Mark Mobius On Oil/Commodities

To begin with, I like Mark Mobius.  When I feel like Asia and Emerging markets are worthy of investment I use Mobius’ actively managed funds as opposed to FXI or EEM (associated bull and bear funds of which are very tradable).

On crude oil:  “at below 50 this is something that no one, ah, ever imagined…”

This is something I would take issue with.  Prechter most certainly imagined it, and stated so even at the peak of ‘Peak Oil’ hype, which is just another beautiful illustration of human hysteria in financial markets. I do not assign prices to things unless I can chart them, and so I have long-since assigned 1.50/lb. to copper.  But during the ‘Peak Oil!’ craze I did my share of bitching and moaning about it from a contrarian perspective.

Anyway, Mobius goes on to say that he thinks the price of oil has no relationship to its supply/demand fundamentals. He says it is all sentiment.  One thing I would mention is that Deflation is largely sentiment as well. At some point it becomes impulsive (as leverage gets taken down, as in Q4 2008) but for now, as Prechter often states, a deflationary mindset is taking hold. Commodities have been ground zero for the first phase of Deflation, which makes sense.

Also of note on Mobius, he thinks that some commodities (in particular the precious metals) are going to get a spike upward soon. He then babbles about supply/demand in the precious metals, which is to be ignored.  But like many gold bugs, he may just dumb luck into a gold rally… if risk goes ‘OFF’. That is where the PM’s would assume ‘1st mover’ status in [anticipation of] any coming inflationary operations.

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