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The price of oil has to at least triple in the next few years. This could easily be your ticket to an earlier or richer retirement.

The price of oil is a function of many things, but as with all economic issues its prime mover is demand. Demand for the past 18 months has been dropping due to the economic meltdown worldwide. This has made for great energy prices, but it’s like a warm day in January in Canada. It’s not real and anyone who has ever lived through a northern winter knows it will not last.

Why?

First, the world is coming out of this recession and oil demand is about to explode and we, the USA, the biggest energy pig in the world, have done nothing to prepare for it. We have less of an ability to provide for our energy needs now than we did 35 years ago.

Second, Asia and the rest of the developing world are coming out of this worldwide slow down, too. Consider how much more oil will be going to Asia and the developing world as they rebound and start to suck up what’s left of the world’s capacity to produce black gold. The demand picture really begins to come into focus.

Third, the current effort of the Obama administration to avoid a depression by pumping trillions into the economy has worked. We are soaring out of the hole faster than anyone could have imagined a year ago. At the same time we are doing so with no way to fuel it, literally fuel it.

We are completely unprotected from the threats to our economy and future well being that comes from importing 75% of our oil.

Fourth, there has been zero new development of oil reserves partly because of a very admirable effort by the Obama administration to shift to clean renewable energy. Clean and renewable is great, but we have about a ten year gap that has to be filled with oil before we can make that a reality.

Fifth, a dysfunctional congress whose priorities are their careers, their party, their district and whatever is left over goes to the well being of this country, in that order. Congress is all but incapable of working toward a long term solution to the problem.

Add them up and we have all of the necessary elements for the biggest rise in oil prices in our history over the next three to five years. Here’s how we can make money on this mess.

DXO, Power Shares Deutsche Bank Crude, or DIG, Ultra Oil and gas Pro Shares, both are designed to give you twice the percentage return of any increase in the price of oil. In the past month or so DXO bottomed at about $1.90 per share and ran to about $3.20 on just a $12 dollar move up in the price of crude. That’s a 68% move. DIG has had a similar neck snapping rebound.
If oil only goes to the $75 range, which is a given at this point, the DXO and DIG stand to move another 130%. The money we can make here is mind boggling.

The best part of this play is that it is inevitable. The chances of oil not moving up in price are almost zero.

You will only get a few opportunities like this in your investing life. Think of all the times you looked back at the market and thought how great it would have been if you had put money in at the bottom. This is the bottom!

As always time is the key to the success of this recommendation. A move to $75 a barrel is very likely by the end of this year, but the big money could be several years out. Give this time to work and you won’t be disappointed.

100% plus this year is just the beginning of this move.

Good luck!

Steve

Darvas Box Theory (By Zhuge Liang)

A trading strategy that was developed in 1956 by former ballroom dancer Nicolas Darvas. Darvas' trading technique involved buying into stocks that were trading at new 52-week highs with correspondingly high volumes.

A Darvas box is created when the price of a stock rises above the previous 52-week high, but then falls back to a price not far from that high. If the price falls too much, it can be a signal of a false breakout, otherwise the lower price is used as the bottom of the box and the high as the top.

In 1956, Darvas was able to turn an investment of $10,000 into $2 million over an 18-month period. While traveling for his dancing, Darvas would obtain copies of The Wall Street Journal and Barron's, but he would only look at the stock prices to make his decisions. It has been said that Darvas was less happy about the profits that he made than he was about the ease and peace of mind that he got from implementing his system.

Skeptics of Darvas' technique attribute his success to the fact that he was trading in a very bullish market. They also say that returns comparable to the ones he saw can't be attained if this technique is used in a bear market.

For clearer chart click====> HERE

Scared Straight! Is that what the OPEC President Chakib Khelil was trying to do when he told the whole world that oil might not have a bottom and there is no floor? Was he sending a message to the oil producers of the world that they had better make drastic cuts in production or then they face a world with a bottomless oil price! Oh My!

So much for the brashness of Chakib Khelil who went from being a guy who just a few months ago was telling the world that he wanted to defend $80.00 a barrel. And in the beginning of this month he said that $70 to $90 a barrel was OPEC's target but now says that there is no floor. In an interview with a Spanish radio station, Khelil said that prices can drop to a very, very low level and that it depends on supply and demand conditions, inventory levels, and also the future of global economic growth. Khelil said the fact that the forward demand cover for oil (which is the number of days of consumption held in total stocks) is currently 56 days, compared to an average of 52 days over the past five years, an excess of around 320 barrels of oil. In other words, global supplies are the highest they have been in years and with the continuing economic crisis, unless the world oil producers make drastic cuts in production, the floor will fall out like a Graviton. This is what he might have said had he ever been on a Gravitron.

Well Chakib was indeed stating what is now obvious to the market but was he doing it for our benefit or his own. Was Chakib trying to shock and awe world oil producers out of a sense of denial on what they are worth and ultimately what a barrel of oil is worth? Is he ramping up the pressure on the lying and cheating Iranian government and Venezuelan government or is it more aimed at some of the non-OPEC world oil producers like Russia, Mexico and Norway. Is he trying to tell these OPEC members that we are all in this together? Did he try to infer that they all face economic doom if they do not act quickly and decisively? Khelil said back in October that non-OPEC members should cut their oil output to stabilize dropping oil prices. He said that if the countries, namely Russia, Norway and Mexico, do not lower production, OPEC’s decision will be more difficult, requiring further sacrifices on the part of the OPEC. Was he saying that if you cannot beat us you should join us?

Well that is exactly what he was saying. Mr. Khelil called on Russia, Norway and Mexico to join OPEC. Khelil told the APS news agency that, “What we really want is for these countries to become members of OPEC." He said that, “I don’t see why Russia can’t be a full-fledged member of the organization. It’s the best way to express solidarity.”

Well I can see why, Chakib. It is because ultimately, as a free agent, they are free to join you on cuts when they want and not join in when they do not want so they ultimately have more power. Khelil added that Russia, Norway and Mexico should cut oil output if they refuse to join OPEC to help halt a slump in global crude oil prices.

Still the Russians said that they would cooperate with OPEC but will it be the type of cooperation that will be enough to stop the downward onslaught?

Yesterday the EIA report showed a draw in crude but in the key Cushing, Oklahoma delivery, a big build! Yes Virginia that is why crude did not hold the rally. That and the fact that the demand numbers are still downright recessionary.