Editor's Note:
While some of you may know Ian Cooper from past options trading services, his 4,500% cumulative gains of 2007, and gains such as these...
...he's decided to launch a new options service, Options Trading Pit, which will look to profit from the market's demise and well as its upside.
In fact, he's been beta testing new strategies in the Options Pit blog, sitting with gains like these:
Are gains like these easily attainable? You bet... especially in today's bearish environment.
Options Trading Pit launches shortly. Stay tuned.
Today's Energy and Capital: Why Oil Speculators are Not to Blame
Oil speculators have been blamed for skyrocketing oil prices... but it's not their fault.
It's a supply and demand issue.
Even Warren Buffett agrees. "In my lifetime, up until the last year or two, there's been a huge amount of excess supply available," he said. "We don't have excess capacity in the world anymore, and that's why you're seeing these oil prices."
Couple that with news that world energy consumption will rise 50% between 2005 and 2030, as demand in developing countries rises 85% and oil "worst case" scenarios become plausible.
But in a witch hunt against any one, or anything, responsible for the problems, speculators are taking blame.
Whether you embrace the premise or not, there is simply no doubt about
it:
Peak Oil has the markets firmly in its grip.
In fact, the peak oil problem has become so big that the International
Energy Agency (IEA) estimates that it will take well over $22 trillion in
spending worldwide to correct the supply and demand imbalances that have
sent the price of crude to the moon.
That will make for a pretty big pie for investors of every stripe to
dig into!
Get your slice with a subscription to The
Wealth Advisory today. It will be the best $49.00 investment
that you will ever make.
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here to learn more about The Wealth Advisory.
Ask the airlines and they'll blame the speculators, too.
Northwest and Delta are among a group of 12 carriers asking Congress to address oil speculator issues, whom they still blame for rising oil cost.
The carriers even issued a statement, saying "We are urging our customers and employees to ask Congress to act quickly to curb speculation in the commodities markets. This speculation, while not solely responsible for the extraordinary rise of oil prices in recent months, continues to make the situation much worse — harming the economy and having devastating effects on our industry."
"For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities," the CEOs said. "To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers."
Sen. Joseph Lieberman and Rep. Bart Stupak, too, believe oil speculation has added some $70 to the cost of oil.
Lieberman wants to ban funds or institutions with more than $500 million in assets from betting in futures markets. Stupak introduced "The Prevent Unfair Manipulation of Prices Act," accusing Goldman Sachs and Morgan Stanley of market manipulation, even though he has no evidence of such illegal behavior.
Unfortunately, the assertion of speculation and manipulation theories doesn't hold up.
Even if you restrict the blamed speculators, it won't curb higher oil cost.
According to the Wall Street Journal, "the wild assertions about speculation and manipulation are defective, and completely unsupported by reliable evidence."
"For the most part, speculators do not demand physical oil the way thirsty Chinese refiners do. There is no evidence that speculators are accumulating large and rising inventories of physical oil. But to cause prices to be above their competitive level, speculators would have to take physical oil off the market — the way that governments have done in the past with agricultural products, amassing mountains of grain and cheese to prop up their prices."
It's a fact. The run in oil prices is very painful for us all. But to focus on speculation as a culprit is misguided at best. The real culprit here is continued heavy global oil demand in the face of slowed production, supply disruptions, and a weaker dollar.
And if you need more of a reason for a rise to $150, $170, even $200, look no further than the Middle East.
Israeli-Iranian tensions over nuclear projects aren't doing much to help. There's a growing fear that in the event of war with Iran, the Strait of Hormuz (passageway for 90% of oil exported from Gulf producers) would be jeopardized. If that happens, we'd see an immediate oil super-spike.
Iran's Revolutionary Guards has already said it would impose controls on shipping in the Persian Gulf and Strait of Hormuz, which accounts for about 40% of the world's oil, if it were attacked.
Buffett and Big Oil Agree...
Big oil companies are agreeing with Buffett.
The heads of some of the world's biggest oil companies recently countered "claims that speculators were driving high oil prices, instead blaming a dearth of new supplies."
Executives from Royal Dutch Shell, BP Plc, and Respol YFP said "restrictions on where they can invest and higher taxes meant they could not help boost supplies as much as they might."
