Crude oil reversed its upward trend of four years – 2007 can be a disaster in oil and gold market
Sam Adelton
Dec. 29, 2006

Oil has fallen 0.8 percent this year in New York to $60.50 a barrel, set for the first annual decline since 2001, after surging 45 percent in 2005 and 37 percent in 2004.

The technical charts manifest a total meltdown in oil and gold market in 2007-2008. Interestingly, that can be actually bullish. Oil and gold will fall in 2007-2008 only to go much higher that where it is today by 2011. The bull market correction is required; experts say to correct the sentiment. When I wrote the first article on Gold’s and oil’s problem, gold was at $725 an ounce and oil at $78 a barrel. I received at least countless emails on how wrong I am. The ratio of public bulls to bears on gold and oil was 1000 to 1. I was more convinced I was right.

Oil is headed for $30 a barrel – perhaps $20. However, please note no one can guarantee a specific price. It depends on supply and demand. In the next two years the supply is abundant and world economy will weaken considerably. That makes a case for much lower oil price. But that will be followed by catastrophic oil demand as the supply from existing sources abruptly collapse due to complacency in exploration and production guided by low prices.

Gold is a different story. Gold has entered a cyclical bear market within a secular bear market. As many believes today, Gold will reach $2500 an ounce by 2012 but after retesting $350 an ounce by 2008. The world economies are showing signs of transforming into deflation driven recessions from stagflation driven underemployed economies. Things will change in 2009 when the major central banks decide to pump the economies with enormous amounts of liquidity and currency – Gold will go through the roof. For now deflation will kill gold and oil markets.

Crude oil reversed its upward trend of four years – 2007 can be a disaster in oil and gold market
Sam Adelton
The technical charts manifest a total meltdown in oil and gold market in 2007-2008. Interestingly, that can be actually bullish. Oil and gold will fall in 2007-2008 only to go much higher that where it is today by 2011.
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