Big Al and Trader Rog discuss the markets.
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Big al,
Did I miss something? what about TR’s remarks of 2 days ago?
Bobby
HI Bobby,
I believe that his time frame for a good market is until the end of the third quarter and then he is looking for trouble.
Best,
Big Al
Roger –
I would think that at this stage that oil has a much bigger upside outlook than downside risk given the recent price slide. In addition, since the price of diesel is a big component of cost for the mining industry, the most recent price decline in oil should somewhat help the miners’ operating margins.
Hi again going down fast,
I agree with you regarding your comment about the upside potential for the price of oil!
Big Al
I would also like to hear more from the Extorre investors as to how they will be voting. Please go back to the comments of 2 days ago.
Bobby,
I will be voting “yes” on this transaction given all the points considered.
Marc
i will be voting yes… i thk Extorre team will not be able to do this alone… its disappointing that’s it’s sold for a song… and i kind of understand why Jim rogers says unless u r an expert… go for the commodity ONLY!
HI SgGold,
Jim usually gives pretty good advice!
Big Al
Marc and SgGold,
Personally I am not going to make any quick decisions on how I will vote. There is still a lot of information to digest. One thing everyone agrees upon is Yamada is getting quite a deal on the property, a company which I am a long term owner.
http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=153517&sn=Detail&pid=66
I recommend a wait a see aproach.
Morning Bobby,
I think that is a good idea on your part.
Big Al
Al
I have been buying and increasing my existing oil stocks holdings for the last month. I am finding dividend yields of 4% and higher, Total and Conoco Phillips being two of them. I consider oil to be the currency of the world. The world runs on energy.
I also like copper/gold stocks. The ones I picked pay in excess of 4% dividend. Granted both the oil stocks and copper stocks are depressed now due to the uncertain times due to the economic slowdown, but I believe while we are the 10% of the worlds who benefits from energy, the other 90% of the world (China and India etc) would like to join us.
I recently read that if oil sells for less than $90.00 per barrel it will stay in the ground. This sojourn with $70.00 per barrel oil will end. In the meantime oil stocks are being beaten up and because of this, opportunity presents itself. I agree with you that the longer term prospects for energy particularly oil look good. You know the old adage buy low, sell high or its not what you sell something for but what you paid for it.
Thanks for you and your guests thoughts on energy and the economy. Oh by the way I bought New Zealand Energy Corp and may buy more. I think they are on the right track.
Morning Martin,
I completely agree with your thoughts regarding energy.
Interesting times right now, huh!
Big Al
Al,
Today it takes $100.00 to buy $17.28 worth of goods in 1970. Oil was priced at $3.39 per barrel or $20.08 in today’s dollar. From 1970 to 2012 the price of oil in inflation adjusted numbers has gone from $20.08 per barrel to $93.00 per barrel. During this time proven reserves in Mexico, Saudi Arabia, Venezuela, has fallen. World oil consumption is still growing. The cost of developing new oil fields has gone up in real dollar terms. All these things in my opinion seem to indicate to me that oil at $70.00 per barrel is a brief dip and that the real price of oil will end up at $100.00+ per barrel if world demand is going to be met. On the other hand, the consumer can adjust to these prices by buying cars that get 30-40 mpg rather than 15-25mpg. These vehicles do not have to be tin cans. The only thing that gets in the way of market adjustments by the consumer is government. In saving us, they can just about make a mess of everything. Enough said.
Oh one last question what would have happened to the banking industry if Glass–Steagall ActGlass had not been repealed? In my opinion this was something that government in a hard learned lesson got right.
Afternoon Martin,
I completely agree re: Glass-Steagall.
Big Al
I must be missing something as we are led to believe that “Operation Twist” has a net zero effect on the Fed’s Balance Sheet. 2 years of 1.5 TRILLION $ Deficits and counting as far as the eye can see and there is zero net effect on the Fed’s Balance Sheet???? Is there any other explanation than “HOT PRINTING PRESSES”?
Ian,
Good question. What happens is the Fed re-purchases bonds that cannot be sold by essentially creating new money on their fancy computer, which creates a debit on their balance sheet for a few seconds, but then they give the money to the Treasury, creating a credit. So to the Fed, it is neutral. To the US sovereign debt, it’s horrendous.
Morning John W,
Capitalize Sovereign no make that SOVEREIGH
Big Al
Morning Ian,
I believe that John W answered your query.
But the reality truly is, “HOT PRINTING PRESSES” and that is ultimately bad for the country in my opinion.
Big Al
Absolutely…it’s just a printing press with two stages, but a press nonetheless. (I’m a poet and don’t know it.)
Before you buy into gold, read this:
Saui Arabia will drive oil down to $60 or less in order to destroy Iran’s economy.
Also, note energy consumption trends in the US are changing drastically.
Good article, and good comments. I have felt for some years that high oil prices will reduce demand and promote alternatives. Although I would not predict US energy independence by 2025 (or ever), I have taken a bearish bet on OPEC for a while. It continues to become less relevant.
CONFUSION REIGNS….yes…the Sage’s view that all is confused is absolutely on target. I suspect that the result will be more sideways activity because no one knows what investments will do best….investors will mainly “stand in place”….deer in the headlights!