Elliott Wave 5.0 "Reboot"

Monday, January 11, 2016

Crude Oil Monthly Chart Review Fueling The $20 Price Forecast Mania

Everybody is jumping on the crude oil bearish bandwagon again, as it crossed to new lows. Don't you just wish that  Morgan Stanley would have forecast $20 in early 2008. Many contrarians saw the oil crash coming in 2008 and Steven Jon Kaplan was one of them.  I figured it would drop to between $75-$50 but crude oil smashed right through those numbers until it settled around $34, at the bottom in late 2008, early 2009. This price crash produced the fundamentals that took analysts years to see. 

In their great vision they still see a $20 oil price.  As oil crossed to new lows with gold about the same this forced the gold/ratio spread apart again as it it hit well over 34.83:1 this morning.  This is already the most extreme I have ever calculated by a wide margin. 

What do you think is going to happen to this gold/oil ratio if oil crashes to $20? This ratio would swing to a stunning 55:1 ratio.   Some say that they can forecast gold by using oil as money, but all other currencies be it cigarettes, sea shells or fur pelts, have never lasted as long as gold has. 
Or if you really want a potential gold price as well, then we are looking at $300 gold with a normal ratio. 

At this point anything is possible, but oil is making a much better looking "ABC" type crash than it ever has and that is a good sign for the longer term. 

They can regurgitate all the fundamentals they want as they are all lagging indicators at best.  If these experts can "see" $20 oil, then why are they "blind" to any bull market that is sure to follow. 

I guess they will never "see" $100 or $115 oil until it reaches $99.99! :)  For oil to go so dead for so long as they say, oil would have to flat line with no heartbeat. This has never happened in any of the charts I have looked at.