Oil Up, Gold Up: what does this say about inflation in 2008?

kennyboy66_2

Melissa177 wrote: »

Oil touched $100 a barrel today (light sweet crude around $99.4 currently), and Gold is up $22 an ounce.

Lots of fear in the markets, clearly....

What does this say about the housing market in 2008? Will inflation - and fear of inflation - make the housing market slump?

One days price movement tells you nothing.

TediousPhoenix

epz wrote: »

didnt they do a study compairing prediction by top city fund managers, todlers, and a guy throwing darts at the FT, i think the fund managers came botom.

imho the stock market is just an untaxed bookies.

But the fund managers would kick up a bigger tantrum than a toddler if we priced a security incorrectly.

Is there an option for throwing darts at the fund managers?

WTF?_2

TediousPhoenix wrote: »

I work for a bank in the asset management sector and it's my job to process daily pricing for equities, money markets, bonds, FX rates etc. My job only processes them, we do not make any decisions.

My manager asked us what we, his 'trusted team' thought house prices/economy would do. Everyone of us went with the slow-down/ fall. He then asked why the fund managers were all investing in asset-backed securities. He said 'do they know something we don't?'.

It made us think, that's for sure.

Part of my pension is in these people's hands so I hope they know what they are doing!

I'm sure that the great and the good in Citibank and all those other financial institutions that have lost billions on CDOs and MBSes thought they knew what they were doing. Now their blue chip financial companies are having to sell off their own equity to middle and far eastern concerns to survive.

Having said that, those securities will be worth something (a fraction of their book price) so there will be lots of money to be made at some point by snapping them up at firesale rates.

(Note: Asset backed securities do not have to be based on debt/loans. There are other sources too).

WTF?_2

kennyboy66 wrote: »

One days price movement tells you nothing.

I think you'll find that oil and gold have been trending upwards for rather longer than one day.....

doubleh_4

not looking good for the home team.

pararct

kennyboy66 wrote: »

One days price movement tells you nothing.

Quite true and indeed the oil price did only briefly touch the $100 mark. It has all day though traded above $99 and it's only a matter of time before it goes and stays over $100 possibly tomorrow maybe next week.

In 2005 oil was around $60 a barrel, the price has risen constantly since then and it shows absolutely no signs of reversing let alone stopping. If the current rate is maintained then it is only a matter of time (perhaps as soon as 3 or 4 years) when it becomes unaffordable for the masses. As one poster has already mentioned we should have been investing time effort and money into alternative energy sources such as bio fuels. I hope we have enough time left and sense within the Government to make that effort now.

epz_2

pararct wrote: »

As one poster has already mentioned we should have been investing time effort and money into alternative energy sources such as bio fuels. I hope we have enough time left and sense within the Government to make that effort now.

biofuels is not a real alternative it costs a lot of oil to make fertiliser and transport them about, the only good thing is we have the distribution network already.

what we needed about 10 years ago was them to throw WADS of cash at anything that looks like hydorgen storage mediums, there are loads of different techs in development, my favourite is the aluminum one that lets you pass votage over it and gradually release hydrogen so you can use it just like lpg.

if you want to really understand the issues then look up a slashdot discussion over energy storage, they usually turn into a flame war with tech journal citations etc to back up each sides favorite techs out there but most are stuck with almost no money to develop.

once you have a storage mechanisim you can eliminate distribution losses and produce using the most efficent method regardless of demand.

paying dust bowl farmers subsides so the cost of corn turned into diesel is lower than oil isnt the way to go.

Melissa177

epz wrote: »

biofuels is not a real alternative it costs a lot of oil to make fertiliser and transport them about, the only good thing is we have the distribution network already.

what we needed about 10 years ago was them to throw WADS of cash at anything that looks like hydorgen storage mediums, there are loads of different techs in development, my favourite is the aluminum one that lets you pass votage over it and gradually release hydrogen so you can use it just like lpg.

if you want to really understand the issues then look up a slashdot discussion over energy storage, they usually turn into a flame war with tech journal citations etc to back up each sides favorite techs out there but most are stuck with almost no money to develop.

once you have a storage mechanisim you can eliminate distribution losses and produce using the most efficent method regardless of demand.

paying dust bowl farmers subsides so the cost of corn turned into diesel is lower than oil isnt the way to go.

I agree with a lot of this, particularly the last comment.

The markets have just seen a massive biodiesel crunch (knock on effect: price of glycerine, the by-product, soars) because the subsidies have been taken away. This business is very cost intensive, and produces just as much CO2 as crude (if not more?), and can't survive without taxpayer subsidies.

epz_2

imho grain subidies are one of the most vile things the west is doing at the moment.

not only are they rewarding inefficent production and enviromental damage and but also keeping 3rd world farmers in poverty.

how much better off would africa be if we bought our grain from them and created markets over there for our products than just dumping our highly subsidised excess on them destroying their local economy.

globalds

So this massive $100 a barrel revenue boost for the oil exporting nations ..will that in itself lead to any inflation in any specific areas ? ..Is there anything they are buying that would increase global prices ..