Commodities to fall, Oil into the teens, and Gold to $250
In the current climate it is easy to look around and find dire predictions. That's why you are reading this post. It is all part of depression era market psychology. Nothing surprises us any more.
So, I am serious about these predictions?
You bet I am. The worldwide financial systems are wrecked to the up side.
We are now peering over the edge of the abyss.
And just because the fed has sloshed around more than few trillion dollars at the bottom of a their leaky bucket, it is all going into efforts that do nothing to increase demand.
No one has any money.
Look. I've been an entrepreneur and businessman my entire life. Let me explain something to you about the business of buying low and selling high, something aside from all the common hype you read here abouts these days.
All the sucker businesses, what in the wholesale trade are referred to as the victim, they are all already out of business, or just about to go out of business.
So, all we are really talking about in the economy are a few hanger-on sucker businesses, and the more savvy wholesale businesses, which account for the lagging indicator of where the world is headed over the next six months to five years of the utterly sure unwind going on.
This is what I did before I bowed out gracefully and in the black in 2001. I was in the wholesale end of the business. I spent all my waking hours looking for victims upon whom I could unload merchandise at more than I could buy it for. I specialized in great deals in worrying volumes.
That is how one buys low and sells high for a profit.
You find a victim first, and then you go cut your best deal on the commodity you want to deliver to the victim at a profit.
If you are good at what you do, you have two or three suppliers already qualified below what you can sell the product for. And you work one off the next until you have worked a spread that makes a small clink in the bottom of your own bucket.
Times ten thousand, and a small clink can make for a good year's pay. That's how you do well in the wholesale business. But! This is an on-demand economy. And, it is also a mostly cash and carry economy too.
That means, no mistakes, or you are out of business.
So now you see why I am calling for Oil in the teens and Gold at $250. There are not very many victims left. They've all been had.
The victims are almost all out of business, or they are so shell-shocked from the business environment taking advantage of them, they spend all their time in their warehouses wondering why they bought all that crap, and why they paid so much real money for it too.
There are lots of desperate suppliers, and more every day. So when a wholesaler finds a victim, it is easy to work the supplier-side price lower.
It is right now impossible for the supplier-price of a product to go up, or, for the market psychology to change and give the upper hand to a rising demand for any product.
Someone would have to be nuts to load up on anything right now. And all those nuts already are out of business, long ago, out of business, or looking for a wholesaler to come and rescue them from the misery of owning product that cost more than the retail price will bear.
Here is how it works, just like this.
"Yeh, Bob. It's me."
"I know it's you, Don. How's that beautiful wife?"
"Just fine, Bob. Though it isn't as much fun just looking at her as it used to be. Jesus Bob, business sucks! I can't make a dime. People are scared. Everyone is scared. You scared, Bob?"
"Naw. I ain't a-scared a nuttin. My wife says if things don't start looking up, she's leaving and taking the kids wid her."
"No shit, Bob. Is she serious?"
"Naw. She ain't serious. She ain't got no wheres ta go. And that kid a mine, Jesus, I'm gonna kill him one a deeze days!"
"Do it, Bob. Do it, if it would make ya feel better. Now, don't get excited. But this is why I called. How much do you want for that house on Main Street?"
"We both know that, Bob. Forgetaboutit. But, Bob, if I had a guy who offered you say, half what you were asking for the place, could it be done?"
"Oh, Don... Jesus, I'd be taking a whopping loss."
"Yeh, but Bob, think. It'd be the only reasonably bearable whopping loss you've had the chance to take in months. What about it, Bob? I got a victim, I think, but I don't wanna sink the hook, if the line ain't tied good and tight. You selling, Bob?"
"Damn right, I'm selling. The bank is breathing down my neck right now. You just show up with the money and the victim and we'll get her done all right. I cannot tell you how much I appreciate the chance to lose my shirt again in a deal with you, Don. You are the pal I've been prayer for, to be sent from heaven. Iffin-ah you can get him here this after, it'll be none too soon either. Bring him by. And Jesus, don't be calling me back and telling me the guy flaked out. Hit him over the head with something and take the money from him if you have to. And bring it to me no matter what, Don. Promise?"
"I'll do my best, Bob."
"Don't be scaring me like that, Don. I don't scare easy, but Jesus! You knows times is tough. I'll be here. I'll be here and I'll have a bottle to seal the deal. How's that sound? Don? Say something."
"I'll be there , Bob."
"Just don't forget the victim."
"I'll bring the victim, Bob. Just let me do most of the talking. And don't go threatening to kill that kid of yours with my victim still holding onto his money. We don't want to scare the guy, do ya?"
"No I don't. Okay. I'll hide the kid. I'll give him a buck and tell him to go get drunk or sumptin."
So you see...
It is a buyer's market. But the buyer is just looking for what they perceive as the best deal they can get. Buyers are greedy. And, they can be easily deceived by their greed in a falling market.
And they learn fast, or they go out of business with their warehouses full of merchandise they paid way too much for because they got greedy.
But wholesalers, they are never too greedy. They find a victim first. Wholesalers are heroes regardless the circumstance. The guy he ends up buying from, while he's gonna howl about what the wholesaler is giving him for his merchandise, at least he got rid of it before the price fell further.
And that is the momentum right now, down, down, and down.
Prices are falling further too.
Regardless all the money the fed is throwing at the banks, and will soon enough throw at the automakers, it isn't going to matter one lick.
Throwing that money around like that is just like spitting on a red hot wood stove. It don't last any longer than to go fisst, just once.