April 5, 2005

OIL'S IRRATIONAL EXUBERANCE PHASE:

Market May Cool Oil Frenzy-Greenspan (Tim Ahmann, 4/05/05, Reuters)

Market forces could eventually lead to a big enough increase in crude oil inventories to cool the recent oil price "frenzy," Federal Reserve Chairman Alan Greenspan said on Tuesday.

Speaking via satellite from Washington to an oil refiners' conference in San Antonio, Greenspan said recent record high oil prices had slowed oil demand growth, although "only modestly."

Slower rising demand and increasing output had already led to faster oil inventory building, he said, adding that stockpiling could pickup further as producers seek to cash in on higher futures prices.

"If sustained, these market technicals could encourage enough of an inventory buffer to damp the current price frenzy," Greenspan told the conference.


Gold bugs don't believe in markets, just eternal scarcity.

Posted by Orrin Judd at April 5, 2005 4:01 PM
Comments

I can't speak for "Gold Bugs", but I think some who buy gold are not thinking about "eternal scarcity" as much as they believe that governments tend to debase their currency. Hence purchasing or holding any commodity is better than holding the currency (or financial instruments that are near cash)

Gold Bugs have been correct since roughly year 2000. Granted a stopped watch is correct twice daily, but lets give credit when its due.

Posted by: h-man at April 5, 2005 6:57 PM

You can't be correct in the short term.

Posted by: oj at April 5, 2005 7:55 PM

OJ:

Wouldn't it be better to say that a "gold bug" can be right for certain periods of time, but not the long term?

Say, from 1967 to about 1982? And then again from 2001 to probably about right now? And even then, investing in steel, concrete, heavy construction, etc. has been much more profitable than plain old Au.

Posted by: jim hamlen at April 5, 2005 11:12 PM

jim:

I'm a conservative--I don't believe in the short term.

Posted by: oj at April 6, 2005 12:48 AM

The short-term is by definition speculation not investment.

The problem with investing in gold is that there are lots of places around the planet where lots more of it can be put into circulation at a moment's notice, not unlike oil or any other commodity.

The one exception is land, unless we see a dramatic curtailment in governmentally imposed artificial scarcity, but given the influence of sucker moms and the like that is unlikely.

Posted by: bart at April 6, 2005 7:05 AM
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