I am sure most of you follow the oil and other commodities. Notice the 50% reduction of oil prices and the publicity @ companies cutting capex budgets for exploration and development of new resources? Notice others are even going as far as to cap wells? DO you think companies will pull oil/gas out of the ground when the margins will be minumium in light of many of these companies holding tons of cash? Any of you believe that there is a global supply/demand problem longer term? Any of you believe that other countries wouldn't use oil as a politicial weapon against the US?

The demand destruction is being tested as we sit. Money moving into oil will be seen as inflationary and moving out is seen as deflationary. Oil is a vital part of our everyday life and is a necessity. Any of you stop buying gas for you car or heating your home or business? Gold is a commodity of value, but it is not needed as an essential part of everyday function. For this reason, I have to belive that the rebound in commodities, barring a financial meltdown, will be led by oil. It was the leader the last couple of years and I see no reason why it will not now. I am concerned when I answer the questions above on either gold, silver, or oil. The answers for me lead to what could become explosive rallies that will create fear and panic. It will not be what we have seen in the past. We have seen snapshots of this recently with a $20/day oil move up and a $100/day Gold move up.

I am watching oil closely. Many of the top producers are performing better than the top gold producers at this point. Oil may have found a bottom at 65-70. If we see rallies in oil and oil equities, inflation is heading up and gold will follow.

GL,

Silvernut