My cycle work strongly suggests an important low in oil may already be at hand, or at worst, very close. Take a look at this chart, made from my cycle studies on oil. You can clearly see the dominant cycle shown on the chart indicates we may be at a major low RIGHT NOW.
I’ve been working with these cycle studies for 20 years now and they are pretty reliable. In fact, they call important highs or lows better than 70% of the time in just about any market I apply my methods to.
What could soon drive oil higher, possibly much higher? Four main forces:
1. The sudden realization that oil supplies are tighter than ever
2. The potential for a bounce higher in the U.S. and global economy
3. The bursting of the bond market bubble — something few analysts are talking about.
4. The monetization of the U.S. Tower of Debt … the gargantuan fiscal deficit … and the Fed’s massive money-printing, has begun. Long-term, it’s highly inflationary.
My view: If my cycle study is correct, oil could be signaling these forces, and we should soon see an explosive move higher in oil.
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{ 9 comments… read them below or add one }
Wow, this is pretty exciting! If we have a bottom in place in the oil, could we see new highs develop over the coming months? I think so. Given the incredibly tense situation in Saudi Arabia, which most Americans have no idea about, plus the volatility between Iran and the rest of the Muslim countries, plus the ever present possibility of further conflict in Iraq, we have the makings of a massive explosion in the oil’s value. This time, I see 200+ / barrel… Thanks for all your great insights Larry…!
Larry Edelson Reply:
February 3rd, 2009 at 1:25 pm
Agreed! Though I think we’re looking at more than a few months!
Fascinating correlation and interesting prediction. Just the insight and bold willingness to make a prediction that I expected from someone of your expertise.
Greatly enjoying membership to your Real Wealth Report each month. Great value. Keep it up. Its appreciated!
Larry Edelson Reply:
February 3rd, 2009 at 1:26 pm
Thank you!
Your projections leave me with mixed emotions like watching my mother-in-law going over a cliff in my new Lexus. I bought 3 Fidelity energy funds back when oil hit $140/barrel. I’ve held on because I firmly believe oils will up this year. So your projection leaves me as stated.
Also, at my age, I buy only M/funds or EFT’s. Does your Real Wealth give any guidence in those areas?
Larry Edelson Reply:
February 9th, 2009 at 7:40 pm
We cover and recommend mutual funds and ETFs from time to time, of course. If you are referring to inverse ETFs or bearish mutual funds, yes, of course, we cover those too. However, I have not recommended bearish positions such as those because we are in a panic, more similar to 1987 than to anything else. It is far too easy to get whipsawed by the markets, and end up losing your shirt when trying to play the bear side of a panic.
Hi Larry!
Of all the market analysts in the Money and Markets group, you impress me the most, and Sean Brodrick is next.
Another very serious indicator of where the U.S. economy is right now is revealed in the Kondratieff Economic Long Wave, especially as applied to America. In my new book, Universal Numbers and the Number 9 Destiny of Humankind, I changed Ian Gordon’s (www.thelongwaveanalyst.ca/) projection for the bottoming of the current down cycle from the year 2020 to 2010, which my numerological and astrological studies indicate is a much more precise time for this financial quagmire to end. Perhaps you would like to see a copy of this revised graph and my other alterations I applied to it that appear to show the real reasons for the Long Wave pattern of the past 200-plus years.
Larry Edelson Reply:
February 9th, 2009 at 7:42 pm
And thank you!
I like your courage. Right or wrong on this, I always hear an independent opinion when I read you. Thanks
Larry Edelson Reply:
February 9th, 2009 at 7:46 pm
Thank you, Luke!
It is pretty sad that you guys have to plant comments to make yourselves look good. Unreal. Unfortunately, I am sure you won’t have the intellectual honesty to even all this one to post.
Larry Edelson Reply:
February 10th, 2009 at 2:07 pm
We do not, and have never posted anything except actual subscriber comments, and our replies. Anyone caught doing so would be immediately fired.
Larry,
Please remove this comment if it doesn’t really belong here, but I have a hard time contacting you through the Money and Markets web site.
Here’s my suggestion. In a future Money and Markets column, I would like for you to comment on Gold Reserve, Inc., which at one time was your top recommendation. I really didn’t understand that prediction, what with Gold Reserve developing a mine in Venezuela of all places, but I guess that it just goes to show that you are human like the rest of us. However, the stock seems to be incredibly cheap now and they are sitting on a mountain of cash, so maybe its time to take another look at Gold Reserve.
Larry Edelson Reply:
February 10th, 2009 at 2:03 pm
Gold Reserve is a good company and a good play. But I prefer to recommend gold shares who have most of their reserves in more stable political environments.
Larry,
I appreciate your work and respect your advice. I am concerned that the $780 billion Tarp approval will generate some short term inflation driving the oil prices higher. But that we are still in deflation and that the next down turn in the markets (ex: 5,500 level for the Dow) will bring oil down (further than the $33/b) with it.
Are you saying in this blog entry that oil downward movement is near exhausted and oil has very little downward momentum left even if the Dow and other indices crash again. Or are you saying we have pretty much bottomed in the Dow and are expecting that deflation is over and inflation just starting again?
Thanks
Larry Edelson Reply:
February 10th, 2009 at 2:05 pm
I believe the Dow has also bottomed, or will with one more thrust lower. Regardless of whether that turns out to be correct, note that relationships between markets are in a state of flux, especially these days. So it is entirely possible to see oil up and the Dow down, for instance.
Larry, Can you comment more on Dollar Deflation in your next issue, the more I read the more it seems this is imminent. I recently purchased gold based on your recommendations. Your issue in Nov.? was pretty exhaustive on the explanation and need, do you feel any more sense of urgency with the current failure of the bail outs?
Larry Edelson Reply:
February 12th, 2009 at 12:24 pm
Well, judging by gold’s action – now trading at $945 — I’d say “It’s Already Starting!”