Oil Crisis Still Lies Ahead: $200 Oil and $6 a Gallon Gas by Late 2012

First things first. The bounce you’re seeing in gold and silver are not — I repeat, not — the beginning of their next legs up.

So if you’re a short-term trader, don’t get overly aggressive in these markets right now. They’re likely to yo-yo around, with a bias toward the downside and a test of the $1,325 and $1,265 levels in gold as we head into year end, and $18 to $23 in silver.

Having said that, maintain all core long-term metals positions. You do not want to be shaken out of them. Though not expected until next year, if gold closes above its recent record high of $1,428 — a new leg up will be underway.

Now, on to a forecast that I would like to reconfirm in a market that impacts us all quite dramatically: Energy.

Despite the ongoing financial crisis, I expect to see at least $200 oil and $6 a gallon gas sometime in the not-too-distant future.

The first step will be to see the price of oil hold the $68.07 level by the end of this year, which should not be a problem.

Then, once oil closes above the $99.37 level — probably by the middle of next year, watch out: It will be your signal that oil will make new record highs within two years.

Bottom line: Anyone who thinks the oil and gas bull markets are over — should wake up and smell the coffee!

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