The Hiking Oil Price and the Recession

2011 might have been the toughest in the recent past with global economy tumbling down to its knees. Many investors felt the pinch and some ventures had to close shop. The majority of the blame was pointed at the price of fuel that has been on a constant rise. As a result, prices of basic commodities aimed for the roof as manufactures struggled to cushion themselves from losses as a result of increased production.

Many couldn't wait for the end of the "doom year" hoping that this year, things would be better. Unfortunately, economists have no good words for the anxious populace. Recession if far from over and if you thought 2011 was the worst year of mankind, then you should brace yourself for even tougher economic times in 2012, especially in West Europe as there seems to be no way out of a glaring recession this year.

The Arab Spring and the Middle Eastern exporters of oil have no enticing words to those whose reliance on oil is massive as the price is set to rise higher in 2012. This is set to affect the growth and expansion of the world's fastest emerging economic giants; China, India, Russia and Brazil. The four currently make up a quarter of the world's economy and are set to reap big in the world's 2012 economic growth. Even though the four are not shielded by the sovereign debts shambles enjoyed by other western world's countries, they have lower debts, stable banking systems, huge reserves and even more importantly, they have an enhanced inter-country trading that guarantees their products markets all year long. The more advanced economies are bound to lose out this year, just like they did in 2011.

In 2010, the price of crude oil was $79 a barrel, but a year later, this price shot to an average of $111 in 2011. With this set to rise further, European nations are likely to experience another year of escalating cost of basic commodities. The Middle East nations have realized that they can use the oil in their countries for the very reasons those they export to use. They are setting up industries and utilizing their oil from within, a trend that is causing both an escalation of the price as well as biting shortage. Even though the Asian nations currently consume only a fraction of what the world consumes, their demand is on a rapid rise.

Fuel consumption per day was 89 million barrels per day in 2011 up from 88.3 million in 2010. Projections have it that the consumption may rise to 95 million barrels per day in 2016, a whopping 25% increase in 16 years. Although supply has increased too, with OPEC reporting a 30.7 million barrels a day and global production standing at eight nine million barrels a day in 2011, the price has not been affected positively as it has remained at a stubborn $100 a barrel.

The price of oil will definitely define the performance of major economies in the world and unless the world leaders and major economy players and industrialist nations that consume a large percentage of this commodity, then we should brace ourselves for tougher times in 2012.

Strategies for Short Term CFD Trading   Answering Fundamental Questions on Spread Betting   A Stylish Study of Price   Commodity Trading Tips   Investing in Futures Options   A Guide To Un-Leased Mineral Owners   

Is the Price of Silver Signaling the Next Monetary Supernova, or Will It Be the Cause?

If the pricing in the world's commodity and financial markets accurately reflected anything but the culmination of decisions made by high frequency trading systems, then the recent price action in the silver market might have something meaningful behind it. In an alternative parallel universe, the recent rally in silver might actually be 'pricing in' the next major monetary event.

The Fed's second round of quantitative easing was announced on November 3, 2010. Nevertheless, the price of silver had failed to break through the psychological $20 level by mid-September of that year, after having been stuck trading around the $18 level for what had seemed like an eternity to most traders.

The Technical Picture Shows Silver Approaching Key Trend line

The series of charts below show silver's price action over each year from 2009 to date. In recent months, silver has been consolidating within what looks like a descending triangle pattern that is now approaching its apex.

Silver's price has also just pushed above a long term down trend line that forms the declining top line of this triangle pattern, which is drawn through the successive highs seen on April 24th, 2011 and February 26th of this year. If its current $30.13 level is broken convincingly to the upside, this trend line will then provide support for a rally even higher in silver.

What Does This Silver Price Action Signify?

Although no one really knows where the price of silver is headed in the short term, the recent near term trend has been quite bullish for silver. As much as it feels as though it is about time for silver to make a substantial move, most of you should be pre-conditioned for what might come about as early as tomorrow or next week.

Sentiment in the silver market has been soft for many months, and it will probably remain fragile over the coming month. Furthermore, open interest in silver contracts has increased steadily; even as open interest in gold futures has fallen. In addition, the net short of the four largest banks has increased as well. This means plenty of room exists to trigger a sharp sell-off, as the market has seen before.

Although the price of silver will someday pass through its fair value based on supply and demand fundamentals, it is unlikely that this appreciation will happen gradually or in an orderly manner.

Any meaningful upward trend in silver will surprise everyone, including those of us who have been studying and following the day-to-day price action and news in silver for years. While it is difficult to not feel optimistic about silver in the short term, since for the price of silver to take off without any news feels quite constructive. Nevertheless, no one really knows.

Silver's Price Pushes Above Key Moving Averages

It seems just as easy to blame the rally in silver on a computer glitch 'working the other way', than on a closely followed technical indicator like the 200-day Moving Average. Nevertheless, the price of silver is now trading just above its key 200 day Moving Average, which currently reads above the $30.50 level. A sustained break above that closely watched indicator can signal many longer term silver traders and fund managers to enter the silver market on the long side.

Speaking of technical indicators, the short term moving averages have also been exceeded, as was the 100 day average. Silver also broke above psychological resistance at the $30 level. Of course, this is how the professional traders make their living by watching technical signals like these.

In the trading world, the market is now approaching an inflection point where momentum and human emotions start to influence the market-driven pricing dynamic. Real supply and demand - and the undeniable existence of manipulation and control in the silver market are apparently forgotten - for now at least. The 'house' is starting to rock.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit http://www.silver-coin-investor.com

Strategies for Short Term CFD Trading   A Guide To Un-Leased Mineral Owners   Commodity Trading Tips   Trading Knowledge For Success in the Futures Market   Greek Default Imminent   Beaten Bean Bulls