With respect to oil, it seems like the large traditional players like OPEC and the multinational oil companies wouldn’t mind prices to go lower to flush out the more levered upstart shale players. The debt of the shale players have significantly widened in some cases in excess of 500 basis points from the start of the year.
It is believed that oil prices around these levels and lower will bring consolidation as weaker hands get bought out by the established players. Fracking is here to stay but perhaps the ownership gets shuffled around.
Source: Bloomberg LP
This article was written by Treesdale Partners, portfolio manager of the AdvisorShares Gartman Gold/Euro ETF (GEUR), AdvisorShares Gartman Gold/British Pound ETF (GGBP), AdvisorShares Gartman Gold/Yen ETF (GYEN) and AdvisorShares International Gold ETF (GLDE).