[barbara23]

Hi guys! Monday oil prices fell as UBS warned of deteriorating commodities environment, as there is global recession in commodities too. ICE January Brent lost 36 cents to $53.88 a barrel, after touching a low of $52.84.

Gold prices also slipped yesterday with a strong dollar and lower oil prices. Spot gold was down at $735.35/738.35 an ounce at 1603 GMT. Gold has been quite bullish in the long term, primarily because the dollar has been weakening substantially on all this liquidity being pumped into the system.

Cheers! Love ya, drive safe!

Barbie

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[mefistofeles]

Personally I think we are nearing the bottom on oil and commodity prices with OPEC poised to cut in December and Cantarell going into steep decline and with less energy investment in the pipe its hard to see things getting too much lower, at least from my POV.

The credit crisis will ultimately hurt the dollar because it given the US government a green light to borrow like crazy.

People are alot like Lemmings they have this tendancy to go off the cliff. I can't say that I'm too different I went off the commodities cliff myself.

However I think you're seeing the same behaviours in place for those who are buying treasury and the dollar. Its said that markets are ruled by two forces: fear and greed.

Now its fear's turn to rule. But I don't think people who pile into treasuries are behaving truly rationally. In my opinion its just the next bubble. That's what's been happening since the internet collapse markets are trading according to any true economic value rather some markets become "hot plays" that are simply far more desirable than others.

The dollar and the Treasury are simply the next "hot play". Why? Because dollars have no value in and of themselves. All the values that the dollar and Treasury bills have are really perceived values. If people think they're worth nothing they're worth nothing.

All other assets are trading at a discount vis a vis the dollar and treasuries. That's the situation we are in.

The question you have to ask yourself is it reasonable that all things trade at a discount versus the dollar. I would answer: no. Perhaps your answer is different.

Personally I prefer the hard stuff, no matter how much the price of oil and gold fall there will always be a market. Just ask the people holding onto Argentinian debt if a market is important for whatever asset class you are holding.

With the Democrats taking charge and Obama poised to put one his cronies in Paulson's seat I believe that the TARP will be used to bail out individual home buyers. The Democrats are going to go balls to the wall with all the programs Bush has setup and that has some omnious implications for what the dollar is worth.