Precious metals markets started the new week with a bit of a mixed picture last night in overseas trading. Spot dealings showed gold falling $2.40 to $1,640.00 and silver down a dime to $31.60 per ounce. Platinum and palladium each advanced $1.
To paraphrase the great Steve Martin, today’s investors are very passionate people and passionate people tend to overreact at times. An overreaction is exactly what’s happened in gold and global markets in recent weeks.
Attention Shoppers: There are some amazing values currently available at bargain prices in the energy department. The current level of risk aversion by most investors has left the doors wide open for those who are willing to see real values.
Oil prices rose about 5% last week to finish only a dollar short of regaining triple-digit status. Since dipping below $80 per barrel on Oct. 3, West Texas Intermediate (WTI) prices have increased almost 28%.
Thanks to higher prices and technological advances, oil companies are finding that the production of unconventional oil can be highly profitable even at higher costs. The higher prices have afforded positive economics to more reserves.
Retail consumers of oil - and retail investors - are the big losers now that oil has become a financial product, says the author of Oil's Endless Bid. The irony is they're doing it to themselves by buying ETFs and other financial derivative products.
Oversold levels never persist for long in an ongoing secular bull. As irrational fear that spawns them inevitably passes and fades, oil and oil stocks will be bid up to prices reflecting today's bullish fundamental reality for this crucial commodity.
The bottom line is the world's largest oil consumer is undergoing a radical shift in long-standing supply trends. The US is seeing its first material imports decline in a quarter century. This is partly due to a once-unfathomable rise in domestic output.