$200 Oil, $2,000 Gold The numbers in the title of this article look absolutely shocking side-by-side, even though there is plenty of evidence to suggest that even those numbers are merely rest stops on a chart with a perpetual sky-reaching tilt. These two figures conjure disbelief in the mind at first look, but then, depending on your where you stand in relation to these industries, they appear inevitable. It is utterly astounding to think that gold and oil could still yet double, more or less, from today’s levels. With gasoline prices stretching the budgets of most North American families, the price of auto fuels in a $200 barrel of oil world would easily be well over $6 a gallon. The only real questions to consider are 1) when will we see these prices, and 2) how can I hedge against these price risks. In terms of question 1, unless you are planning on checking out in the most profound sense of the term, the question is more or less irrelevant.
Gasoline could hit $7 a gallon in four years Surging crude prices, which could surpass $200 a barrel in four years on tight supplies, could push gasoline prices to as high as $7 a gallon, CIBC World Markets analysts said Thursday. Crude supplies are actually lower than some official estimates indicate, while demand is unlikely to fall anytime soon, according to a statement by analysts led by Jeff Rubin at CIBC, an investment bank. They forecast that these tighter supplies and continued strong demand will drive oil and gasoline prices to roughly double their current levels by 2012. "It is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity," said Rubin. "Despite the recent record jump in oil prices, oil prices will continue to rise steadily over the next five years."
Hidden unemployment Last month's jobs report leaves little doubt that the country is in a deep downturn, although you can't easily tell it by the official numbers. At 5.1%, the current unemployment rate is relatively low by historical standards. But the percentage of jobless Americans of prime working age -- 13.1% for men 25 to 54 years old -- is historically high. Most of them do not qualify as unemployed, but they are nonetheless out of work. This discrepancy exists because the government's definition of the unemployed includes only people who do not have a job, have actively looked for work in the four weeks preceding the survey and are currently available for work. The headline number is based on a survey of 60,000 households and is the most widely reported number in the jobs report.
Many states appear to be in recession The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes. The situation looks even worse for the fiscal year that begins July 1 in most states. "Whether or not the national economy is in recession - a subject of ongoing debate - is almost beside the point for some states," said the report to be released Friday by the National Conference of State Legislatures. The weakening economy is hitting tax revenue in a number of ways: People's discretionary income is being gobbled up by higher food and fuel costs, while the tanking housing market means people are spending less on furniture and appliances associated with buying a house.
Load Up the Pantry I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food. No, this is not a drill. You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here. Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster. "Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent.
Why this crisis is still far from finished During the past few weeks we have seen a growing number of market participants predict an end to the dislocations that erupted last summer and claimed victims throughout the financial system and beyond. While their predictions are understandable, they are premature. The dynamics driving the disruptions are morphing and may again move ahead of both the market and policy responses. The optimistic view is based on two distinct elements. First, that the deleveraging process is reaching its natural end as valuations stabilise and institutions come clean about their losses and raise capital; second, that a series of previously unthinkable policy responses have been effective in restoring liquidity to the financial system.
Consumer Mood Sours as Inflation Fears Grow U.S. consumer confidence fell for a third straight month in April, hitting its weakest in 26 years, on heightened worries over inflation and the sagging housing market, a survey showed Friday. The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for April fell deeper into recessionary territory, to 62.6 from 69.5 in March and below economists' median expectation of 63.2 in a Reuters poll. The April result is the lowest since March 1982's 62.0, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans. Short-dated Treasury debt prices briefly edged higher after the release of the data, while stocks briefly turned negative or extended prior losses.
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