IMHO: A CORRECTION WILL OCCUR IN WEEKS, NOT MONTHS...
We’ve compared the spike in oil and other commodities like gold with the decline in the dollar since the fall of last year, and, up until recently, there was an outstanding correlation — going long oil, gold or other commodities was pretty clearly an effective way to short the dollar in an almost risk free environment. Something has changed, however, in recent days.
Since early April, gold and oil have moved in opposite directions. Gold’s price, in our view, has retreated as the market has judged, correctly, that the dollar’s decline is nearing an end for multiple sound reasons (a halt to interest rate cuts, global slow growth or recession, etc.). Meanwhile, oil’s price has become completely untethered from reality in an insane speculative frenzy, even versus other commodities (which have had their own bull markets).It’s over, or at least coming to an end, in our opinion.
A BARREL WILL BE CLOSER TO $70 THAN $90.