That’s what makes the market.
T. Boone Pickens, Texas Oil Billionaire makes his money by being right about the price of Oil. He is right this time too. He says with political unrest in the oil producing countries of Iran and Nigeria Oil is going to go to $100 per barrel. FEAR.
On the other hand Ben Dell, a respected oil analyst says the price of oil is about to fall to $45. His whole document is here.
He then says that the price will creep back up to about $60 by 2010. So relax.
Gasoline is going to be cheap with a short-term spike for a while yet to come.
How is all this possible? Fear means if you believe the world is running out of oil and we are going to die then you buy oil futures. Ride the ride up. Political unrest only drives your fear further. You make money on fear.
If on the other hand you believe that the world is awash in crude oil looking for a market and when that bird comes home to roost you are going to see an oil bust, then you look for a way to make a buck by selling the market when it hits $100. Greed.
In this context greed is good.
So, who is right Pickens or Dell? Both!
Here’s what is about to happen. Political unrest and instability will cause the world oil markets to peak at over $100. This will be driven by a couple speculators. This will last until the world settles down again. Then reality will set in. Oil will drop like a rock. It will go to $45 and then over the next 4 years creep back up to $60. That’s all in today’s dollars. If we have huge inflation, a devaluation in our currency, (Gold at $1000) then you must think in today’s dollars.
If you want to become hugely wealthy wait until the oil hits $100 then sell it on the futures options market (a put) and wait as it drops to $45. Send me some.
PS: For Christians only. You already knew this. God never does anything unless he tells his prophets first.
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