Commodity Bubble? Keep Dreaming!
Aug 2008
Last week we said CHK had started its bottoming process and that we are witnessing a commodities correction, which is healthy and normal, and not a sell off. A sell off means an end to a run. A correction simply means, a breather, and MUCH higher highs to come. We said to buy a ton of CHK again at 45 as we did, and that we are witnessing a silent run to CHK 100. While many are screaming Oil 80 dollars, we stick to our GUARANTEE oil will hit 200 dollars by the end of 2009. There is no way commodities will be lower in 18 months than today, and no way Oil will be below 150. It is not rocket science. How many times do we have to emphasize that THERE HAS BEEN NO MAJOR OIL FINDS IN ALMOST HALF A CENTURY! What part doesn't the street get? It is IMPOSSIBLE to have a bubble when the product is FINITE!!! IMPOSSIBLE. Take a look at Exxon's most recent quarter. PRODUCTION DOWN 3%. Production is ONLY going down in oil. This is as easy money as you'll ever make in the markets if you remain bullish on commodities. Commodities: read very carefully- COMMODITIES WILL BLIND SIDE THE WORLD WITH A PRICE SHOCK NEVER IMAGINED! Even worse, the United States will get blind sided the worst with Oil 200, and Gold going much higher. The U.S. dollar is a FLAWED currency. The U.S. dollar rally is the biggest suckers rally of the year. It's as funny as many suggesting 60 dollar oil. Wake up America! You WILL NOT solve the Oil crisis without any action except for pushing market paper prices down. That wont work forever. It will backfire. You wont correct the U.S. dollar problems with quick fixes in the markets. We said it a month ago, and we got mocked at as financials continued to rally and energy continued to get crushed. We said: Go head and buy the Fannie and Freddie's of the world. Go head and believe the financial rally. In the end not only will you lose profits, but you will lose it all. We said please don’t get suckered by the financial rally. We said to stay with energy. You will be rewarded handsomely. Its very easy. One sector is growing at record levels, and the other is losing at record levels, yet the losing one is rallying? Well, finally rationale is coming back slowly into the markets. As much as the government is trying to stop the financial bleeding by MANIPULATING the markets, they cant hide the truth forever. You cant prevent 200 dollar oil without finding new MASSIVE oil reserves, and you cant bring the financials back to life by preventing shorting of their stocks. The US government needs to understand to think long term instead of short term. What has changed overnight for oil to go down and the dollar to go up? What has changed for CHK to get crushed and banks to go up? NOTHING NOTHING NOTHING! In the end, the financial story will get uglier, and the energy story rosier. Its time America wakes up and realizes overseas countries have been paying for 5-7 dollar gas. Its time America prepares itself for it, instead of hoping the oil crisis is over by trying to push down the oil markets via paper to 60 dollars. It doesn’t work that way. You want lower oil prices, you need to take action! Such as mandating natural gas immediately! Oh…..and YOU WILL sooner than later. Not because you want to, but because you will have NO choice. This oil crisis hasn’t even begun. Oh no no no. Anyone that understands commodities KNOWS even a 55-60% pull back is normal. We said this before and we will say it again: commodity pull backs ONLY set up the next leg up. For example, on the first leg CHK went from 35-70. Now on this leg it will go from 45-90. As long as your starting point is ALWAYS higher, you will continue to go a next leg up as long as the fundamentals' are there. Stop watching the media, and thinking the oil crisis was solved in the month of July when NOTHING positive happened in July, but ONLY positives happened in July for higher oil prices. We will say it again: THIS COUNTRY WILL GET BLIND SIDED BY 200 DOLLAR OIL!
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