In a slowing economy, oil demand will decrease. It's slowing here, but not in India and China yet. However, the bigger problem is likely production volume. Gregor talks about this yesterday:
gregor.us
His conclusion is the same as GST -- short term bearish for oil, and that's already playing out, but longer term, very bullish.
Another thought on the oil release is that other stimulus measures may be tried now since QE is coming to a close and did squat for employment. Think commodity suppressing actions such as the SPDR release and perhaps yet another tax holiday for corporations, this one to repatriate off shore assets. Neither increases the deficit and so represent some stimulus which will not torpedo the dollar.
In the end, all of these actions are LT bullish for oil, and that, in turn, will squeeze the life out of any feeble attempt at a recovery in the US and therefore put pressure on Bernanke to initiate some kind of new money printing operation; and that, in turn, will be mega bullish for gold. |
