Peter Schiff: A Gallon of Gas Costs a Dime, Jim Rogers on Commodities

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Peter Schiff: A Gallon of Gas Costs a Dime, Jim Rogers on Commodities

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Peter Schiff on CNBC Fast Money 4_25_11

Reminds me of the saying you can always buy a good Suit with an ounce of Gold.

Of course my Custom Suits cost way more than an ounce of Gold, but I get it.

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Jim Rogers breaks down commodities from an old interview.

Jim Rogers : Missing out on Commodities?

Matthew Bradbard’s daily commodity round up:

Brace for the Fed as we expect it to be a market mover. Indecision in the oil market as prices close virtually unchanged today. If we fail to make a new contract high in the next few sessions we should resume the set back we’ve been forecasting, in June that would be a trade over $114.05. A settlement below the 20 day MA should confirm a move lower but before either scenario happens we’re just guessing, that level is $108.90 in June WTI. We suggest the sidelines in natural gas willing to be a seller on a spike higher. We cut losses for clients that still held bear put spreads in the June ES; it resulted in a loss of approximately $400/per position including fees.

Continue Reading about other Commodities

Update, just in:

Record low gas prices, IMF on China & U.S.

Click Here for Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market by Jim Rogers

The Rest is Up to You…

Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life

http://www.thegmanifesto.com

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8 Comments on "Peter Schiff: A Gallon of Gas Costs a Dime, Jim Rogers on Commodities"

  1. The G Manifesto
    Adventure21c
    26/04/2011 at 7:05 am Permalink

    What the fuck, The G Manifesto.

    “Peter Schiff: A Gallon of Gas Costs a Dime”.

    I can’t stand those “investors” working out everything in their heads.

    That is such a misleading statement to draw in the readers/audience. This is why I think the media is a bunk. Every time I watch news, I get the feeling it’s 100% crap, the McDonald’s evil sibling in journalism. I usually don’t watch, and I’m sorry I’ve made an exception this time–again, the same BS.

    Totally f’ed up and irrelevant way to measure it. How should a silver minted dime in 1965 have any real economic meaning now?

    Here’s how you really measure the current value of gasoline.

    I remember that back in 1995, a gallon of gasoline cost $1.00. Now, the U.S. GDP per capita in 1995 was $27,638 in today’s dollars (inflation adjusted, etc.)

    In April 2011, the average price of a gallon of gasoline in the U.S. is $4.00 where as the U.S. GDP per capita is $47,284.

    This means that while the income of an average American hasn’t even doubled, the price of gasoline jumped 400%. The price of gasoline definitely went up faster than income gain for the American average Joe and Jane.

    The real supply constraints are there, gasoline IS NOT as cheap as it has ever been. China isn’t the only culprit, as the petro consumption all over the world went up, due to the developing economies. And even more supply constraints are coming, unless there’s some breakthrough energy technologies.

    Now, as a punishment to having good time and earning money out of talking nonsense and downright lie, we should sentence those baloney talking investors into getting doctoral degrees in petro chemistry and alternative energy technologies, and have them couped up in laboratories 16 hours a day, 7 days a week, for 10 years to develop the post fossil-petroleum energy technology. That’ll set their head straight.

    Too many bad things happen when you hand over economy to the number crunchers.

    Now, hand it over to the real men for the job. This is the perfect time to do so.

  2. The G Manifesto
    PPIII
    28/04/2011 at 6:36 am Permalink

    @adventure21c
    Thanks for your insightful post, more power to you.

  3. The G Manifesto
    x
    28/04/2011 at 11:37 am Permalink

    @adventure21c

    You missed the entire point.

    Schiff is saying that our money (USD) has dramatically lost its value. He mentioned 1950’s dimes because they have substantial silver in them… valued now at $4.00. Gas is not more expensive than before, everything is more expensive due to our dollars weaker buying power…gas is just more noticeable because the price is observable the several times a week we buy it.

    The FED’s printing of money, err should I say quantitative easing, has made our dollar lose its value drastically. Gold and silver have performed so well because they are REAL currency.

  4. The G Manifesto
    Adventure21c
    28/04/2011 at 6:35 pm Permalink

    @x

    “You missed the entire point.”

    My reply is that you missed the entire real point.

