Implications for Stock Market – “the oil price has clawed it’s way back relentlessly through a series of critical levels of first $30, $35, $40, and most recently popping above $45 to stand at a high for the year of $48! Nearly DOUBLING in THREE MONTHS!”

At the start of the year the prevailing mood in the oil market was not just one of gloom and doom but of catastrophe as the oil price sunk below $30, skidding by the middle of February to virtually touch $25, a period during which many prominent analysts and investment banks such as Goldman Sachs all of whom were bearish on the prospects for oil prices this year some even suggesting that the oil price could sink to as low as $10 (Standard Chartered) which meant that the oil producers large and small, the frackers and even a string of nations such as Russia, Nigeria and Venezuela were on the fast track towards going bust as their oil profits that financed their state spending budget deficits evaporated.

We’ll barely 4 months on and the oil market has gradually transformed from that of imminent $10 apocalypse to one of hopeful recovery as the oil price has clawed it’s way back relentlessly through a series of critical levels of first $30, $35, $40, and most recently popping above $45 to stand at a high for the year of $48! Nearly DOUBLING in THREE MONTHS! And now all those who failed to see this coming are now forecasting higher prices i.e. one of the biggest oil bears of the year, Goldman Sachs now reckons the oil supply glut has evaporated and oil prices are going to reach $51, WOW crude oil has already risen to $48!

These are the SAME fools who have been banging the drums all year for an sub $20 oil price, but now AFTER the oil price has DOUBLED are proclaiming themselves as being bullish! This illustrates an important point! Goldman Sachs and the REST are nothing more than snake oil salesmen! They clearly don’t make money trading as you or I understand it to be, for if they did they would be back to being just as bankrupt as they were during the financial crisis. Instead they make their money by doing dubious deals such as that which bankrupted Greece, by means of hiding their debt!

Crude Oil Price Trend Forecast 2016

In terms of my oil price forecast for 2016, my in-depth analysis of Mid January forecast expectations for the crude oil price to bottom by early February at approx $25, the actual bottom came in at $26 and within the time window for a final bear market bottom as the following video analysis and article excerpt illustrate:

17 Jan 2016 – Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016

Crude Oil Price 2016 Forecast Conclusion

My forecast conclusion is for the crude oil price to trade within three distinct trading ranges for 2016 of $20 to $40, $35 to $50 and $62 to $40. Furthermore the trend pattern imposed onto the trading ranges implies that a bottom is likely by early February 2016 at around $25, followed by a trend higher into Mid year towards $50, a correction into September, followed by a trend towards $62 before succumbing to a correction during December to target an end year price of approx $48 as illustrated by the following forecast graph.

Crude Oil Price Forecast 2016 Implications for Stock Market Trend

My latest video analysis seeks to update what has transpired since, and whether the crude oil price remains on track to to continue trending towards $60 before the end of this year, and what this means for the stock market that I have consistently stated should track the crude oil price rally higher, whilst many if not most have long since convinced themselves that stocks were not only in a bear market but that a crash was always liniment! So found out the prospects for oil and the stock market in my latest video analysis –

 http://www.marketoracle.co.uk

related: The Oil Crash Is Over

Quite a surprise when Gold fell into a bear market in reaction to the Fed’s 2011 QE III – the nearly unlimited money-printing blitz. A historical review tells us when we can expect inflation and another important underlying force that you need to understand….

Inflation?

The most frequently asked question I seem to get, even these days, is: “Larry, don’t you see hyperinflation for the U.S. in the years ahead?”

So let me clarify my position, here and now. There was a time when I expected the U.S. economy would eventually experience hyperinflation.

But when the price of gold failed to react to the Fed’s QE III announcement of virtually unlimited money-printing in September 2011 and the yellow metal entered a bear market, I knew something had radically changed.

So I further researched the known periods of hyperinflation in the world. And I found something that completely changed my view: There has never been a major core economy that has died at the hands of hyperinflation.

There was the Weimar Republic, of course, but it was not a core economy for the world. There are the hyperinflations of Zimbabwe, Brazil, Argentina, Venezuela now and countless other small economies that were never at the core of the global economy.

And upon further study, I found that even the Roman Empire, certainly a core economy during its reign, didn’t even die of hyperinflation.

It died largely because of abuse of power by politicians, which drove citizens away from the Empire; because of rapidly rising taxation, which had the same effect; and because of a corrupt treasury and justice system that tracked down and confiscated citizens’ wealth, largely to fund increased military campaigns, which were hoped to revive the Roman economy. Sound familiar?

Was there high inflation in Rome before it fell? Yes, but nothing of the sort of hyperinflation like we subsequently saw in Weimar Germany or any of the countries I mention above.

So, then, what does the U.S. economy face? Further disinflation, eventual reflation or something else?

My view, and I am not hedging my answer or talking out of both sides of my mouth: We face a combination of further disinflation in the short term, followed by a rather large jump in inflation a few years from now.

How high will inflation eventually go? Hard to say, but I wouldn’t be surprised if, say, three years from now, we see 20% or even 25% inflation for a very brief period of time.

But I highly doubt we will ever see inflation in the thousands or even millions of percent. It’s just not possible in a core economy. For many different reasons.

Whether we have deflation or inflation is also the wrong way to think about the U.S. economy these days. The reason? Ever since we abandoned the gold standard, inflation and deflation have become two sides of the same coin.

In other words, they are both present in the economy at the same time. You can have certain goods and services and even asset classes deflating, while others are inflating. It’s as simple as that.

For instance, the price of LED TVs has crashed in the past year or so, as have the prices of laptop computers and many other goods.

So it’s not a matter of one or the other, it’s a matter of what sector is inflating and why, versus which sectors are deflating and why.

Nevertheless, there’s another important underlying force that you need to understand, another one that resulted from the abolishment of the gold standard.

A certain level of general, system-wide inflation is always baked into the cake. It’s due, again, to the fact that we no longer have a gold standard, but it’s also due to many other forces, such as population growth, limited availability of natural resources, the constant desire for people to improve their lives and more.

This is important to understand, because it’s the chief reason prices will be higher a year from now, five years from now and even 10 years from now … no matter what the U.S. or global economy does.

And it’s also why investing in gold — just after it experiences a short-term disinflationary trend — is an ideal strategy to jump on.

Speaking of gold. It looks good now. But you don’t want to buy it at these levels. Gold’s new bull market is just getting started. Let it prove itself by first pulling back — which it will do, to below $1,200 …

Then back up the truck. Ditto for other precious metals and especially mining shares.

Best wishes,

Larry

related: Billionaire George Soros Cuts U.S. Stocks Position – Buys Barrick Gold

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Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader.

Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.