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December 24, 2008
Oil Has Not Reached Bottom
Yesterday I was looking at oil prices and found something interesting. The price of WTI oil was about $7 or $8 below the price of the other two contracts listed. I asked if any of my readers could explain such a big difference in prices and reader Bill came to the rescue. Yes it is what is know as cantango. when the futures prices end up with a much higher spread level. It has been going on if you look not just the cash and feb contract but out 6 months it has been widening.Reader Frank had something else of interest to add. Bill is correct about oil. The exact opposite is happening in gold futures, that is, backwardation. There are more buyers for physical gold than there are sellers.So what does it all mean? Lower oil prices, probably much lower and higher inflation (in 2008 the official figure for inflation was about 6%), so much higher inflation is probably in store. Well I'm no economist and I have no money to put into any market and this advice is worth exactly what you paid for it, but the thing to do in times of high inflation and low interest rates to protect your assets is to buy real property. In other words it is time to buy houses. Cross Posted at Power and Control posted by Simon on 12.24.08 at 10:16 AM |
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December 2008
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It's never a good time to buy houses as an investment. Raw land, in a growth market, on the other hand, is always a good long term investment.