On March 1 of this year, I wrote a blog about oil being ridiculously priced given the supply, lack of demand, and non existent or shrinking world economy. Oil is down another 2 bucks today.
None of that has changed. I still see oil at 80 bucks a barrel.
Every commodity this year- has gotten it's ass kicked. What is amazing to me is that I forget the pure market forces of deflation because of all of the FED intervention that has gone on over the last four years. No matter how hard Bernanke tries, deflation just keeps coming back. The only solution to deflation is inflation. The FED hates deflation. Debt holders get their asses kicked and sooner rather than later, bond holders will begin to feel the pain.
My next prediction and the point of this piece... is to remind you to get ready for another FED intervention. The only solution left for the FED is money printing. They know it, a few of us know it, but the vast flocks of sheep do not know it. I am going to post the following chart which is intended to scare you into believing this is 1980 all over again and silver is headed for 5 bucks. This is complete and utter bullshit.
So far this has been the game. Try to let the economy work its way back on it's own, when it can't, administer pain killers in the form of money printing. The game, for the FED, is to never telegraph your intentions. Pretend there is no QE3 plan and don't talk about it yet. Markets are beginning to deteriorate, capsize, and investments are being liquidated to pay liabilities elsewhere. Do not fear this. It is not 1980. We cannot eliminate the debt tsunami that we are in which was not present in 1980. We had the capacity to recover back then and pay the debt down. Structurally, we have lost that capacity. Paying this debt down is currently not possible- if ever.
Within 6 weeks, as markets deteriorate further and Obama feels the noose around his neck, the FED will announce another round of quantitative easing. I am looking for the great unveiling by Jul. 1. They have no choice. At that moment you will know that the cat is out of the bag permanently and they will not be able to retrieve it. Do not be afraid to let the metals complex deteriorate further and do not sell physical. Prepare to buy more. If you have not bought by the time QE3 is announced, you will not get the best price. Just be aware that in the next 6 weeks as markets unwind- a desperate FED and desperate politicians will be doing anything they can to stop deflating markets just as we hit the new debt ceiling before election day. Say... i n t e r v e n t i o n.
Like Obama, Bernanke never lets me down.