Friday, May 30, 2008

Three Big Bubbles Will Burst: Part V, Addendum 5/29

Although I feel that I am usually right about my opinions, I am always open to corrections or suggestions. Having said that, heed the following.

The cauldron is bubbling nicely now, and I believe this update confirms much of what I said about the oil/gas bubble.

Yesterday a $4 drop in oil was accompanied by a rise in the USD ( $1). It was questioned as to the chicken or egg of the situation. My personal view is the rise in the $1 prompted the fall in oil, demonstrating that at least part of the price of oil is the reduced value of the dollar.

Also the government is looking into the speculation of the market to see if there is any manipulation in the futures. I doubt it because it is so huge, but the fact that the multi-trillion dollar pension funds have been buying commodities has definitely been a factor.

These fund involvements in futures is not good, especially for the pension funds. As a former dabbler in the futures, I certainly wouldn't want any of my money in there. Their involvement is in the billions, so when they pull out (when the last fool has bought the highest priced barrel of oil, or other commodity), there will be gigantic losses.

And thirdly, if you think this only affects the non-Mideast world, think again. The oversupply of money in that area (Mideast) is causing an enormous amount of inflation and is beginning to disrupt lives there. This is especially true of the hired help.

Keep an eye on all of this. We are not far from the end of this one.

As always, be informed and be prepared,

the Hammer

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