CNBC Stock Blog: What factor(s) did HSBC’s Jim Steel recently cite as making precious metals “safe investments”?

“The persistently high price of oil, the weaker dollar and the resurfacing credit crisis are driving up the price of precious metals, making them safe investments,” said Jim Steel, chief commodities analyst for HSBC.

Looks like an “all of the above” to me.

Hercules Offshore is a Houston based provider of services and equipment in the exploration and production of both oil and natural gas in shallow areas offshore. Deep off shore drilling are the buzzwords in politics but with energy the focus of investors and profits very tangible in …

Article Source Arnold Kling poses a question for Paul Krugman. Here's how I would answer. Kling writes: Early in 2007, the price of oil was $60 a barrel. Recently, it has been above $130 a barrel. Which of the following does Paul Krugman believe: (a) market fundamentals justified $60 a barrel then, and they justify $130 a barrel now; or (b) market fundamentals justified a much higher price in 2007? ...We know that Krugman does not believe that today's oil price is out of line with fundamentals. Krugman's view, in effect, is that if speculators artificially boost the price of oil, then supply will exceed demand, and the excess has to go somewhere. Where are the inventories? This view ought to hold in reverse. If speculators artificially kept the price of oil too low early in 2007, then demand should have exceeded supply and inventories should have ...

By Jason Simpkins Associate Editor The price of oil edged up again yesterday (Tuesday), before settling at $137 a barrel flat, as concerns about short-term supplies continues to overwhelm Saudi Arabia’s recent pledge to boost production. With Saudi Arabia offering some, albeit limited, cooperation, Congress has turned its ire on speculators and investment banks. First, demand from China and India was to blame for soaring oil prices. Then the weak dollar, the member nations of OPEC, Big Oil, and now investment banks take their turn in the rotation as politicians scramble to find a suitable scapegoat in an election year. Story continues below… Sign up right now, and we’ll send you an important new report for free: “The Three Best Investments in Asia.” ...

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135. Imposing limits on speculation and other regulatory changes could reduce prices back down to the marginal costs of oil production,and the price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday. More from MarketWatch.com: Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy ...

Don't believe it, think stocks will keep falling?  We called it at 13,000.  Thanks to the U.S. Congress throwing their weight around trying to bring down the price of oil, we have a great catalyst to push the DOW back up.  You think CEO's and Wall Street analysts hate being wrong, think of the ego's on Capital Hill being beat down?  Very soon Masters, we will rally, just you wait. Liberity and Justice for All! Time to put that shopping list together again, best of breed stocks. Today (6/18/08) Bush is even saying to lift our long-standing ban on offshore ...

The Labor Department reported on Friday that the US Consumer Price Index (CPI) rose 0.6% in May -- the most since November and reversing a three month downward trend -- as the high price of oil sent the price of goods higher. While I expected the number to come in on the high side, it grossly underestimates the real inflation rate. What’s more, the “core” inflation rate, which strips out energy and food prices, was reported to have edged up only a modest 0.2%. Give me a break! That’s not a bad number if you don’t eat and drive! As I’ve told you before, the government’s CPI number is rigged, using all kinds of manipulations and shenanigans to keep the number absurdly low. Anyone with half a brain can see that the “official” data doesn’t jibe with what consumers are experiencing as prices for everything under

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A huge debate is raging at the moment about the outlook for crude oil, influencing the formulation of investment strategy in a significant way. Discussions range from excessive speculation to geopolitical factors to increased demand meeting inelastic supply.

A report from Rob Fraim (Mid-Atlantic Securities, Inc) has just arrived in my inbox and is worth perusing for two reasons: (1) Rob’s good track record in this sphere, and (2) his common-sense approach and findings with which I mostly concur. The paragraphs below are extracts from his excellent report.

I have for quite a lengthy period of time – going back several years – been bullish on energy markets and energy-related stocks.

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Article Source

Price of NYMEX light crude. Source: ino.com. Why did oil breach $138? One key impetus certainly came from news about U.S. interest rates and the dollar. European Central Bank President Jean-Claude Trichet Thursday cautioned that the ECB may raise interest rates next month in order to contain inflation, while Friday's U.S. unemployment numbers may have put further U.S. rate cuts back on the table. The twin developments sent the dollar plunging 1.1% against the euro and the dollar price of many commodities soaring. Gold was up 2.6% and

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Some of the explanations for the dollar jump rely upon the perceived weakness in the dollar's value (and hence, by extension, Fed policy). Does this make sense? As I've remarked before [1], there is likely two way causality between the dollar's value and the price of oil denominated in dollars. One way of taking out some of the numeraire issue is to see how a price of a barrel of oil would be, expressed in other currencies. In the figure below, I compare the dollar price against that in euros, and against that in the Special Drawing Rights (SDR). Figure 1: Price ber barrel of oil (WTI), in USD (blue), in SDR (red), and in EUR (green). Squares indicate values for June 6. NBER defined recession dates shaded gray. Sources: St. Louis Fed FREDII; IMF International Financial Statistics; Pacific Exchange Services; and author's calculations. The weights for the USD, EUR, ...