Gushing Oil and A Golden Shakeout

I do not like high oil prices any more than the next person, but pretending that everything is ok with the supply and demand of the commodity is just as good as sticking your head in the sand. If U.S. consumers really cared about the price of oil, more pressure would have been put on congress by the public, and congress would pressure the auto makers. The end result would be an American made hybrid vehicle. Pretty soon people will be wondering if taking that extra 30-60 mile trip is really worth it. Without the implication and utilization of fuel saving vehicles within the next 10 years, "going out for a drive" just for the fun of it might be a thing of the past. The car I took on a 1,200 mile trip was a hybrid vehicle. It got 50 miles per gallon, at an average highway speed of 80 MPH (no exaggeration). Why are people so against hybrid vehicles? Is there anything wrong with getting 50 miles to the gallon while going 80 MPH?

Today, oil gained $2.70/bbl and bounced off the $85 support level.

If you think that oil is not going to $100/bbl you are fooling yourself. The current fed policy is to lower interest rates during a commodity bubble. It is the wrong move in every respect. The fed should have held interest rates steady and let the housing and credit bubble work its way out of the system. Instead, they decide to support the housing bubble with cheap money while it is popping.

I fully expect consumers to start feeling that pain again at the pump. Right now the average gasoline price in the U.S. is $2.82. I expect the average price to increase along with the price of crude oil. The spot gasoline price has slowly been moving up and testing out new levels.

The gold market tried to shake out weak longs in the last couple days.


I suspect that $800/oz is closer than people think

I'm currently counting on another fed cut as the 10yr yield dropped to 4.33% today.


Thanks for reading, and best of luck trading this volatile market.