An excerpt from Sprott Asset Management:
....Although Peak Oil is a story of supply, the demand fundamentals of oil will only amplify the
pending shortage. For the first time, crude oil consumption in the emerging markets of
China, India, Russia and the Middle East will exceed consumption by the US this year.
Economic growth and skyrocketing car ownership in these regions, which have a
population eight times greater than that of the US, are accelerating global demand for oil.
In China alone, automobile demand grew by 20% in the first quarter. The Chinese are not
only buying more cars, they are buying bigger cars. Woe to a peaking oil market if the
developing world should come anywhere near to approaching the oil-intensity of the
developed world. Even without Peak Oil, oil shortages are already in the making.
In the interim the stock markets may continue to merrily rise, oblivious to the economic
dislocation that an oil shortage will inflict, particularly in the US. For reasons we've written
about many times in the past on the current financial meltdown, we believe the US is
already effectively bankrupt, and would only be more so in a Peak Oil world. In our opinion,
it’s only a matter of time before the US stock markets are overcome by the reality that is
Peak Oil.
I can't imagine the junior and penny stocks doing anything in this environment. At the bottom of each cycle, it is hard to find a junior resource stock over $1.00 a share. There may be a loooong way down from here. The apparent lack of liquidity suggests we could get there very quickly with the right market "trigger". |
