Dear Reader,
I personally believe that oil will bounce back from the current lows. I see 10% to 20% upside potential. Russia/Ukraine, Iraq, Syria, Lybia are just too many black swans to be ignored. It seems that the shale boom in the USA is one of the reasons driving the price of WTI and Brent oil lower, but the geopolitical risk premia could return with a vengeance. A good bet is buying high-beta oil stocks or options on oil majors.
Gold is another story. I think it will break below 1200USD. It closed under the important psychological levels of 1300 and 1250 USD, so I see it going further down from here. I believe it will reach bottom somewhere around 800 USD in 3 to 5 years, if the fundamentals do not change significantly. A good way to play this is to buy long duration puts on gold miners.
Disclaimer: This article is provided solely for informational purposes, and does not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost are the author's and they in no way express the opinion or official position of Bulgarian National Bank!
Conflicts of interest: I may possess some of the securities or currencies mentioned in the blogpost!
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