>Oil rich sheikhs buying GOLD?

Oil-rich Sheikhs in the Middle East are scared. How do I know?

Because they are buying gold like crazy!

First, we got the news that Saudi investors spent $3.47 BILLION on gold in a recent two-week period. On a ratio-to-GDP basis, that's like investors in the U.S. spending $131 BILLION.

Why are they doing this? The only explanation I've heard is that the Saudis are turning to gold as a safe haven in the midst of the global financial crisis. And since the financial crisis kicked into high gear in August ... something must be scaring them quite a bit more right now.
Second, Reuters reports that Iran is converting some of its foreign currency reserves to gold. Iran has $120 billion in foreign currency reserves ... there's no details on just how much was shoveled into the yellow metal.

Third, gold dealers in Dubai reported running low on gold during the recent Indian holiday, the Festival of Lights, a traditional time for Indians to buy gold. More than 50% of the population of Dubai originally comes from India. And about 20% of the world's gold is traded in Dubai.

The world is in the grip of economic hard times — over 40 countries are officially in a recession. Japan just joined that unhappy club. And the euro-zone nations are already there.


The oil producers are used to a world where U.S. oil imports always go up. But that world has been turned on its head. In September, crude oil imports dropped to 8.4 million barrels per day, down a whopping 16.5% from the average of 10.1 million barrels registered a year earlier.
U.S. crude oil tumbles.

This is helping the U.S. trade deficit, but for all the wrong reasons. The way to get lower oil prices is through conservation. Now though, Americans are being forced to conserve by economic hardship.

And since the U.S. uses one-fourth of the world's oil, our falling imports are a major driver of cratering oil prices ...

There is strong support for oil at $50. But you know that the Saudis, Iranians, Venezuelans and other OPEC heavyweights made their budget plans based on much higher prices. And cheap oil means the only way they can make up revenue is by pumping more oil ... which should weigh on prices even more.

Looking forward, it gets worse for the oil producers ...

Just last week, the Energy Information Agency projected that OPEC could earn $595 billion in 2009. That's way, way down from projections of $979 billion of net oil export revenues in 2008, and even lower than the $671 billion it earned in 2007.

Saudi Arabia earns 29% of OPEC's total revenues. If their revenues go back to 2006 levels, what will that do to the political situation in a country that is already sitting on a fundamentalist Islamic powder keg?

Yeah, that might be a really good reason for the Saudi fat-cats to buy gold

whether this step reap gains or backfires remains to be seen.

RESEARCH REPORTS

>OIL Producers( HUNTER getting HUNTED)!!!

Together they form an “Axis of Diesel”. Buoyed by petrodollars, Russia, Iran and Venezuela hectored the West as they extended their reach abroad, backing separatists in Georgia, Islamists in the Middle East and Leftists around the world.

Now those oil-producing powers may be forced to draw in their horns as crude prices tumble. They face austerity budgets that could force them to scale back their military spending and foreign assistance even as falling oil prices fuel domestic dissent.

“All countries heavily dependent on petroleum revenue are nervously watching oil prices as they drop not just far, but quickly,” said Jonathan Elkind, a senior Fellow at the Brookings Institution in Washington.

“That price adjustment is raising questions in all these capitals about the suitability of the economic model that has been making them feel so full of themselves in the recent period.

“It would be a serious mistake for people in the United States or other net consumers to feel a sense of the satisfaction that ‘Happy days are here again',” he said. “They're not.”

Leaders in Tehran, Moscow and Caracas have gloated as the financial crisis has hobbled the United States and its Western allies. Analysts say that the three swaggering petro-states are the most vulnerable oil producers to the steep price declines. From a record high of $147 (£85) a barrel in July, crude oil is now trading at around $70 after dipping to its lowest level since August 2007.

Deutsche Bank estimated in a recent research note that Iran and Venezuela need an oil price of more than $95 a barrel to balance their budgets, and Russia requires a price of $75. That compares to a break-even figure of $55 for Saudi Arabia.

Iran and Venezuela have led so-called oil hawks in recent days to push the producer cartel Opec to bring forward an emergency meeting to next Friday, from mid-November, to discuss cutting output quotas to drive up the price. While Russia has prudently salted away much of its oil windfall in “rainy day” funds, Iran and Venezuela are much worse prepared for the downturn, Mr Elkind said.

The tumbling oil prices are grim news for President Ahmadinejad of Iran as he prepares to fight for re-election next June. The populist son of a blacksmith won a landslide election victory three years ago by pledging to give the poor a fairer share of Iran's oil wealth. Now the economy is his Achilles' heel. His profligate spending of petrodollars from record oil revenues has stoked inflation, which topped 29 per cent last month, compared with 12 per cent when he took power.

Bazaar merchants - a potent middle-class force - went on strike last week for the first time since the run-up to the country's Islamic revolution, forcing Mr Ahmadinejad to scrap plans to impose 3 per cent VAT to help to replenish Iran's coffers.

