Reserves of high-grade oil are in decline, says Byron King. Other hydrocarbons will be required to meet energy demand over the coming decades. But the cost of extracting and refining these resources is much higher than the current market price of crude. And that’s why cheap fuel is definitely not here to stay.
Don’t expect oil prices to remain at these low levels for long, says Byron King. Demand weakness for crude is temporary. And oil-producing nations cannot sustain their own economies unless oil prices are close to $100 a barrel. Byron says it could be time for investors to slowly build up a position in oil service stocks.
Byron King finds himself inspired by a recent Patton-style ‘motivational’ speech for gold. This from Whiskey & Gunpowder:
Do you remember the 1970 Academy Award-winning movie Patton, starring George C. Scott? In the beginning of the movie, Scott — playing the iconic American Gen. George S. Patton — stands in full dress uniform, backed up by a gigantic American flag. Scott then rouses the troops (and the audience) with a stirring speech that follows the lines of the address the real Patton gave the Third Army on June 5, 1944, the eve of the invasion of France in World War II.
Patton’s original speech is considered by many to be one of the great motivational talks in all of military history. And actor Scott’s…
Remember the blackout that crippled New York in 2003? Byron King says this could be a common occurrence across the US within five years. He says the power industry is “paralyzed by the uncertainty of lopsided risks”. Soon costs are going to rise, and reliability will fall. Byron says investors in new power companies should make big profits.
One of the biggest collapses this year hasn’t been in stocks. Crude oil has lost half its value since it peaked at just under $150 a barrel in July. Today, a barrel of the black goo sells for just over $80.
Outstanding Investments co-editor Byron King says “it seems like the investment locomotive — energy, resources and related infrastructure — has derailed.”
Does this mean you should sell your resource stocks? Byron says selling now would leave a lot of value on the table. That’s because resource stocks are now priced well below their intrinsic value.
Oil and energy expert Byron King says the current market climate is like Napoleon’s retreat from Moscow: there’s no relief from the suffering.
Assets across the board are deflating. The world wants it’s money back and is selling hard.
Should you join the rush to the exists? Not necessarily, says Byron.
First, it’s important to learn how the world economy got into the situation it’s in now.
Crude oil prices have been highly volatile this. From its $146 peak in July, the black goo is down at $87 a barrel.
It’s a scary time to be a direct investor in oil. But Byron King says is one way of sidestepping the wild price swings: investing in tanker ships.
“As long as people continue to use oil,” says Bryon, “there will be some consistency to the tanker business.”
There is a relatively tight market for charters. And many good reasons why there won’t be a capacity glut in coming years.
On Friday, Congress passed the administration’s pork-laden bailout bill. Today, the Dow has plummeted by over 500 points. London’s FTSE plunged the most since 1987.
So much for the government ‘fixing’ the financial markets. Mr. Market simply isn’t buying the bailout.
How should investors react? Outstanding Investments co-editor Byron King says the answer is physical gold and precious metals mining shares.
Why are precious metals moving upwards? After all, the market smashed them down all summer as the dollar strengthened. The short answer is that right now gold and silver are the only decent game in town.
Have you followed the recent rise in value of the U.S. dollar? Through late summer, the dollar increased in value against the euro, as well as the yen and numerous other currencies.
