Should you bet against Goldman Sachs?

Goldman Sachs analysts are predicting that the price of oil will fall to $20 per barrel but as we know, Goldmans only bet against the mortgage backed securities market once they'd off-loaded all their holdings onto unsuspecting clients (as explained in The Big Short). So if Goldman Sachs is saying the price of oil will continue to decline, does that mean they are betting on a dramatic price rise?

What’s Really Going on with Oil? By F. William Engdahl
If there is any single price of any commodity that determines the growth or slowdown of our economy, it is the price of crude oil. Too many things don’t calculate today in regard to the dramatic fall in the world oil price. In June 2014 major oil traded at $103 a barrel. With some experience following the geopolitics of oil and oil markets, I smell a big skunk. Let me share some things that for me don’t add up.

Let's face it, Goldman Sachs has form going back to the Wall Street Crash of 1929 as related by Matt Taibbi in his Rolling Stone article, The Great American Bubble Machine and Goldmans aren't alone in their manipulation of markets. Banks frequently work in concert, under the direction of Rothschild controlled central banks, manipulating markets. They did it in the sub-prime crisis and have been doing so in gold to prop up the US dollar. Manipulation of the oil price, which also is a key factor in the value of the dollar, has been going on for years.

Did Wall Street Banks Create the Oil Crash? By Pam Martens and Russ Martens
From June 2008 to the depth of the Wall Street financial crash in early 2009, U.S. domestic crude oil lost 70 percent of its value, falling from over $140 to the low $40s. But then a strange thing happened. Despite weak global economic growth, oil went back to over $100 by 2011 and traded between the $80s and a little over $100 until June 2014. Since then, it has plunged by 72 percent – a bigger crash than when Wall Street was collapsing.

So, should you bet against Goldman Sachs? Manipulation of markets often means that fundamentals (supply and demand) have little to do with prices but a few canny analysts read the signs of an impending oil price collapse as long ago as June 2014. One such is Jesse Colombo who remains convinced that oil will continue to plummet because the least savvy investors remain invested in oil. It is only when they capitulate and sell in the final panic that the oil price should reach the low from which it can recover.

This is happening against a background of global, economic and political instability and anything is possible; all predictions are to be treated with caution.

Comments   

 
0 #4 Clive Menzies 2016-01-28 17:09
Quoting Ivor Kellock:
US$ is supported thru oil - low price = low support - yes FED are in a hole but the levels of debt we are all suffering is a much bigger issue than maybe allowing prices to fall a little cos oil is lower or increase margins within companies.......the quadrillions of derivatives is the real concern - how will these play out in an unregulated market?

There are complex forces in play - in the same way that the gold price in the paper market has been manipulated down to maintain the value of the dollar, there is an inverse correlation between the oil price and the US dollar. However, the issue is complicated by the 1971 OPEC agreement to only trade oil in dollars which has underpinned the value of the dollar. In the absence of this agreement, the value of the dollar would plummet due to oversupply of US dollars. The US economy has long benefited from people having to hold dollars (both producers and buyers of oil). That agreement is now breaking down because the Russians and Iranians are trading in other currencies. So there is no simple answer to your question as evidenced by the opposing arguments in today's Daily Pickings.

There is the additional paradox of the US shale oil (fracking) industry being decimated because the cost of production is way above the current price and there is huge debt overhanging fracking companies.

Remember, this oil war is not being fought in US interests but for the Structural Elite who don't give a toss about the US and it's people.

The Structural Elite are winners which ever way the dollar goes because they run the casino.

Rob sent this table which tabulates GDP and population predictions for the US, UK and many other countries in 2025 relative to today. The data are sourced from the CIA, IMF, UN, USG etc. It is not a pretty sight:
www.deagel.com/country/forecast.aspx

Interesting times (in the Chinese curse sense)
 
 
0 #3 Ivor Kellock 2016-01-28 11:18
US$ is supported thru oil - low price = low support - yes FED are in a hole but the levels of debt we are all suffering is a much bigger issue than maybe allowing prices to fall a little cos oil is lower or increase margins within companies...... .the quadrillions of derivatives is the real concern - how will these play out in an unregulated market?
 
 
0 #2 Clive Menzies 2016-01-28 08:14
You may be right Jimmy but the question is, will low oil prices be enough to get the Fed out of the hole? Conversely, is this a prelude to much wider war across the Middle East and beyond which drives the price back up and satisfies other objectives of the Structural Elite?
 
 
0 #1 James Walter 2016-01-28 08:01
Why is everyone missing the elephant in the room and lifeboat? This price drop has been a tremendous STIMULUS! The point to put the shale oil people out of business. Then the price will go right back up, a HUGE LOAD on the economy. The FED is in hole. They cannot cut interest rates any more and the money is not going to consumers, but offshore and under the bed - so to speak - sitting in banks and bonds.
It is NOT the economic policy of the US that has pumped it up, but the oil price!
 

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