buying equity in an oil major proves to be a great investment. But the investment is at the whim of the individual corporation, and corporations, as proven by BP, can always make mistakes.
I have some hard assets and am hanging on to them really tight. I was thinking oil because I see the price picking up again, which shares are lagging. I see it as a buying opportunity, especially if it is going to continue going up.
ReplyDeleteThanks for the reply,
JM
I think you are mistaken about the Euro's value. If Greece is kicked out of the Euro, many government debts will be defaulted upon.
ReplyDeleteDefaulting government debts = currency devaluation. Just like the USSR's default meant the Ruble fell to shit.
The Euro is going towards 1.00, not 2.00.