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Barron's Alan Abelson on Gold and Oil"We'd like to whisper a kind word for commodities. Not all of them, to be sure (we haven't completely lost our mind). The two we're feeling uncharacteristically kindly towards are oil and gold. Gold is a no-brainer (who was it out there who just said that automatically qualifies us to talk about it?). Our thesis is as simple as it is unoriginal: Virtually all of the civilized world and a good chunk of the uncivilized world is in a race to see who can debase its currency the fastest. The big spur here is the great global bailout and the trillions in paper money being the baling instrument of choice. We can't think of a better way to take advantage of this frenzy of financial free-fall than stowing away a few nuggets. Gold has taken its lumps along with virtually every swappable asset, hard and soft. Its current price of $742 and change an ounce is down some $300 from its peak. It's volatile, but so is life. You can't eat it, but it's durable and a reasonable haven. Oil, no secret, has been on the skids ever since it set an all-time peak of $147.27 a barrel back in July. It ended last week at a few pennies over $57. The steepness of its decline frankly surprised us, and we don't have a decent feel for where it will be next week or next month. But OPEC, scared out of its ermine robes (a discomfort we truly enjoy watching), is slated to take another slice out of production before year's end, while the tailspin in prices may give pause to some of the more notorious cheaters in the cartel. Meanwhile, more so it seems to us than in similar fallow stretches in the past, producers have been quick to adjust to the drop in demand. And then, as our old pal Tom Petrie out in Denver puts it, the era of what he calls "Practical Peak Oil" has been delayed by the global recession. But it still looms in the not-too-distant future and promises -- or threatens -- to furnish a powerful lift to prices." |
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Msg # | Subject | Author | Recs | Date Posted |
41541 | Re: Barron's Alan Abelson on Gold and Oil | auric | 4 | 11/15/2008 6:43:50 PM |