TAE: Risk vs. USD

[funkyspec]

Ilargiʻs Nov. 19 post:  Risk vs. the US dollar

Reiterates their call that we will (very) soon see a fall in equities, oil, and gold and a rise in the dollar.

[Domscott66]

And what exactly is going to cause this rise in the US dollar? He doesnt explain that, only the connection between gold, oil and the dollar in the past...which I certainly agree, but gold and oil are not rising in USD price due to supply and demand, demand is tapering off on oil...instead these are rising because the dollar is falling and the policies are designed to continue to let it drop so they can create more debt.

[Bill Hicks]

And what exactly is going to cause this rise in the US dollar?

A "flight to safety" when the stock market crashes.  No, I don't understand it either, but I'm looking forward to buying more PMs when they dip in price.

[Megadoom]

I'm thinking after Christmas, but who knows... Yes the dollar will strengthen (after all those secret consolidations made to the Chinese PM) and stocks/commodities, etc will fall from their lofty peaks, but as far as oil is concerned...maybe, maybe not. The current oil production won't necessarily remain steady into next Summer, and then there's the Iranian scenario to consider.

Folks, WE ARE AT PEAK OIL. Sooner or later, and the precipace is near, the production will begin its multi-year decline. When demand and production cross thresholds the strong dollar won't mean shit, and then we'll be in a world of trouble where we have deflated equities, massive unemployment, AND expensive oil. It will be a death nail for our economy...hell, it'll be a death for the world's economy, and then the starvation will begin in earnest. Wars develop from this type of scenario, and not just small skirmishes, but BIG ones.

[Arraya]

If they keep shrinking the economy, PO is never a problem.  Of course, you have different problems.

[croesus]

If they keep shrinking the economy, PO is never a problem.  Of course, you have different problems.

I disagree.  See this:

http://www.hedgeco.net/news/10/2009/logi-energy-determines-saudi-oil-production-has-peaked.html

Jeffrey went on to discuss his land export model and the ramifications of depleting oil fields and increasing demands within exporting countries by their own citizens. He and Dr. Foucher have determined, through deep analytics, that the exports from the top 5 exporting countries has peaked and half of all oil ever to be exported after 2005 by these countries will be exported within 4 years, by 2013.

If this proves to be true, the biggest ramification for this prediction is that there will be global oil shortages in the US and other OECD countries before 2013 even at the current low demand levels. The practical application of this statement is less exports resulting in an increased likelihood of gas rationing in the US.

[Megadoom]

If they keep shrinking the economy, PO is never a problem.  Of course, you have different problems.

NO, I disagree. Demand elasticity will not be able to keep up with the production shortfalls; that is, if they don't utterly destroy the economy then I suppose YES they can reduce demand enough to keep oil cheap. Regardless, that would be an even worse scenario since keeping oil prices so low due to demand we're not investing in non-conventional expensive hard to get oil, and that produces an ever widening gap for when we do require oil. The production squeeze will destroy us.

[picasso moon]

Good find, Croesus,and welcome! And good comments, Mega. Some people just don't get Peak Oil, even at peak oil sites. 

[PromiseLandAkitas]

If they keep shrinking the economy, PO is never a problem.  Of course, you have different problems.

I disagree.  See this:

http://www.hedgeco.net/news/10/2009/logi-energy-determines-saudi-oil-production-has-peaked.html

Jeffrey went on to discuss his land export model and the ramifications of depleting oil fields and increasing demands within exporting countries by their own citizens. He and Dr. Foucher have determined, through deep analytics, that the exports from the top 5 exporting countries has peaked and half of all oil ever to be exported after 2005 by these countries will be exported within 4 years, by 2013.

If this proves to be true, the biggest ramification for this prediction is that there will be global oil shortages in the US and other OECD countries before 2013 even at the current low demand levels. The practical application of this statement is less exports resulting in an increased likelihood of gas rationing in the US.

I agree with Croesus, and the article, except for the last line in Croesus's quote.  I don't think that the practical application will be just an "increased likelihood of gas rationing in the US."

[ninakat]

And what exactly is going to cause this rise in the US dollar?

A "flight to safety" when the stock market crashes.  No, I don't understand it either, but I'm looking forward to buying more PMs when they dip in price.

That's what happened in 2008, but I've got a feeling that it's going to be a smaller drop for oil and gold this time, and a smaller rise for the dollar. A year makes a heck of a difference, and there's a lot more grumbling out there regarding the dollar as compared to last year.

<a href="http://www.youtube.com/v/YtKT6QDYOQ8&amp;ap=%2526fmt%3D18&amp;rel=0" target="_blank">http://www.youtube.com/v/YtKT6QDYOQ8&amp;ap=%2526fmt%3D18&amp;rel=0</a>

[Bill Hicks]

And what exactly is going to cause this rise in the US dollar?

A "flight to safety" when the stock market crashes.  No, I don't understand it either, but I'm looking forward to buying more PMs when they dip in price.

That's what happened in 2008, but I've got a feeling that it's going to be a smaller drop for oil and gold this time, and a smaller rise for the dollar. A year makes a heck of a difference, and there's a lot more grumbling out there regarding the dollar as compared to last year.

http://www.youtube.com/watch?v=YtKT6QDYOQ8#noexternalembed&feature=player_embedded

I agree that PMs probably won't fall as afr this time.  Darn it.   

[funkyspec]

And what exactly is going to cause this rise in the US dollar?

From the article:

What we see is not gold vs. the USD or oil vs. the USD. We see risk versus the US dollar. Investors have not been risk averse the past months. And they still are not (yet). And stocks are up, and gold is up, and so is oil. And the dollar is down.

Risk versus the US dollar. If one goes down, the other goes up.

We think that right there you can see what will happen when investors and speculators and everybody else except for a few bravehearts will want to get away from risk, lose their appetite. At that point, it'll be either risk or the dollar. If you think investors will want to take on additional risk, in the face of the numbers on housing and jobs and CRE, a bet against the dollar makes sense. If you don't, that bet, in our view, makes no sense.

They have mentioned in previous posts that even though the "flight to safety" of the dollar is irrational (dollar as a store of value is eventually doomed), people will find it less risky than equities and commodities. Stoneleigh also contends that it is herding behavior and human emotion that govern the behavior of markets, not external factors (but external factors are always later rationalized as the causes for rises and falls).

[Domscott66]

Unless another option is available. I do agree, peak oil is pretty flipping here, right now, but I also know we are not the only ones that have that understood, I have a feeling that other countries also seem to "get" it and are making preparations to overcome this issue. From a peak oil standpoint, how nice would it be to take away the US from the user's menu of oil, doesnt take a lot, just pull the money rug out from under us...or threaten to and see the US dance to keep things going just a little bit longer.

So I try to put myself in China's shoes or Russia or anyone else but us...and what would I do when faced with a huge user of oil that refuses to change...I think I would find a way to take their oil away...can't militarily wise...so lets take them out under their own debt weight...but before they fall...lets get all that we want from that country. We have all discussed what will happen as the consumer amount is higher than the supply amount...so why would they not head it off before it reached that piont by reducing the consumers. There are many powers at play here than just peak oil and each pulls on the other.

[Armageddon]

I have always believed that the full effects of PO will never be felt because of a complete financial collapse that is ahead,  and when I say ahead,  I mean VERY soon. 

[PeakARoo]

I have always believed that the full effects of PO will never be felt because of a complete financial collapse that is ahead,  and when I say ahead,  I mean VERY soon. 

I posed the question in another thread asking, "what if the US economy collapses? will it postpone peak oil for many years?"

Nobody replied to the hypothetical. I thought maybe the question was a stupid one...