The dollar was down today against the Euro and I suspect it will fall quite a bit more as we get into banking trouble over the amount of money invested in high cost per barrel fracking.
Gold may turn out to be the trade of the year soon. At least when based on dollars.
It is a pretty good trade though here around $1.46. Like buying a call option on oil and drillers. If it goes under, you lose $1.46 but if there is some incredible rebound, you make $5.
I know! The shock right? The DOW is down 700 points from last week and TC is down to $1.38 from the low of $1.39 last week. Horrible.
The oil business might be good but FCX bought dry wells. Well, at least they don't have to worry about scaling back oil production LOL.
And it is probably more than 20 pounds of copper in an electric vehicle. The wiring in the battery pack is probably 20 pounds or more by itself.
I had hoped that electric vehicles would really take off and the huge amount of copper needed for field coil wiring (20 pounds per vehicle x 20,000,000 vehicles = 400,000,000 more pounds of copper needed above current world demand). Then the fast charging network with upgrades in power grids...
But at $55 oil I am now considering shorting Tesla :-)
I think they figured that out already, which is why they are shutting down Endako. Instead of producing $11 moly and selling it for $11 from Langeloth after processing, they will buy $9 moly on the open market and sell it for $11.
FCX totally messed up with the buyout of Plains/MMR Getting in the oil business and all that extra debt...
If they were just doing copper gold and moly they would be fine, instead of trading under $23. I took a hit a few weeks ago selling out at $29 for tax loss harvesting (my basis was in the low/mid 30s) but sure am glad I sold when I did.
Actually it is impressive that TC is holding the $1.40 area. It would seem that the selling has finally stopped, with slight dips to the $1.30s rebounding back to the $1.40s.
As long as gold is above $1200 and copper above $2.90, TC should stay above $1.29.
Theory. NADL has dropped far more than Seadrill. $11 to $1.50 (equivalent to Seadrill dropping from $40 to around $5).
If oil rebounds and the Russian deal goes through, NADL rebounds to $6, a 300% gain, while Seadrill might rebound to $20 (a 100% gain).
If the slide continues and NADL goes under, Seadrill gets crushed also, losing $4 to $5 more of share price.
Moly was like $14 in August and there was some hope that the moly mines might not need to be C&M after all. Just pointing out one reason why TC sold off (oversold though)
I think he is talking about the small wells you see on private property, slowly pumping. Some of them are marginal producers and not profitable to run/maintain at $60 oil.
I looked at the long term chart on gasoline and saw it used to be $0.05 a gallon. This has a LONG way to fall when we go by the charts.