Iranian reformers are urging the headstrong Mr Ahmadinejad to prepare for lower oil revenues by slashing subsidies on commodities such as sugar, cooking oil and wheat. Instead, with an eye on the elections, he continues to tour the provinces, attempting to buy rural support by dispensing largesse in cash and loans.

In Venezuela the Government has unveiled an austerity budget. Just as in Iran, however, Mr Chávez maintains his populist social spending ahead of municipal and state elections. Economic analysts predict that the Government will be forced to raise taxes and devalue the currency.

First affected may be Venezuela's foreign allies. The country's energy aid to friendly nations, which has bought it influence across the continent, is likely to be reined in. Its generous credit programme for Caribbean partners in the PetroCaribe energy accord has been reduced from 50 to 40 per cent.

Defence spending may also be hit. Venezuela has bought about $4.4 billion-worth of Russian military equipment since 2005. Last month it got a $1 billion Russian loan for more purchases - the first time it has sought financing for arms deals with Moscow.

Russia is best positioned for the crisis, having built up the world's third-largest foreign currency reserves before the crisis, at $580 billion. As its stock market plunged it has been forced to spend more than $32 billion in the past two weeks to prop up the currency and bail out banks. The Kremlin will be forced to plug holes in next year's budget by dipping into the Reserve Fund, a $154 billion repository of windfall oil revenues forecast to grow to $174 billion by 2010, but may now start to shrink instead.

President Medvedev, however, is determined to press on with modernisation of the military and has adopted an increasingly strident tone with the West. He has ordered a renovation of Russia's nuclear deterrent and the creation of new space and missile defence shields by 2020, as well as the “mass production of warships... and multi-purpose submarines”.

Nevertheless, Western diplomats detected signs of a new Russian flexibility during last month's UN General Assembly, when Moscow backed an extension of the Nato mandate in Afghanistan and agreed to a meeting on Iran's nuclear programme.

Frank Verrastro, of the Centre for Strategic and International Studies in Washington, noted that oil prices had only fallen to last year's levels and cautioned that it would take more sustained price falls to trigger long-lasting changes by major oil producers.

“It's premature to say people are radically changing their behaviour,” he said. “I think they will, but not yet.”

Source:-Times Online

RESEARCH REPORTS

>$200 oil: How could have oil experts gotten it so wrong?

Hi Friends,
A nice explanation of greed , fear,optimism and trader psychology,Go through the following Article which explains about the 5 wave structure of OIL with corresponding events unfolding.
Read it and try to recollect what was going through your mind during that phase of oil bull run:).


Three months ago, you couldn't swing a baseball bat in a crowd without hitting someone screaming that the world was running out of oil.

But after reaching a record high of $147 a barrel in July, oil fell as low as $68.57 (on October 16 -- Ed.) – a 50% decline. Before oil slipped below $70, "Goldman Sachs, among those predicting $200 a barrel oil, cut its year-end forecast of oil to $70…" (AP)

How could have "those predicting $200 a barrel oil" gotten it so wrong?

"To be fair, there is always a tendency in parts of the analyst community to look at short-turn trends and assume it’s something that will continue in perpetuity,” commented on the situation an analyst with the International Energy Agency.

Exactly. Isn't projecting short-term trends into infinity the definition of every financial bubble?

Avoiding such predicaments is precisely what Elliott wave analysis helps you accomplish. A study of market psychology, the Wave Principle helps you find psychological extremes in market charts – and then, ideally, forecast a change in trend before it occurs. A priceless advantage, indeed.
Here's how Elliott wave analysis could have helped you navigate around the oil bubble. On June 4, 2008 – still a month before oil's all-time high – Steve Hochberg, editor of Elliott Wave International's Mn-Wd-Fri Short Term Update posted this chart


Later, on August 11, 2008, The Short Term Update wrote:

Oil is down 23% from its July high. [This] chart was published in the June issue of The Elliott Wave Financial Forecast and shows our call for a top. Prices traced out five waves from the December 1998 low and carried to just above the upper line of an unorthodox parallel trend channel. Optimism was at near-record levels and the president of OPEC stated (shortly thereafter) that, “prices won’t come down.” It was a very strong confluence of conditions that indicated a reversal.


Near term, prices have closed lower the past two days, which is interesting in that if there ever was a fundamental “reason” for oil to shoot higher, it is Russia’s invasion of Georgia. I believe that they even shut down a pipeline. When psychology reaches an extreme and the trend turns, all the supposed reasons pundits cited as to why prices were rising matter little. Nearly all were rationalizations to begin with, and the change in psychology exposes their flaws.

And that brings us to today. Here's an update on that oil chart from the June 2008 Elliott Wave Financial Forecast:

Now that oil has dropped 48% from its July peak – into the forecast area of "the previous fourth wave" – we may see market sentiment reach a low extreme. What will that mean for oil going forward?

Regards
Rish

Source :-Elliott wave international