Despite the ‘demand destruction’ hype, it is interesting to note that during this severe global recession, worldwide oil usage has dropped by a minuscule 2.7%. So, what will happen when the world comes out of this recession? Who will rise up to the challenge and meet our insatiable thirst for energy? These are critical questions not many are willing to ask.

According to the US Department of Energy, liquid fuel demand in the developed nations peaked in August 2005 at 41.89 million barrels per day. Since then, it has plunged by 3.6 million barrels per day to 38.27 million barrels per day. However, you may want to note that despite these tough economic conditions, consumption has been extremely resilient in the emerging world. For instance, demand in the developing countries peaked in October 2008 at 46.33 million barrels per day and it is down by only 0.36 million barrels per day!

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Today’s guest is David Galland, the managing director of Casey Research. David’s going to give us a look through the trained eyes of the Casey Researchers at the energy sector, more specifically, natural gas. So take a look and see why David thinks cheap doesn’t always mean buy. As always, be sure to leave us a comment on your energy strategies.

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At the height of its late 2005 rally, natural gas in the U.S. was selling for just over $16/MMBtu, 350% higher than today’s price of $3.56. The oil/gas ratio, now over 18, is an all-time high… suggesting that natural gas is dirt cheap. So, it’s a buy, right?

In a phrase, not exactly.

According to a recent report by Natural Gas Intelligence, U.S. natural gas available for production “has jumped 58% in the past four years, driven by improved drilling techniques and the discovery

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At the height of its late 2005 rally, natural gas in the U.S. was selling for just over $16/MMBtu, 350% higher than today’s price of $3.56. The oil/gas ratio, now over 18, is an all-time high… suggesting that natural gas is dirt cheap. So, it’s a buy, right?

In a phrase, not exactly.

According to a recent report by Natural Gas Intelligence, U.S. natural gas available for production “has jumped 58% in the past four years, driven by improved drilling techniques and the discovery of huge shale fields in Texas, Louisiana, Arkansas and Pennsylvania, according to a report issued Thursday by the nonprofit Potential Gas Committee (PGC).”

According to the report, the increase in gas discoveries and production improvements means that North America shouldn’t have to be concerned about gas supplies for up to 100 years!

Dr. Marc Bustin provided an overview of the situation in the May edition of Casey Energy Opportunities.

In the ...

Gold had another uneventful day. The slight downward trend that developed in London was erased before 10 a.m. on the Comex and the yellow metal stayed flat from there, finishing near where it started, at $937.70/oz., up $0.70. For the week, gold is up 2.7%.

Platinum got a boost early in Hong Kong trading, then trended down until things got started in New York where the metal broke through resistance at $1170 to post a solid gain, closing at $1172/oz., up $11. For the week, platinum is up 6.1%.

Silver’s chart yesterday resembles the Nike swoosh symbol. After a curving downward trend through Hong Kong and London the metal went vertical in the early hours of Comex trading, but then tapered off, ending near its intraday high at $13.41/oz., up 12 cents. For the week, silver is up 6.0%. (Click here for charts)

Investors showed slightly renewed interest in gold

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By Cees Bruggemans

With the SARB going on hold last week, the prime interest rate remaining at 11%, the question is what next.

Another cut of 0.5% in August, prime falling to 10.5%?

Or have we reached a bottom, prime remaining at 11% through next year, with the speculation shifting as to when the first tightening move will occur (2010-2012?).

My sense is that we have reached an abrupt bottom at 11%.

This isn’t warranted by the current CPI inflation forecast and the recessionary condition of the economy.

Its reasons lie elsewhere, in the risks to the inflation forecast (which may change but will probably not improve) and especially the global picture (where the strength of industrial recovery is probably going to surprise many).

In terms of a simple Taylor Rule, the bedrock assumption is for our prime interest rate to incorporate a stable real premium longer term (in

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by John Keynes

There are ten asset classes that are regularly traded by global macro investors. Real estate, venture capital, equities, currencies, commodities, cash, bonds, collectibles, statistical arbitrage, and private equity. While a few of these are tough for individual investors to get into, the majority are easily accessible.

Cash is the first asset on the list. While technically a currency we look at it as more of a place of last resort. You earn a bit of interest on it but basically you only use it when you can find another place to put your money to work for a higher return.

Stocks are next. Stocks represent ownership in a company. When we look at stocks we look at them across the globe. That means domestic, foreign, and even emerging market stocks are included. Obviously we look at them different depending upon where they are located but they are still …

The CRB Index: What Commodities Can Tell Investors About Stocks

by Dr. Scott Brown, Advisory Panelist

In 1933 and 1934, President Franklin D. Roosevelt was doing the same thing Obama is working to do today – reduce the corruption in our capital markets by increasing transparency and regulation.

Most investors know that the SEC and our key securities laws were enacted in those years…

Few know that in 1934, at the request of the U.S. Department of the Treasury, the Bureau of Labor Statistics began the computation of a daily commodity price index, using quotations for sensitive commodities.

The Commodities Research Bureau Index (the CRB Index) let’s you see what the commodity markets are doing, just like the S&P 500 does for stocks.

For many investors who focus on stocks, the thought of following a commodities index doesn’t intrigue. And it’s unfortunate…

The CRB Index – Very Different From the S&P 500

The CRB

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Gold was flat until New York opened on Thursday, bumped up about $8 in the first hour, then sold off until after noon, bottoming at $802 before turning things around again and rallying strongly into the Globex, then slipped a little to finish at $816.70/oz., up $6.60. Overnight, gold is sharply higher.

Platinum was modestly down all day, but did manage to bounce decisively off the $900 mark, regaining some of the lost ground, and ended at $919/oz., down $10. Overnight, platinum has pushed higher.

Silver had a very erratic day that followed gold very closely, but with more striking peaks and valleys that ultimately resulted in little change, as it closed at $10.58/oz., up just 3 cents. Overnight, silver is trending higher. (Click here for charts)

It was a day without any major moves in the precious metals, as gold managed to hold onto a modest gain, platinum eased

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Stocks stared into the abyss, again, and finally jumped in, as the financial crisis that has been percolating for weeks finally overwhelmed Wall Street. The Dow posted its largest one day drop since just after the September 11 attacks.

The day started with an orderly sell-off that picked up steam in the second half of the session. No sector escaped the carnage.

The Dow lost 504 points, or 4.42%, to 10917. The Nasdaq Composite Index fared slightly better, giving up 81.36 points, or 3.60%, to 2179. The S&P 500 Index now finds itself below its July lows, shedding 59 points, or 4.71%, to 1192.

There were historic deals, and non-deals, all weekend long, as two of Wall Street’s most revered investment banks threw in the towel. Lehman Brothers (LEH) declared bankruptcy after it couldn't find a partner who would take on its problems. Merrill Lynch (MER) fared

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We discussed this name earlier this week as a wind play... [Jun 10: American Superconductor (AMSC) with $450 Million Follow up Order from China]Much like Energy Conversion Devices (ENER) (which I highlighted in early May in the upper $40s, and is now in the mid $60s) this has been a "hope" company for a long time - long on promise, but short on execution. [May 8: Energy Conversion Devices - Is the Turnaround Finally Here?] But we've seen how the ship has appeared to come in for ENER, and perhaps the ship is coming in for controversial AMSC as well. They received a huge follow up order today. This appears to be a 3 year contract for $450 million. Considering the company is only doing under $200 million in revenue in total this year, the magnitude of this contract is enormous for this size of ...