Stratfor Vice President of Global Analysis Reva Bhalla and Global Energy Analyst Matt Bey discuss highlights of an upcoming series on the geopolitical impact of oil below $90 a barrel.
Gold breaks support
Gold broke support at $1200/$1180 per ounce, signaling another (primary) decline. 13-Week Twiggs Momentum peaks below zero strengthens the signal. The long-term target is $1000*. Recovery above 1200 is unlikely, but would warn of a bear trap.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold – further falls likely
Low interest rates increase demand for gold by lowering the carrying cost. A rising dollar, however, has the opposite effect.
Gold respected resistance at $1250/ounce, confirming the primary down-trend. Another 13-week Twiggs Momentum peak below zero strengthens the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above 1250 is unlikely, but would test the descending trendline around $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, fell sharply since breaching long-term support at 190. Declining 13-week Twiggs Momentum (below zero) signals a strong primary decline. Bearish for gold.
The price of gold adjusted for inflation (gold/CPI) remains relatively high and further falls are likely.
Solar Struggles To Compete With Other Renewables On Cost
Andy Tully discusses a study by Ecofys, a renewable energy consultancy based in Utrecht, Netherlands:
…..The Ecofys study concludes that new coal and natural gas plants in the EU, running at maximum capacity, have levelized costs of just over $64 in 2012 dollars per megawatt-hour. Onshore wind costs about $102 per megawatt-hour.
On the higher end, the Ecofys says, nuclear power costs about $115 per megawatt-hour and solar photovoltaic systems cost about $127. At the low end, the cost of hydroelectric power costs about $12.
Read more at Solar Struggles To Compete With Other Renewables On Cost.
Alleged Oil Shock Isn’t All That Shocking
Keith Johnson discusses the impact of crude oil at $80 per barrel:
….Cheaper oil prices means lower prices at the pump and for everything that is ever shipped, from food to flip-flops. The recent fall equates to a massive, unplanned stimulus package for the world’s shoppers. Citigroup, for instance, figures that cheaper prices amount to a $1.1 trillion global shot in the arm.
Read more at Note to World: Alleged Oil Shock Isn't All That Shocking.
Crude oil threatens support
Brent crude [pink] has already broken long-term support at $90/barrel and Nymex Light Crude [blue] is testing similar support at $78 to $80/barrel. Breach would confirm a primary down-trend and a long-term target of $50*.
* Target calculation: 80 – ( 110 – 80 ) = 50
Gold Bugs and Silver warn of further weakness
Low interest rates strengthen demand for gold as they reduce the carrying cost. A rising dollar, however, would reduce demand.
Gold encountered stubborn resistance at $1250/ounce. Respect would confirm the primary down-trend. Another 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above $1250 is unlikely, but would test the descending trendline around $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, broke long-term support at 190, signaling another primary decline. Gold is likely to follow.
Silver failed to rally in concert with gold, instead consolidating in a narrow range which suggests further weakness. Another bearish sign for gold.
Crude targets $75
Nymex Light Crude is headed for a test of major support at the 2011 low of $75/barrel after breaking support at $92/barrel. 13-Week Twiggs Momentum (below zero) already signals a down-trend. Brent Crude has also broken primary support, but is maintaining a premium of $5 to $10 per barrel.
* Target calculation: 92 – ( 110 – 92 ) = 74
Bears eye gold
Gold is testing resistance at $1250/ounce after a two-week retracement. 13-Week Twiggs Momentum (below zero) continues to indicate a primary down-trend. Respect of resistance at $1250 would confirm this. And breach of primary support at $1180 would offer a long-term target of $1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Silver has already broken long-term support, signaling another primary decline. Gold is likely to follow.
Gold Bugs Index, representing un-hedged gold stocks, is also testing long-term support (at 190). Breach of support would strengthen the bear signal for gold.
Gold finds support
Gold rallied off support at $1180 and is likely to test $1250/ounce. But the primary trend, as indicated by 13-week Twiggs Momentum (below zero), remains down. Respect of resistance at $1250 would confirm this. Breach of primary support at $1180 would offer a long-term target of $1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Silver is also in a primary down-trend, retracing to test the new resistance level at $18.50/$19.00 per ounce. Respect would confirm the target of $15.50/ounce*.
* Target calculation: 18.5 – ( 21.5 – 18.5 ) = 15.5