It is official. In periods of crisis, people used to flock to the dollar, to Treasuries, a bastion of safety. No longer. Not with the imminent Fed bailout $5 trillion bailout of Fannie and Freddie. The dollar is confetti, adding $5 trillion in debt to the national debt just poisons the value of the dollar. Euros aren't worthy either, they will devalue in lockstep to keep from killing their export based industries. The best store of value is crude oil. Its an asset that can't be printed to bailout dumb financial institutions and can't be diluted. It is the real deal. Crude oil has replaced gold because gold is a luxury item, in times of distress, luxury takes a back seat to basic needs like energy. Crude oil is king. All hail to the king!
Oil is going to collapse just like every market does when it gets totally overvalued. Im sure you thought the housing bubble was going to last decades too, it didnt and the same will be said for OIL when it collapses under $100 again.
The bond market needs to throw up on itself. Guess the asians are to stupid to understand that. Keep buying more bonds morons.
Paulson just made a public announcement regarding Fannie & Freddie and the word "bail-out" was not used in his statement. Hmmmmmmm . . .
So why are you still LONG the UYG ( financials ) as it drops another 5% to $17.60 ? The UYG has been cut in HALF since May 1st. Did you not purchase the UYG back in May at $29.00 ? But you just love trying to pick tops and bottoms, don't you? Ever heard that the TREND IS YOUR FRIEND?
We are not there yet. It may take years for production to surpass demand, and this production increase hasn't started yet, true there are good plans as US shore drilling, but no work yet.
If oil goes under $100 again, that will be the bargain of a lifetime. Simply, the emerging markets won't let that happen, they are sopping up the marginal barrels and willing to pay over $140/barrel for them. 4-5% demand destruction is not going to do it. You will need to see 20-25% demand destruction in the US and a halting of the demand growth in Asia, we are nowhere close to that. The Chinese genie is out of the bottle, its not going to be put back in.
The problem with oil is that the moment it hits $200 (or wherever it tops out - could be higher if Iran blows up), it will fall 20% in one day, and 50% within 6 months. At this stage, oil is becoming more a trade than a long-term investment. Buying and holding it is just nuts. Buy as a trade, then jettison into panic buying once it comes along (and it will). The best crisis hedge is a diversified anti-dollar portfolio - outrights and calls on EUR, SFR, JPY, AUD, CAD and gold. Oil has too many other variables to be a reliable dollar hedge.
Correct. Crude oil not bonds or gold is the new flight to quality. Safety is no longer in an asset who's value is determined by a market. Gold may be of no value to society if it is oil that is needed. Bonds of course are only worth what the USA can guarentee. It is only crude oil that can run society.
You're absolutely wrong. Subprime ABX BBB tranches are the best hedge, especially when purchased at AAA prices.