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0920 EST Monday March 20 2006

Good Morning: The sobering analysis of Crude Oil's outlook and future on CNN Presents this weekend, underscores what we have been saying here since 2001. That the US has already lost four years and squandered numerous opportunities to bear any burden and pay any price to create "The Manhattan Project" of the 21st Century that can become the World's Next Energy Resource either from Ultra Clean Fuels derived from Coal and an accelerated drive towards Hydrogen Powered Fuel Cell technologies. After all, if they can create showplace Hydrogen Fueling stations for experimental vehicles and mass transportation prototypes in selected locations, what's to stop them from replicating these initially on a more widespread scale, with a view to eventually creating a Worldwide distribution infrastructure en masse.

What has been lacking, is the 'no holds barred' setting of an agenda to be energy independent by a date certain, no matter what the costs.

One nation saw the light 30 years ago and set forth a path towards Energy independence that has rendered Brazil impervious to Worldwide Oil price hikes or supply interruptions, because Brazil is now virtually a self sufficient ethanol based economy, that through the ingenuity of flexible fueled cars, can run on both Gasoline or Ethanol or a combination of both. The advantages Brazil has gained from this strategy are astounding, including deriving some 20% of its Electricity from a bi-product of Sugar production that in of itself is an efficient burning fuel and ridding itself of much of the hydro-carbon based contamination and atmospheric pollution that increasingly plagues the entire World.

While CNN's scenario might have come across as a little extreme, it highlights the tenuously thin line that now constitutes the current and apparently new norm of Oil prices at $60 plus, that have become the premium prices of today's World we've had to accept since Katrina and Rita and the potential for new disruptions that could send Oil prices sky-rocketing and that could be just a few hurricanes during 2006.

The difference this time around is unlike last year, where Oil prices came from lower levels, if oil continues to maintain these highly inflated price levels, then it will be the new record priced base from which future threats and disruptions could impact and so, could see new highs.

On top of all this, as we've stated here on occasion, the hyper-growth going on in China, India and many other emerging economies may have been underestimated such that a 1 or 2 million barrel a day supply demand cushion that exists, could be reversed into a very similar amount of supply deficit that could dramatically impact prices as the World is unable to produce enough oil to satiate the growing demand.

In spite of the temporary alleviation provided by the windfall of Alberta's Tar Sands, with production expected to increase to 3 Million barrels per day over the next 10 years new demand for Oil Worldwide is expect to rise by 20 Million barrels to well over 100 Million barrels per day.

Even if Canada's output and perhaps the new output from Mexico's massive 10 Billion barrel Noxal 1 oilfield just announced, were sufficient to relieve a good part of America's current 21 Million barrel per day demand, the numbers above suggest that the rest of the World could be in deficit and as such, prices could be exponentially higher than where they are today and of course eventually, that would reduce usage and stimulate alternative energy sources rendering them increasingly competitive with Oil. That will be the ultimate denominator that will be the death knell of Oil decades from now, as the prophetic words of Sheik Ahmed Yamani, the Saudi Oil Minister of the 1970's will ring true: That the World will stop using Oil not because it runs out, but because we will have found something better to replace it. Bring it on, soon!

The Oil companies are still thinking like Oil behemoths buying back their stocks, instead of investing wisely in the next generation of fuels that could eventually dwarf the Oil industries of today, as new opportunities we cannot yet imagine are created: They should heed Yamani.


Oil's Impact on Gold (as it too becomes increasingly scarce)

In just the same way as Oil has already gone up 700% adhering to our now more widely known 7 Fold Factor, since highlighting this rather unusual but proven phenomenon here over the past year or so, wherein the same 7 fold increase that drove Gold prices up by that amount twice in one decade during the 1970's we saw as being applicable to the price of Oil since 1999 and so far it has happened almost exactly.

We now very strongly believe that the 7 Fold Formula is about to be re-applied to the Gold market as it is currently lagging the Oil market and inflation in general, considerably. The difference this time around is: Just as the World is already running out of Oil, it's really and truly running out of not only Gold itself but Silver, Copper and a host of other resources that are creating an increasing tight supply demand gap.

The price of Gold and these other resources today, do not yet reflect the kind of urgency that has already been built into the price of Oil, but it will, as more investors begin to realize the real implications of this and how big money could lead to speculation and profiteering on an unprecedented scale that could make the Hunt brothers attempts to corner the Silver market in 1980 look like a dress rehearsal. That is why we are mega-bullish on Gold long term, believing that $600 to $750 may be reached within a year and as high as $1785 by 2009 ~ 10.
Although it is hard to imagine the impact of such high prices on Gold mining companies, we believe it will be truly staggering as the largest bull market ever will render many Gold mining companies become spectacularly profitable leading to numerous Gold issues at $100 plus...

The raising of the US Debt ceiling to 9 Trillion Dollars last week, was probably a catalyst for the weakening Dollar that dominated the week and actually may have helped stock prices, Gold, Silver and Copper all rise and Oil too. For a long time, many analysts and soothsayers have been saying the US cannot keep going on this path towards some kind of financial melt-down with devastating consequences that we believe in due time could be dramatically manifested by way of a sharply weakening US Dollar and we have put some numbers out we truly think will be reached over the coming years, beginning with 75 on the US Dollar Index from its recent highs of 92 and beyond that we're not ruling out the low 60's, 50's and even at a stretch 45... Which we think could be reached in 2009, coincidentally with CNN's Oil doomsday.


Equities Set Numerous Multi-year and New All Time Record Highs

Last week was not only a record week in many respects for so many US Indices, but around the World, many markets soared to new multi-year highs including the UK's FT Index, with its former colonies India and Australia setting new all time records in the process: First, the Bombay Sensex hitting 10,951.38 and Australia surpassing 5,000 for the first time ever this week: A market we see on track for 10,000 before this decade's end especially if resources keep performing the way we expect as outlined above. Australia will emulate the 90's Dow.

Trade Well
From the Desk of Savant

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