Social Media, Revolutions, and Oil
I hate the term social media. I'm not really sure why. I'm not much into Facebook but understand the younger generations' use and interest in keeping up with their friends. The recent violence and demonstrations in North Africa seem to be spreading and the authorities have been quick to ban Facebook, Twitter, as well as texting and even in some cases internet access. This will not end well. I'm certainly not an expert on North African politics, but I understand that some of these so-called democracies have suffered from corruption and now thanks to helicopter Ben, rampant food inflation. You can blame the speculators if you want. Apparently M3 has been flat but how can you believe old Benny that he isn't increasing the monetary base with QE2. With Obama's state of the union, it has become clear that there is no polictical will to decrease the $1.5 trillion gap, so it looks like QE3 and QE4 are on deck. This is bullish for gold as well as other commodities. I digress here, but the point of this post is really about oil. Since we already have an investment in gold and agricultural commodities, we might consider adding oil in the short term. We've had a recent pull back in oil (and gold) and with fires rising in North Africa, one has to wonder how long before revolutionary flames in the Middle East start up again, and we all know what that means to the price of oil.
Labels: gold, oil, revolution

3 Comments:
I like that; never let a good crisis go to waste! What do you like: OIH, SLB?
Unfortunately we only have $46 in cash so we would need to close out one of our positions. I think Royal Bank is announcing earnings soon, so we'll see if being a primary dealer has padded it's trading income. COW has performed well and Ag seems to have good momentum still. Gold has underperformed since we got in mid-December but not a huge divergence from the overall market as yet.
I think we should think about losing RY and picking up OIH?
From a risk mgmt perspective, I'm not so keen on putting everything into commodities (oil, ag, & gold). I think the headlines of food shortage and high prices could be the contrary signal for COW. Let's see the RY earnings and then make a call.
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