This Just Hit Multi-Decade Highs But Here Is The Big Surprise

This just hit multi-decade highs but here is the big surprise.

August 18 (King World News) – A portion of today’s report from the always brilliant Jesse Colombo:  The chart below adjusts the price of oil for the U.S. Consumer Price Index (CPI). It shows that the average real price of oil over the past four decades was roughly $77 in 2026 dollars, while the 2008 peak reached $223 and the 2022 peak reached $151.

That puts today’s price of just $84.35 into perspective, as it is only slightly above the long-term inflation-adjusted average and shows just how much room oil has to surge in the event of a serious escalation in the war and/or during the energy supercycle ahead.

Adjusting prices for inflation using the CPI is standard practice in the world of economics and finance, but there is good reason to believe that the CPI understates the true rate of inflation. For that reason, I prefer to adjust prices using the U.S. M2 money supply, which I find to be a more accurate way of accounting for monetary inflation.

The long-term chart of crude oil prices adjusted by the M2 money supply, and indexed to 100 for easier interpretation, shows an average of 42 since 1983, a peak of 129 in 2008, and a peak of 41 in 2022, compared with a reading of just 25 today. This implies that crude oil is actually trading well below its long-term average on an M2-adjusted basis and has substantial room to run if it is to revisit its historic peaks.

I am also fond of comparing commodity and precious metals prices to the S&P 500, which makes sense because commodities and stocks have historically acted as counterbalances to one another. When one is in a secular, or long-term, bull market, the other is typically in a secular bear market or period of stagnation, and vice versa, as capital rotates between the two in recurring cycles that typically last at least a decade, as I explained in this recent report.

The WTI crude oil-to-S&P 500 ratio, indexed to 100, is currently near record lows at just 5.61, compared with 107 at its 1984 peak, 71 at its 1990 Gulf War peak, 62 at its 2008 peak, and 17 at its 2022 peak. This extremely low price of crude oil relative to U.S. stocks reflects both the undervaluation of crude oil and the biggest stock market bubble in history, as I explained in my report linked above.

I firmly believe that the bursting of that stock market bubble will unleash tremendous amounts of capital that will flow into oil, precious metals, and other commodities, providing a huge source of fuel for the supercycle ahead.

KING WORLD NEWS NOTE: Crude Oil Is Shockingly Undervalued vs S&P 500 Today (5.61) vs 1984 (107), 1990 (71) & 2008 (62) Peaks. 

Multi-Decade Highs
Peter Boockvar:  Seen again, the aversion to taking on long duration risk in bonds continues globally. Fresh multi decade highs in yields are being seen in Japan, Europe and the US (almost in Australia). With the US in particular, we continue to rely on the kindness of strangers in financing our deficits and at least from a foreign government perspective, they continue to walk away from our market. Foreign private investors have taken their place to an extent but some of that has been Cayman Island buyers, aka, hedge funds and buyers tapping UK banks and Euroclear in Belgium. Natural foreign buyers that recycle any balance of payments surplus are no longer parking that money on a net basis into US Treasuries. Gold instead has been a beneficiary.

Between a drop in holdings and declines in value, ‘foreign official’ holdings of both Treasury bills and bonds fell by $72.1b in the month of June according to the TIC data seen last night. Japan and China were the two biggest sellers with Japan still the biggest holder and China #3 behind the UK (which includes what’s been parked at UK banks from anywhere). Belgium, Cayman Islands and Luxembourg are right beneath them and can be anyone parking money there.

Foreign official holdings now make up just 12% of US Treasury holdings vs about 37.5% 15 years ago. This chart is from my friend Adam Josephson reflecting this:

Here are some other notable charts from the US Treasury in their TIC data release yesterday for June showing the total foreign breakdown of holdings.

$180 Silver
To hear how high Nomi predicts the price of gold and silver will be next year CLICK HERE OR ON THE IMAGE BELOW.

Could The Price Of Gold Surge To $8,000 In Just A Few Months?
To listen to Alasdair Macleod discuss skyrocketing gold, silver, oil, and mining stocks CLICK HERE OR ON THE IMAGE BELOW.

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