When it comes to the future of the US economy, it's their energy policy that can make it or break it, explains Byron King
Energy policy and getting it right is a long-running theme in my writing. And if the US does not get energy right, nothing else really matters all that much.
Bad US energy policy will take down everything. You name it. Pick your favorite issue: the economy, health care, Social Security, education, immigration or the environment, without assured supplies of good-quality energy which will not come cheap or fast all of these problems will just get much worse.
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If the US could get energy right, the impact would improve a lot of those other problems. I tend to take a long term view of the investment world, but still I hawk the screens to keep up with critical prices and other indicators. I watch prices for gold, silver, oil and natural gas. I also watch prices for many other commodities, from copper to platinum, and lumber to cotton and look at many different stocks. I'm always trying to make sense of it all. It's not just, "what is the story?" It is, "what is driving the story?" I want to be a few steps ahead of everyone else so I can offer the best advice to you, the reader.
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When it comes to energy policy, the US is a world-class laughing stock
So what have I been seeing lately? Well, the screens have been hopping. Prices for just about every commodity have been gyrating. And I don't need to comment too much on the general stock market. Days of deep losses are followed by some days of spectacular gains. Every day, I open the newspapers or fire up the screen and wonder what new monetary disaster is going to surface. Will the Fed lower rates some more? Yes, indeed. That's what this world needs more cheap money (just kidding).
The rest of the world is watching the US. People in world capitals are asking, "Is the US serious about its energy issues? Or is the US just wasting time? Are its people just collectively flattering themselves with their sense of exceptionalism?" The US is a world-class laughing stock when it comes to its national energy policy.
Maybe when oil prices get to $250 per barrel, the US Congress will finally allow those evil oil companies to park some rigs offshore and drill that oil. But don't hold your breath. If the US started an offshore leasing and drilling program tomorrow morning, it might take 10 years for the first barrel of oil to make landfall. That would be... um... Easter 2018. I know I can't wait.
Even the mattress won't work
When I am not worrying about US energy policy, I look to see which major bank will announce more bad news. Or what big brokerage house is on the verge of failing. (Maybe they shouldn't have paid out all those big bonuses last December.) Or what part of the world's energy supply chain got blown up overnight. You get the picture.
What can you do at a time like this? Well, you can always just sell everything. Liquidate and take the money and stuff it into your mattress. But even going "long cash and mattress" is an investment decision. And eventually, you will probably regret the decision. You will wake up one day and find out that your mattress stash has lost a lot of its purchasing power to inflation. (Thanks, Fed.)
Should you sell just some of your stocks? Or should you buy some shares, even now? And if so, which ones should you sell or buy? Well, no one can predict the future with absolute certainty. But we might be in for a modest correction in some of the run-up we have seen in the prices for gold, silver and oil.
The mainstream media are stuck in the past
So let me offer some last words of advice. I work hard to give you the best ideas I can find. But I cannot control the larger investment climate or the bad energy policy of the US I can just try to make good investments "around" that difficult climate and bad policy. One of the biggest hurdles to the US getting energy policy right is that the mainstream media infotainment circus has not prepared people to connect the dots of what they already know. Think about your own daily observations.
People "see" information that tells them how much oil, for example, is in the hands of the national oil companies of many foreign nations. But the mainstream media (MSM) and a lot of US politicians corporately hate Big Oil so much that they won't inform viewers and readers how little control the name-brand players have anymore.
Really, in a lot of respects, Exxon Mobil, Shell and Chevron are now bit players in oil. The MSM are stuck in the 1970s, in the thought processes of the disco era. The MSM need to lose their polyester leisure suits.
The MSM could help the situation if they emphasised that we live in an era of less oil, higher prices and a lot more competition for the same old stuff. They could point out to viewers and readers that the developing world is... um.... developing. And the US is not. They are just living off the past, drinking from wells they did not dig and running down the energy inheritance.
The world is changing so quickly that a lot of what the media know is quickly becoming obsolescent if not already obsolete. The MSM have just plain missed the energy and resource story. I guess it is over their heads.
By Byron King for The Daily Reckoning
