Why Oil Could Move Higher–Much Higher
Charles Hugh Smith
August 1, 2013
Commodities could rise even as global demand sags.
The conventional wisdom of the moment is that a weakening global economy will push the cost of commodities such as oil down as demand stagnates. This makes perfect sense in terms of physical supply and demand, but this ignores the consequences of financial demand and capital flows.
I wrote this essay for Peak Prosperity about three weeks ago, before the revelations of investment bank speculation in commodities became news. In my view, these revelations only confirm the basic story I describe here, of capital moving from asset bubbles nearing exhaustion to the open territory of commodities. I see this move as secular, i.e. not limited to a handful of big investment banks; they are the lead players in a much broader shift of capital.
On the Nature of Conspiracies
The human mind seeks a narrative explanation of events, a story that makes sense of the swirl of life’s interactions.
The simpler the story, the easier it is to understand. Thus the simple stories are the most attractive to us.
This is one reason behind the explanatory appeal of conspiracies: ‘Event X’ occurred because a secret group planned and executed it.
Power groups may indeed have both the motivation and means to influence or control events. Certainly many price-fixing cases that go to trial uncover just such shadowy groups and conspiracies.
Even the Executive branch of government is, in essence, a series of private meetings in which policy makers craft plans to influence or control a series of events. And so we find the Internet a-buzz these days with rumors of grand designs of Orwellian-style populace control.
But conspiracies and power groups do not always provide comprehensive explanations for what we observe.