Oil be damned, get back under $100

Every time oil breaks the $100 a barrel mark there are teams of analysts willing to make calls like $200 oil, recently one even said (without cracking a grin) $250 oil.

If we debase currencies enough then there is no upper limit on oil prices (think Zimbabwe Dollars for a moment), but how likely is that with the USD? If you think ‘very likely’ then stop reading, if you think dollar hegemony is there to stay at least a little while longer then continue – bearing in mind that every time there is a crisis people run into USD and the world won’t run out of crises any time soon.

This is furthered on the options market where somebody was willing to buy the right but not the obligation to purchase oil at $250 in December. To use their own parlance, I have four words for them ‘out of the …

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The next movement of the ECB

The ECB has always had inflation, or more accurately the ‘control of inflation’ as its only guiding light. The ECB raised rates by 0.25% on the 3rd of July and now it is time to wait and watch, to see what they will do next. While we don’t possess a crystal ball what we can do is take a brief look at the world and how some market movements may shape the next meeting of the ECB.

We are (worldwide) in an inflationary environment, in Vietnam inflation is at 25%! The highest it has been since the Vietnam War. The government there is trying to stop the importation of gold, because the Vietnamese have surpassed both China and India in the levels of gold consumption, in the first quarter of 2008 they imported over 38 tonnes. Why is this happening, and what does it have to do with the ECB?

The ‘Dong‘ is a fiat currency that was born in 1978, after the war, the currency that existed prior to that the French …

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Bubble Bubble, Boil and Trouble, Markets Quake and Markets Crumble

There is talk about the property bubble, and now an oil and gold bubble. Commodity prices have had a massive bull run, so will does this bull still have ground to cover? There is a real possibility the answer is yes… quite so.

Commodities have cycles like any other product, there are cycles such as ‘winter demand’ for oil, or a rise and fall as economies boom and bust, but then there are structural cycles that have to do more with supply and demand. There has been (for instance) a big upsurge in demand for oil but Opec have not increased output in order to meet the demand. The US Economy is slowing down (don’t use the R word!) and Europe is following, so if some of the major markets are starting to slow then what will that do to Oil or other commodities?

Oil prices in Euro’s prices went from €16 to €68 because the Euro got so much stronger against the Dollar, so is the solution to buy from the Iranian Oil Bourse which deals in euros? Supply …

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Oil Hostages & European oil dependence

Oil prices are at record highs, not record highs for the last year or decade, but ever. And what we are starting to see now is a realisation by countriees with oil that they hold the cards that in the past they never had, they were at the table and holding a royal flush but didn’t know how to play the game. Up until recently the flow of oil was largely influenced by the USA and the EU but that seems to be diminishing quickly as Arab Nations and Russia grow into the big oil boots they have had for so long but failed to notice.

Here’s a question: Is Russia’s Gazprom, a state sponsored strong arm? They have been holding the Ukraine to ransom lately by denying them oil. Don’t forget: the Japanese went to war with the USA for the same reason 60 years ago, natural resources are unfortunately geographically bound in a very global world. Cutting a nations gas supply during the winter – …

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Oil Hostages & European oil dependence

Oil prices are at record highs, not record highs for the last year or decade, but ever. And what we are starting to see now is a realisation by countriees with oil that they hold the cards that in the past they never had, they were at the table and holding a royal flush but didn’t know how to play the game. Up until recently the flow of oil was largely influenced by the USA and the EU but that seems to be diminishing quickly as Arab Nations and Russia grow into the big oil boots they have had for so long but failed to notice.

Here’s a question: Is Russia’s Gazprom, a state sponsored strong arm? They have been holding the Ukraine to ransom lately by denying them oil. Don’t forget: the Japanese went to war with the USA for the same reason 60 years ago, natural resources are unfortunately geographically bound in a very global world. Cutting a nations gas supply during the winter – …

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New Iranian Oil bourse, it might just get them bombed.

When it comes to Uncle Sam and oil you simply don’t mess around. I don’t mean that in a frivolous way either, playing about with Oil supply will get you invaded, it has happened before (both Gulf Wars) and can/will happen again.

Iran’s leader Mahmoud Ahmadinejad might not be your favourite leader, and he does some of the disgraceful things that are a hallmark of some Middle Eastern politicians, such as claiming there was no holocaust. Perhaps for them ‘holocaust’ is subjective given that there is one happening in Iraq today and nobody is talking about it any more than the SS did back in the 1940’s, the only saving grace at the moment is that it is not a state sponsored exercise. Anyways, Ahmadinejad might not be to your liking but he is the legally elected President and the leader of Persia, thus far his wild comments and defiant stance when it comes to things like nuclear power have brought about international pressure but the thing that might make his country the final resting place of many bombs is …

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Whats the fuss about the U.S. Dollar?

The federal reserve is expected to cut rates next week in an effort to alleviate a credit market in crisis. In the meantime there are other developments which may be coming to the rescue, last week Abu Dhabi Investment Authority bought a $7.5 billion stake in Citigroup helping Americas largest bank, who incidentally have massive exposure to those nasty sub-prime loans that are at the root of the present credit crunch. Perhaps Abu Dhabi Investment Authority see an opportunity to pick up assets at a bargain from amongst the wreakage? The other surprise is that China Investment Corporation have expressed a desire to invest in stocks ‘rocked by sub-prime defaults’. The chairman of China Investment Corporation said that the $200 billion fund he directs will be a ‘stabilizing force in the international capital markets’. Perhaps they are seeking credibility in the business world.

Why would it be any other way? If the U.S.A. goes down it will seriously hurt China. Why? For a start the fact that for the near future most of the worlds commodities are in $USD it …

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