BP's CEO Hayward felt that oil speculation theories were a "myth," adding that supply-demand failures are the reasons for recent price hikes.
The Respol CEO agreed, saying, "The fundamentals in the industry are the significant reasons for having these prices."
Even Goldman Sachs and Chicago Mercantile Exchange Chairman Emeritus Melamed dismissed the theory of speculation.
The reason we're seeing higher crude oil
prices is because demand for oil has risen significantly in the last few
years, says Melamed. "the oil demand-supply equation in
the world has changed. While there has been a massive 25 per
cent rise in oil demand, the supply of the commodity has come down resulting
in this current price rise."
You buy domestic oil and alternative energy companies.
Making these companies even more attractive are the oil and gas discoveries and the fact that domestic explorations are more appealing given geopolitical tension.
You know as well as we do that prices would come down sharply if we started producing on our own. And it'd be a strong global signal that we're not willing to be hostages of oil rich companies.
Even the President agrees.
"Our problem in America gets solved when we aggressively go for domestic exploration," Bush said.
Listen, we're not economically pessimistic at Energy and Capital. But we won't put on the rose-colored glasses and tell you everything's fine. Our goal is to profit from the situation, which we've been doing in Energy and Capital, Pure Energy Trader and The $20 Trillion Report.
Good Investing,Ian L. Cooper
http://www.goldworld.com
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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of July 7, 2008.
IndyMac,
a $0 Stock?: The Nail in the Coffin...
In my last position at a competing company, I recommended a buy on IndyMac
January 2009 20 puts. And I wasn't the only one that saw the coming IndyMac
disaster.
Lehman
Breaks $20... Hands Us 143%: We nailed it... Plus, What to Watch for...
On June 3, 2008, Lehman had just broken $30 support before catching a wave
of buying. But you'd have to be blind not to see that Lehman was in real
trouble. It's why we recommended buying the October 25 put (LYHVE) right
here in your free options blog.
Gold
Moves Higher on Iranian Rocket Tests: 'Can Hit Isreal'
Gold regained ground on Wednesday as speculators resurfaced on news that
Iran had test-fired nine long- and medium-range missiles, lifting the
metal's safe-haven appeal in times of uncertainty.
Progress
Or Complacency?: How The G8 Screwed Us Again On Climate Change
So the G8's global warming discussions are officially over. What did they
decide? Well, they made a statement that calls for cutting global greenhouse
emissions in half by 2050.
Investing
in Solar Installers: The Other Side of Solar
It's fair to say that, so far, solar installers have been the red-headed
stepchild of the renewable energy investment world. Their counterparts,
module manufacturers and silicon suppliers, have been in a noticeably
different boat. And rightly so.
Peak
Oil Confusion - A Game Whose Time Is Up: Taking IBD to Task
Confusion breeds apathy, and that's not something we can afford anymore. I
believe that the impending energy crisis is too urgent to allow
misinformation about peak oil to go unanswered. So I am attempting to set
the record straight.
Haynesville
Shale: Two Stocks Rushing for Haynesville Shale Gas
Another week, another record. Hopefully by now you've gotten
used to seeing record crude prices. As usual, we started to see a sell off
after nearly reaching $145.85 a barrel last Thursday. This morning, crude
dipped over six dollars a barrel before bouncing back over $141 per barrel
this afternoon.
Investing
in BBVA: Profits Across the Pond
MADRID, SPAIN: You can't blame Spaniards for playing to win. They're on a
roll, with a European soccer championship and Wimbledon title in just the
past few weeks. Now Spanish players are surging into games of chance, and
their top opponent is the slowing economy.
ETF
Options Trading: Make Another 58% as the World Goes Mad
Behind the unemployment stats, layoffs are surging, as corporate profits
sink. According to the Wall Street Journal, UK homebuilders like Barratt
Developments and Taylor Wimpey announced that, together, they'd cut 2,000
jobs.
Insiders
Buy at 2-Year Lows
What's interesting is that the last time insiders bought, the stock ran from
about $21 to more than $24 between March and April 2008. Hoping the stock
will do the same off recent lows, we're recommending a buy. Double bottom
support doesn't hurt either.