Wednesday, July 8, 2009


BANZAI7 NEWS--As stock markets wavered on Wednesday, oil prices fell to their lowest point in six weeks on signs that fuel stockpiles are growing and demand continues to dwindle.

Crude oil futures fell $1.24 to $61.68 a barrel, giving back two months of gains that came as traders speculated that a global rebound was just around the corner. Oil topped $70 a barrel for the first time since autumn as China increased its stockpiles and hints emerged that the recession was losing force. Analysts said however that the spike in prices did not match basic economic realities.

Earlier in June, Goldman Smith predicted oil would reach $85 per barrel by year's end, $90 by this time next year, and forecast a price of $95 by the end of 2010.

In the Spring of 2008 Goldman Smith predicted year end oil at $200 per barrel.

QUESTION: How does Goldman Smith make money on commodities trading when it clearly has no idea how to predict short term prices?

ANSWER: (a) It knows the opposite will happen and is lining up more suckers for the opposite trade.

(b) Price fundamentals are irrelevant in the brave new world of strategic trading and manipulation.

(c) Both of the above.

"To learn that a man can make foolish plays for no reason whatever was a valuable lesson. It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind."

Jesse Livermore

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