Eric Sprott Was Right —Oil Slump Says ‘No’ to Recovery Story

Friday, February 27, 2015
By Paul Martin

By Henry Bonner
Friday, 27 February 2015

Gas prices are some of the highest in the country in San Diego, California, and it still cost me only $2.96 a gallon to fill up my tank last week.

There’s an excess of oil supplies, according to analysts. You can see from the chart below that global oil production has been rising steadily over the last three years.

In our new report, we make the case that the oil decline is not merely a supply issue.

Oil is cheap, but so are copper, uranium, iron ore – all the materials that are used in a growing economy. Increased production of goods and services tends to stimulate consumption of these raw materials.

This recovery isn’t causing an uptick in demand for these metals and energy sources. Hence, copper is near a four-and-a-half year low of $2.661 per pound. Uranium is at $39 per pound, down from $652 per pound in 2011. Iron ore for delivery in 2015 trades below $60 per tonne, down from over $180 per tonne in 2011.3

Instead, we are seeing an uptick in the demand for US stocks, bonds, real-estate, and other assets whose values have been rising.

US stocks have soared by around 100% since early 2011. Corporate buybacks and debt issuances have surged too. US corporations are piling on new debt and buying back their shares. In 2014, S&P 500 companies are estimated to have spent 95% of profits on buy-backs and investor payouts.4

The Rest…HERE

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