Stock Market Horizons: Gold $3,000, Oil $70

In the last two decades, even although gold prices have dwindled from $850 to $350 an ounce, there are still marketplace gurus who predict gold price to hit $3000 an ounce. Hecla appears to be quite bullish about the future.

With oil costs fluctuating among $40 and about $60 a barrel, the industrialized nations are completely dependent upon the foreign oil supply. The US government has a deal with the Saudis for that rather objective. The Saudis have to maintain the oil flowing and we, in turn, will maintain the monarchy in energy. This is a healthy arrangement for each parties in the brief run.

I have a serious dilemma with the $3000 an ounce gold cost. If this prediction had been to come true, what shall be the interest rate? Can somebody answer it for me?

In contradiction to this Saudi deal, the Bush Administration is committed (not officially) but morally, according to the pronouncements of G.W. Bush to stabilize the whole Middle East region by establishing democratic systems of government in a decade.

We can't have it each approaches. We have not succeeded to acquire any viable sources of option energy therefore far. The environmentalists won't let us dig for oil and the car business has invested millions in the development of much better and even more power effective cars.

At $3000 an ounce for gold, we have to preserve an interest rate of at least 20% (my guess). The million dollar question is: what will take place to the mortgage organization and the housing business as a entire? The rate of inflation at present levels will not allow new dwelling buyers to pay their mortgages. Might be there will be a sudden boost in the GNP. But how? What will happen to the funds supply? Are we going to keep on printing revenue as we do now?

This was 1 scenario thus far according to bulls. But the bears view the whole problem differently.
The Oil Cost Dilemma
In 2004, we saw a huge spike in the oil price. Some analysts nowadays are even forecasting the cost increases to more than $60 a barrel in 2005 or even $75 to $80 in the event of a major supply disruption.

The growing demand for oil specially from the U.S. and China underlies most of the cost increases due to the fact oil is priced in dollars about the globe. A weaker dollar indicates much less income for oil producers.

European Central Bank President Jean-Claude Trichet cited oil prices as one threat to economic growth. The world presently consumes much more than 84 million barrels a day of oil. OPEC at present is producing 29 million barrels of oil everyday, roughly a third of globe supply.

Are we going to be forced to pay $60 a barrel for oil? Does this mean that the OPEC nations can or could possibly dominate the global economy thru oil? The banking industry has been in a state of turmoil for the last two decades. There are a couple of factors for this. The illegal but fairly prevalent Havala technique of dollars exchange accounts for part of the dilemma. The subsequent puzzle is the drug trade funded and operated under cover by some governments in power. The cash from such trades (trillions of dollars) is laundered thru banks illegally. Civilized nations are supposed to be ethically run, but are they when it comes to substantial sums of capital?

The rules of the banking market are too old to fit in the quickly altering climate of income transfer from the sale of oil and illegal drug sales. No one has come upon a answer thus far. The rate at which the oil and drug trade income modifications hands is significantly quicker than the rate at which the banks can successfully launder it legally. It means that trillions of dollars in cash remain unaccounted for. With that type of cash it is not hard to purchase weapons or anything you like to topple a government with beneficial preparing.

We had hoped the Caspian Sea oil to flow to the US, but that has not happened but. The Iraqi war and the Afghanistan scenario have each tilted the balance of energy in the civilized (industrialized) globe. But in whose favor?

The buying energy of the US dollar continues to decline. The global political instability continues to remain a issue to contend with.

The vast modifications in the crust of the earth have triggered the ocean levels to rise and fall in some places. This will bring about dramatic adjustments. All these elements create a quite flexible environment and we will see the changing weather patterns eventually bring about changes in the climate and vegetation in many countries.

What does the wave theory say about the stock markets of the future and the world economy as a whole? The mass migration of peoples of the earth will be the next step. This can mean that certain governments will lose support of their consumers and thus fall from power.

We can anticipate the stock markets to turn out to be additional volatile than they have ever been. Fortunes will be created and lost. Let me remind those who dream of a $3000 an ounce gold price that the gold smugglers can bring tons of it from the Far East and South American routes, obtain the most prestigious US properties and produce chaos in the globe economy. If this happens, you will not care about the DJIA. Why? Because it will cease to exist. We are talking about a pretty numerous ball game.

Ninety percent members of the UN are dictatorships. And they would not like to lose power ought to the gold price rise to $3000 an ounce. I rather forget that the US economy is not backed by gold. How can we have a gold standard? Properly, we cannot for the time being. What's your opinion?