This trend is dead. Stick a fork in it. It can still grow, but I do not believe that it can grow at the 13.8% pace it once grew at. If nothing else, there will never come a time when 100% of our wages are used to buy imported Chinese goods. This seemingly stable exponential trend was therefore guaranteed to fail at some point. I strongly believe that it happened a few years ago.
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If the oil story is dependent on the China story, which I am fairly sure it is, and the China story sits on a shaky foundation (for a variety of reasons), which I am fairly sure it does, then betting on rising oil prices from here would seem to be quite risky.
Also keep in mind that the long-term trend for Saudi Arabia has been pulled higher by one confirmed bubble. That bubble is therefore distorting the true picture. If we are experiencing an echo bubble (which is not confirmed) then that would be adding additional distortions. In other words, what would the long-term trend look like *if* the confirmed bubble and the potential echo bubble were removed?
That's a big if of course. It might not be an echo bubble. Is there any additional evidence? I think there is. You decide.
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Look how expensive oil has become relative to natural gas. It's gone parabolic. Can it continue? Maybe. Can it continue forever? Probably not. When will it experience an exponential trend failure? You tell me and we'll both know. As a side note, this era seems to have an exponential trend of exponential trend failures. I can barely keep up, lol.
The more commodities rise toward the heavens, the more skepticism emerges from anyone who distrusts the look of parabolic graphs.
This is not investment advice. If was investment advice I wouldn't even know what to tell you. I have never shorted an asset. Oil is a particularly dangerous place to start. We do need it and as they say, "@#$% happens." I prefer instead to find assets that I would prefer to own. So what would I choose now? Toilet paper still seems safe. If nothing else, it is particularly good at cleaning up @#$%.
On that note, Happy Easter! :)
This post inspired by Troy who compared the growth in our trade deficit with China to the growth in our GDP.
I am not a financial advisor. I am not offering investment advice. Although I have attempted to provide accurate information, that's all it is, an attempt. Please do not trust the opinions, numbers, and/or charts of a random anonymous blogger on the Internet. Make your own opinions. Make your own charts. Do your own due diligence. Thank you.