    Schiff’s comment was simply absurd on numerous grounds. Yes, the USD has lost its value, and yes, the price of silver went up to the point of a dime manufactured in the 1950’s matching the current price of one gallon of gasoline.

    So?

    Who really cares about an investor pointing out that the value of silver have gone up? Other investors who wants to bank on that opportunity. That kind of comment of Schiff’s DO NOT help whatsoever the economic predicaments of everyday people but it’s sure to help investors. How is it supposed to be laughable when the majority of population are feeling the squeeze?

    “Gas is not more expensive than before”: How do you even come up with this kind of statement? Do a research on “inflation adjusted gasoline price,” and future oil demands, especially from China. Do research on inflation on commodities. I’m not sure what the hell goes on in the head of these inflation deniers, maybe they don’t want an angry mob, or they’re probably clever enough to know it’s better for them to deny it than admit it.

    Investors are not the sort that put up the work to improve the system, but rather, they’re a sort that game the system. Sure, it benefits, them, but not the people who are getting the worse end of the economic drama.

    Are the investors going to solve the upcoming petro crunch when China starts consuming more and more petro? If I had a silver dime minted in the 50’s, I’d bet that on ‘no’.

    Are the investors going to solve the stratospheric US debt problem and the USD losing its world’s reserve currency status? Chances are, no.

    Are the investors going to solve the runaway global inflation problem that’s bound to come when China starts consuming ever more resources and its working population dwindles due to the aging Chinese population? My bet is no.

    Are the investors going to solve the economic slowdown and distant recovery prospect due to the increasing energy prices to come? Probably, no.

    The fact is, investors live to exploit such situations, not help to improve the situation. Believe me, the investors couldn’t care less whether the U.S. economy and its currency tanks or not because they can and will benefit either way.

    “Gold and silver have performed so well because they are REAL currency.”

    And what the hell do you mean by the REAL currency? Gold and silver have been performing high because when the USD even further loses its value, they’ll retain their value as commodity, still tradable with retained value even when the USD wouldn’t be or have even lesser value. Gold and silver are simply one exit out of the USD, or a value reserve, and that’s what the investors have been doing: exiting on the USD. Heck, if a commodity can be a currency, and it actually is, even petroleum can be a REAL currency.

    Investors like Schiff dispense those kind of information for one reason and one reason only: to benefit themselves and other investors.

    Yeah, that’s real heroic, the typical obnoxious investor’s way of thinking.

    Let’s consider everyone involved and their predicaments, shall we? The other 95% of the population, eh? THAT IS THE ENTIRE POINT.

  5. The G Manifesto
    Rayn
    30/04/2011 at 12:18 pm Permalink

    @Adventure21c -good counter viewpoint. both posts. -After the financial sector has had their way it will be the engineers who will have to put the country back together.

  6. The G Manifesto
    x
    04/05/2011 at 7:43 pm Permalink

    I promised I was not going to answer because I hate reading cringe worthy replies, but…

    In the last decade, the Federal Reserve has engaged in almost-unprecedented easy monetary policies. The broadest measure of the money supply is called M3. According to estimates at Shadowstats.com, until the financial collapse of 2008, M3 was continuously increasing at a rate anywhere from 5 to 15 percent annually. This money creation by the Federal Reserve led to the unsustainable boom of the Bush years and the economic meltdown that we have experienced in the last three years.

    In addition, this rapid monetary expansion led to the decline of the dollar in currency markets. The value of the dollar peaked in the summer of 2001. From June 2001 to the end of March 2011, the dollar depreciated 40 percent relative to the euro, from €1.18/$1 to €.704/$1. During this period, the US spot price of oil increased 348 percent in terms of dollars (from $23.38 to $104.64 per barrel). But in terms of euros, those same oil prices only increased 167 percent (from €27.59 to €73.67 euros per barrel). If the dollar had held steady relative to the euro at the exchange rate of 1.18 euros per dollar, then the US spot price for oil at the end of March would have been $62.42 per barrel.

    Consider the impact that this has had on gasoline prices. To make the calculations easy, let’s say that the current price of gasoline is $4 per gallon. Oil costs are 68 percent of the price of gasoline. That means that oil costs make up $2.72 of the $4 gasoline price. The dollar’s depreciation relative to the euro in the last decade was 40 percent; and 40 percent of $2.72 is $1.09.

