Anyone who has read my blog for some time, knows that I am bullish on oil over the next 12-24 months. I recommended purchasing oil in the 50s and low 60s . I still like it over that period, but think it ran up a bit too fast. Rex Tillerson, CEO of Exxon said on 6/16/09 The recent rise in oil prices is mainly caused by the weak dollar and not supported by market fundamentals. “When you look at just fundamentals, there’s not a lot to support this kind of price movement we have seen…in the last six weeks…Concerns about a weakening dollar and coming inflation have led some investors to bet on an economic recovery and try to get ahead of a rally.”
Source: Rex Tillerson, Exxon CEO statements made at a gas conference the Dutch city of Groningen.
My Comments: Merkel has been critical of central bank actions for some time. The independence of the Federal Reserve specifically is very suspect to me. Merkel was on the record saying “I view with great skepticism what authority the Fed has and the leeway the Bank of England has created for itself,” Merkel said in a speech in Berlin. “We have to return jointly to more independent central bank policies.” Stricter monetary policy isn’t politically acceptable, even when it’s the right thing to do. Merkel has called for tighter monetary policy (from foreign and the German central bank). Merkel apparently was awake on the day they taught about German’s inflation problems of the past.
Take a look at these two pretty good articles by Bloomberg and old faithful the Wall Street Journal.
My Comments: In Germany you can now buy gold out of vending machines in the subway. Gold is a funny asset that many people believe is the only real hedge against inflation. The problem is you will always need willing buyers and sellers and during panics it usually goes up and during periods of normalcy everyone forgets about it. It is the wrong asset to buy and hold for decades, but can provide some diversification benefits during periods of uncertainty.
“It isn’t the sum you get, it’s how much you can buy with it, that’s the important thing; and it’s that that tells whether your wages are high in fact or only high in name.”
This economy is making it clear to more and more people that their retirement expectations will come up short. Aviod the following mistakes and you will be much better off.
(1) Failing to start saving early. It’s never too late to start. The impact of compound interest is sexy!
(2) Failing to save enough. Small sacrifices now can make a big difference when the law of compound interest is on your side.
(3) Planning on social security to replace the bulk of your income. It’s more likely that over time benefits will see a decrease.
(4) Depending solely on your company pension plans. Most pension are designed to only replace a portion of your income.
(5) Being “recklessly agressive” or “uber conservative” in your investments before and during retirement. The current market has shown us while being ultra agressive close to retirement can have life changing consequences. Being too conservative can be a “safe strategy to go broke.” Annuities, CDs and some fixed income typically don’t yield much over inflation rates, so investor’s purchasing power over time can be substantially diminished.
By Jennifer Ablan and Daniel Burns
NEW YORK (Reuters) – The U.S. economy is in for a “lasting slowdown” and could face a Japanese-style period of relatively low growth with the added problem of high inflation, billionaire investor George Soros said on Monday.
Although we don’t know what the next asset bubble will be, we can only be certain that the incessant creation of fiat money by government central banks will serve to engender more speculative booms to lure investors into financial ruin.