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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: SliderOnTheBlack who wrote (40391)	3/19/2005 7:29:40 PM
From: Ed Ajootian	Read Replies (1) of 206106

Slider, always great to have folks such as yourself bringing up the "counterpoint" to the bull story. We need you guys to keep our feet on the ground. IMO, one of the things that the current miniscule excess OPEC oil production capacity has created is that it has turned the logic of bullish vs. bearish possibilities on its head. So the prospects of Chinese demand for oil dropping are actually bullish right now, since it will cause oil prices to go down and mitigate the chances of high oil prices taking down the world economy. Nobody wants $50 + oil, we can all make plenty of cash with $40 + oil. We know that the world economy can absorb oil in the mid-40's, but we don't know yet whether it can deal with $50 oil. So we would just as soon avoid finding out what would happen then. Your point about inventories dropping in supply/demand shocks is helpful. This tells me that oil price have not yet gone up high enough or fast enough to constitute a shock. Stratfor's concern about US interest rates continuing to rise a lot seems unwarranted to me. I don't see that strong an economic boom that would be able to support such interest rate increases here.

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