Boy, do I ever remember when I called for oil at $100 dollars by 2009 a few years ago, when oil was much lower. I got a mountain of negative correspondence from the traditional investment community. Now everyone is saying “Oh yeah, we always knew it would go to $100…” To be truthful, very few knew it. Jim Sinclair, myself and our team were among the few.
Now, when I call for inflation to arrive in the developed world as a result of rising prices in the developing world and rising food and energy prices, guess what? I am getting a similar reaction to the one I got when I called for $100 oil. Another prediction of mine is that within the next few years all those who today deny that inflation will rise, will be saying that inflation is a problem….and we knew it all along.
OIL AND GOLD MOVING HIGHER
Oil demand has become less sensitive to GDP demand in recent 20 years.
To quote Martin King the highly respected energy economist at First Energy of Calgary, Canada. "We remain skeptical that even an outright recession environment in the United States would materially affect global crude oil prices".
King and other analysts have pointed out for years that the growing worldwide demand is not being met by increasing supplies, and Jim Sinclair, Lars Lindgren, Dan Norcini and I on numerous occasions have pointed out how global energy prices will move higher as the dollar falls.
Additionally, as oil prices rise, and oil exporting nations become wealthier, they use part of this newly acquired wealth to purchase gold. Consumers of oil who hope to protect their capital’s purchasing power also buy gold.
The gold sales by Spain from their gold hoard have come to an end, which has two effects: 1) As excess supply is removed from the market, the gold price rises. 2) Spain will now be selling less gold going forward and total European Central bank sales in 2008 will be less than previously thought.
All of the above events continue to be positive for gold and for Jim’s prediction for $760 gold soon…….to be followed by much higher prices in due course.
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