As you can see back in 1998 when oil traded at $10 a barrel it was barely 6% of the index where it trended sideways for some time. Again, in 2008 a similar pattern developed. No single indicator is perfect, but we can tell you both times when it made up almost three times the percentage of the index from where it is today, hardly anyone thought much about selling.The opposite pattern holds true for the low percentages of the index. We don't know how low it can go and neither does anyone else. No doubt you'll hear many warnings about value traps; they do exist. We don't deny that.
Around that time we attended a conference where television guru Lawrence Kudlow was all puffed up about the low energy and gold prices, indirectly pointing out gold was dead in its mine shaft. Gold was a little above $200 an ounce at the time. In late 2002 gold started on its nearly 15-year bull market run. At the beginning of this century oil was an MSM value trap. So was gold.
May the force be with you is a popular saying these days. That should be abstract enough not to offend anyone's beliefs or disbeliefs. Some of us were fortunate enough at the time to get trapped in the profit value of the two. Believe us it was difficult to enjoy with MSM lined up so solidly on the other side of that trade for all those years. But as they say: If it doesn't kill you, it makes you stronger.
Some people will tell you it was the market forces that topped gold out. Others harbor a different tale. High gold prices typically translate into failing confidence in fiat paper. Everybody needs an easy, available villain. For the climate change crowd it's energy, human or otherwise. For central bankers it's any and all threats to their printing presses.
Time will have its own tale about those printing presses.
cnbc.com/applications/cnbc.com/resources/files/2015/12/16/
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