SOS Record High!

Gold touch record high USD1,467 per oz.

Silver reach 31 year high at USD40.06 per oz.

Oil touch USD110 per barrel, new high since 2008.

Of course the main reasoning is Middle East & Money Printing, which is friendly for the precious metals and oil. OK, let just say if oil dropped back to USD95 per barrel, does the Middle East issue still stands. Sometimes it appears the reasoning is created to suit the price actions. The reasoning is always logical but not necessary correct.

Same with precious metals, the reasoning is also because of money printing fear. What happen if we assume gold and silver dropped back to about USD1000 and USD25 per oz respectively, would the reasoning still hold?

Price actions are determined by the crowd psychology or trends or cycle, which is harder to measure than the typical fundamental demand and supply equation. If we use demand and supply logic to explain the precious metals prices of going up, it is illogical, because it is a fact that supply exceeds demand (at the moment). So the movements in metals are not based on fundamental but the perception of the crowd in anticipation of an inflationary environment. So, what happen if the perception change, hence, price change.

How do we then trying to understand or measure perception. Well, we can use bullish and berish reading of up and down, volume, confidence index, VIX, analysts bullishness or berishness. At this point of time, nearly everone is BULLISH.

As usual, when bullishness reach its peak, it will reverse. The longer the bullishness, the higher the reversal.

MyView

What Jim Rogers advice is, never buy when prices is at peak. That is why he is long US dollar (for short term) because everyone else think US dollar will collapse. That does not make him right, but, his experience tell him so, because he does not mention any specific reason for his basis to long US dollar other than, when the scale is tilted on one end, it will revert to the other side. Perhaps, he may have strong basis, but he is keeping it to himself.

At the moment, it seems that oil, gold and silver are in for a super bull. Who will say otherwise, other than Charles Nenner, who thinks gold will correct to about USD1000.