Earlier on, I visited the website of Powder River Petroleum to find out more updates about their lawsuit by Oilpods.
Powder River has already been placed into receivership for a host of charges brought against them - these includes operating a ponzi scheme and cheating thousands of Asian investors.
(Update: Powder River will be contesting those charges.)
The receiver has uploaded
at the Powder River website quite a fair bit of information on what is happening
.
However, the links don’t seem to be coded correctly. I managed to find the correct links to download the documents. Here they are for easy access:
Some pointers (and views of Marc) from this short Marc Faber interview.
What’s your outlook from here?The cyclicals, energy and the material stocks, like steel and iron ore companies will come under pressure. The downside in banks is running out. There are other sectors that are more vulnerable.
What would you be buying?
We should be asking what are the sectors to be sold. He doesn’t see value in equities, commodities and real estate.
Are you saying we should be in cash?
Cash is not good as it is losing its purchasing power due to the “money printing” policy of the Fed.
On the surge in oil prices
He is not sure whether oil at US$140 is justified. There will be corrections along the way, but if the supply of money is being increased, the price will go up if supply is constant. The big upside is gone. Be careful about blindly buying commodities.
On the one investment if he had to make a pick
There was no commitment from Marc. His reply was that he would go for a holiday.
Last week, investors with OilPods would have received a letter from the CEO of OilPods, Mr Mark Chang.
Oilpods markets (oil and gas) working interest in the US, with the oil and gas lease operated by Powder River Petroleum International, formerly known as Powder River Basin Gas Corp and traded on the OTC Bulletin Board.
Investors of those working interest receive monthly payouts based on their share of the revenue generated from the sale of the oil and gas produced.
In general, the price of gold and oil have a positive correlation.
When oil prices rise,there is an upward pressure on inflation. This enhances the use of gold as an inflation hedge.
Historially, oil purchases were made with gold.
One way of identifying trading opportunities is to use the gold-oil ratio. This can be calculated using this formula:
Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)
In the last 30 years, this ratio has traded between 8 and 30. Here are a few charts:
The present gold-oil ratio is less than 9. If prices revert to the mean, that means we will have to see a pullback in the price of oil or rise in the price of gold.