    Therefore, if the dollar had held steady with the euro, we would be paying roughly $2.91 for a gallon of gasoline that now costs us $4. Gasoline prices would be 27 percent lower today if the dollar had held its value relative to the euro over the last decade. It’s true that there is little the Federal Reserve can do to bring oil and gasoline prices down. Federal Reserve policies have already weakened the dollar leading to higher oil prices, and this damage cannot be undone. However, over a long period of time, the Federal Reserve has had a major impact on energy prices. And things are going to get worse. Due to the Federal Reserve’s bank bailouts and quantitative-easing policies, we should anticipate much higher gasoline prices.

    The chairman of the Federal Reserve, like yourself, blame supply disruptions and the growing economies of the world. We see this all the time. Elected officials and other agents of the state never accept any blame for the destruction created by their policies. Others are always at fault. In this case, however, we can clearly see that the Federal Reserve bears much of the responsibility for the economic damage of high gasoline prices. We can add high oil and gasoline prices to our long list of reasons why we should end the Fed and return to backed currency.

  7. The G Manifesto
    Adventure21c
    06/05/2011 at 4:28 am Permalink

    @x

    I’m rather speechless. Apparently, all the expounding in the second post didn’t do anything in getting my point across.

    “Gas is not more expensive than before”: I’m not sure how a comment like this can be backed up in anyway.

    Ironically, your calculation enforces the fact that the price of gasoline went up. Gasoline is definitely not as cheap as it has ever been (as Schiff said), and a comment like “A Gallon of Gas Costs a Dime” by a career investor does not help the situation whatsoever. Yeah, anybody can dig into the reason, doing some neat numerical calculations, but none of that helps to improve the situation. The original comment was about that.

    Now, since you’re so adamant on bringing the Fed into the discussion, I’ll comment on it.

    I’m not sure why you’re so hung up on the Federal Reserve. Nor do I care.

    “our long list of reasons why we should end the Fed and return to backed currency.”

    Maybe you’re so against the Fed, you’re simply too distracted to see my original point.

    For the record, I agree that Fed’s quantitative easing over the years lowered the value of the USD–anybody would. I’m not a fan of the Fed either. But the Fed had nothing to do with my original post, nor in the subsequent post.

    “A Gallon of Gas Costs a Dime”.

    Now, my original comment was simply about that. The price of gasoline clearly went up, it’s more expensive in respect to the income gain, the average Americans have less buying power on gasoline, and a comment like that by an investor simply do not have any meaning to the average Americans, nor does it help. The original comment was about inventors: that they would rather benefit from the situation than working on to improving the situation.

    “I promised I was not going to answer because I hate reading cringe worthy replies, but…”

    If you’re so up there mighty high to see what others are really saying, then you shouldn’t have started off with someone else’s opinion, trying to ‘correct’ someone else’s view. Simply saying your own anti-Fed point of view would’ve been perfectly suitable.

    Please, do spare me from your anti-Fed agenda. Also spare me from your commodity supply constraint denial unless you can back it up with clear and trustworthy data.

    Now, I’m not even go into a plethora of other issues such as the following since I have a good suspicion that all of that would be too much for you.
    -Longer term outlook on petroleum and the peak oil.
    -The commodity speculations by investors driving up the prices.
    -What the developing economies’ ever increasing resource consumption means for the global economy for years to come.
    -America’s diminishing economic power due to the debt and the losses of economic bases.
    -Why a national currency doesn’t have to be nor needed to backed up to an arbitrary commodity like gold in spite of the advantages such as currency stability.
    -Aging populations in developed economies, and population explosion in developing corners of the world such as Middle East and Africa.
    -Inflation, the difficult choices in monetary decisions, the lack of panacea and magic bullet in any economic situation.

    It’s quite amusing to me that how simply ending the Fed and returning to backed currency would totally eliminate the commodity supply constraints. Hmmm, what a thought. The Earth must have an unlimited amount of resources to provide, and it’s all just a currency problem. Unlimited farming land, unlimited precious metals, unlimited petroleum, unlimited human labor, and so on.

    The Fed isn’t a stellar institution, in my opinion, but to bring that down you’ll probably need a heck a lot stronger arguments and works, and you can safely ignore me in pitching that idea. After all, it’s quite outside of my capability to abolish the Fed. I’m someone who’s as irrelevant as it can be in that regard.

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