No sign Saudi Arabia will ride to oil market rescue
Low oil prices have pushed top exporter Saudi Arabia to hasten difficult economic reforms and cut spending on popular benefits, but it has few options beyond sticking with a strategy to defend its market share - no matter how low prices sink.
A return of Iranian crude to the market after sanctions were lifted may now plunge prices to new lows after a 19-month drop of 76 percent that caused Riyadh's $54 billion fiscal surplus in 2013 to swing to a $98 billion deficit last year.
It has led them to what, in the oil world at least, is an epochal change in policy, abandoning their position as a so-called swing producer that would raise or lower output as required to balance the market, and instead defend market share.
DYI Comments: The time is now to dollar cost average into your favorite oil/gas/service mutual fund. DYI's favorite is the chart above which is Vanguard's Energy Fund. Most energy funds are down about 50% from their peak. The time to buy bargains is when prices are way down. Only dollar cost average at this point in time as the world economy along with the U.S. could very easily go into recession driving prices even lower.
If prices on West Texas Intermediate becomes a teenager then lump summing with my favorite closed end fund Adams Natural Resource Fund symbol PEO.
Don't forget precious metals mining companies share prices have been decimated down 70% to 80%. This industry will recover through mine closings along with mergers and buyouts bringing these companies back to profitability. The worlds central banks have printed money on a vast scale setting the seeds for inflation in the 2020's pushing up all metal prices. This is an amazing time to build a position at incredibly low prices. Speculators on the long side will hate this time but the real long term value player has an opportunity to build a position at prices that have been decimated.
The above chart is Vanguard's Precious Metals and Mining Fund symbol VGPMX.
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 1/1/16
HAPPY HUNTING
DYI
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