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Gold market predicting a top in the crude oil market?
In the middle of media outcry, massive consumer scare and hedge fund bullishness crude oil actually may have topped out and is headed for an intermediate term correction.
While a lot of speculation, scare, natural calamities, hedge fund short term greed, excessive global hoarding, Governments’ relentless desire to build strategic reserves specially in India and China – all worked to push crude oil from 20s to upper 60s, the bullish trend may be at the end at least from an intermediate term stand point.
The crude oil and natural gas market may move up another 5 to 10% depending what kind of scare is created in the market place due to storms developing in the Gulf of Mexico area, there are indication that oil has reached a major peak. The indication comes from the Gold market. Gold is at a price never seen since 1988. Normally Gold and Oil in text book type inflationary environment moves up together. But this time it is different. It is stagflation. In this environment Gold takes off a little later when it is clear that central banks cannot do much to control the inflation because of stagnation if not recession in the world economies.
At that point of time, when Gold goes up and continues to move up steadily, the demand for oil tops out due to massive stagnation and reversionary pressures from world economies.
The supply of crude oil and reserve piles are enormous. Iraqi politics are maturing and they are ready to pump huge amount of crude. The citizens of India and China are finally learning that western style high standard of living may not be achievable so quickly since all of that are dependent on crude oil and natural gas.
US ELECTION ARTICLES
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