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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Horgad who wrote (94231)5/14/2008 6:32:12 PM
From: Keith Feral  Read Replies (1) of 110194
 
What do you expect on this thread? The thread is dictated by inflationists waiting for the world to fall apart so they can increase their profits in gold. Keep in mind that gold has underperformed Citibank since the end of March, so everyone is getting very defensive.<g>

There is nothing special about inflation. It always leads to bubbles, especially when everyone becomes convinced the "new" market is so tight that it will be different this time. All we need is for Bush to open the SPR and the inflation trade will be dead for the summer. The key to destroying the inflation trade will be a violent correction in supply. We already saw the first step by the government to stop adding to the SPR which might have a gradual impact on demand. However, if the government dramatically increases the short term supply, that will send the oil prices into a tailspin.

The bullish "silver lining" to a drop in oil prices is that it would take the pressure off production costs for the rest of the commodity sector. Every miner and oil producer would be far more profitable with oil back at $100 a barrel. It would also make it cheaper for all the utility companies to reload their natural gas inventories this summer.
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