Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Rising Oil Prices May Be the Forerunner to War


Traders' fears that an impending attack on Iran by either the US or Israel is related to the rise in oil prices.


The headlines are widely publicizing the new highs being made in gold. Soon the news may be directed to gushing gold in the energy space … Black Gold.

Many of the fundamental reports I read on oil say that there's an "oil glut", and that the world is "swimming in oil". That may in fact be true, but our motto at Coby Lamson is that "Price is Truth" and all else is just interesting commentary.

The rising price of oil and its potential impending breakout is telling a much different story. In this piece I'll examine price trends (the truth), and I'll also speculate as to what the rising price of oil may be telling us.

On July 18, 2008, our Grail Indicator gave us a sell signal at $130 per barrel. See this weekly chart:

Click to enlarge

On March 17, 2009, our Grail Timing Indicator then gave us the first buy on oil at 51 per barrel after its momentous decline. Just a few days ago, we just received a confirming momentum buy on the daily chart.

With a close above $77, we see oil possibly going to $92 or $107 per barrel. A rise to $92.26 would be a 38.2% Fibonacci retracement of the full down move, and $107.26 would be a 50% retracement of the collapse from the July 11, 2008, peak to the February 13, 2009, low.

Later in this article I'll lay out a possible scenario that could push oil to new all-time highs. Should such a rise take place, it would rock both world markets and economies.

In my recently published book Discover the Upside of Down, there's a chapter entitled "Black Gold: Boom and Bust profit opportunities". I believe that we may be entering a time where we'll witness the "boom" portion of that sequence. Chapter four of Discover the Upside of Down begins with this observation:

The proverbial "powder keg" in the Middle East has been hanging over world markets for a very long time. As the new century rolls along, the sparks are close to setting off a combustible explosion. The fuse is getting shorter on this powder keg explosion with fears of Iran becoming nuclear and a weapon possibly finding its way into the hands of terrorists. The fuse gets shorter by the day with the political instability of Pakistan, and even shorter as the US continues the war in Iraq. With so much instability in this region, it's only logical to assume that the fuse is close to being lit and the explosion is set to incinerate global stock markets and economies.

As the Federal Reserve frantically prints new dollars in the new century to stave off a NASDAQ 2000-like real-estate implosion, the value of those dollars lessens and that affects the exchange rate against the other world major currencies.

As the US dollar has fallen in the first several years of the new millennium, some nasty repercussions have resulted. Since oil is priced in US dollars around the world, OPEC has responded to the falling dollar with higher oil prices.

OPEC kept supplies tight to keep prices high. One reason it does this is to compensate for the reduced purchasing power of the falling dollar.

While oil-producing countries could decide to not accept US dollars, that would not only be the wrong economic decision, but would also be a very dangerous one.

When Iraq threatened to not accept US dollars as payment, it wasn't long after that the US military invaded, and the leader who made that comment was roped and hung. Iran has recently followed Iraq's lead and has stated that they "prefer the Euro or Yen" and no longer want to trade oil for "worthless dollars".

< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos