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Here is an interesting tidbit about Gold and Oil. Just thought I would share.
mrpaseo
Posts: 4,753 ✭✭✭
Mar 14 2008 12:01PM
The Other Reason to Own Gold
Everybody knows that gold is an inflation hedge. That’s why most people buy it. They know from experience that the purchasing power of all national currencies is being constantly eroded by inflation. But they also know that their purchasing power is preserved by owning gold.
For example, the price of crude oil has been rising for decades when viewed in terms of dollars or any national currency. But when the cost of a barrel of crude oil is viewed in terms of ounces or grams of gold, its price is essentially unchanged. In other words, the dollar price of crude oil and the dollar price of gold are both rising more or less lockstep.By owning gold instead of US dollars, you can today purchase basically the same amount of crude oil as at any other time since 1945.
In other words, gold is an inflation hedge. But that is only one of gold’s advantages. There is also another valuable reason to own gold, and significantly, this other reason is becoming increasingly important.
Gold is also a catastrophe hedge. Gold enables us to protect our wealth from a financial meltdown because it does not have counterparty risk.
I wrote about counterparty risk last August in an article entitled “As Financial Tremors Reverberate, Focus on Counterparty Risk”. I recommend re-reading that article for a refresher course on the nature of counterparty risk and how it arises. It is I think important to recognize that the financial tremors are indeed reverberating, and are doing so with growing ferocity. http://www.kitco.com/ind/Turk/turk_aug102007.html
The monetary and financial system is rapidly spinning out of control. We are witnessing the unwinding of decades of reckless credit expansion. Borrowers – corporations, hedge funds, homeowners, etc. – who no longer have the financial capacity to repay their debts are defaulting on their obligations in increasing numbers. In that environment, the safety of one’s wealth becomes paramount, to protect against the catastrophe of default in all types of financial assets.
In short, promises are being broken, so in an environment in which financial assets are becoming increasingly doubted, one needs to own tangible assets. Own things instead of promises, and there is only one money that is not dependent upon someone’s promise and that’s gold. So buy gold; it is the best catastrophe hedge. But also buy gold because it remains the best inflation hedge.
For example, gold was $670 on August 10, 2007 when my article on counterparty risk was published, and crude oil was $71.50 per barrel. When viewed in terms of gold, crude oil was 3.3 goldgrams per barrel.
Gold today is $992, and crude oil is $109. So both prices have risen considerably in dollar terms, but the price of crude oil today is 3.4 goldgrams per barrel, essentially unchanged from last August. Gold performed as expected, being a nearly perfect hedge against inflation.
So when considering all of its advantages, gold provides what everyone wants – peace of mind knowing that the portion of your wealth placed in gold is safe.
by James Turk
*****
James Turk is the Founder & Chairman of GoldMoney.com http://goldmoney.com/. He is the co-author of The Coming Collapse of the Dollar , which has been updated for a newly released paperback version, now entitled The Collapse of the Dollar www.dollarcollapse.com.
Copyright © 2008 by James Turk. All rights reserved.
See story here: http://www.kitco.com/ind/Turk/turk_mar142008.html
The Other Reason to Own Gold
Everybody knows that gold is an inflation hedge. That’s why most people buy it. They know from experience that the purchasing power of all national currencies is being constantly eroded by inflation. But they also know that their purchasing power is preserved by owning gold.
For example, the price of crude oil has been rising for decades when viewed in terms of dollars or any national currency. But when the cost of a barrel of crude oil is viewed in terms of ounces or grams of gold, its price is essentially unchanged. In other words, the dollar price of crude oil and the dollar price of gold are both rising more or less lockstep.By owning gold instead of US dollars, you can today purchase basically the same amount of crude oil as at any other time since 1945.
In other words, gold is an inflation hedge. But that is only one of gold’s advantages. There is also another valuable reason to own gold, and significantly, this other reason is becoming increasingly important.
Gold is also a catastrophe hedge. Gold enables us to protect our wealth from a financial meltdown because it does not have counterparty risk.
I wrote about counterparty risk last August in an article entitled “As Financial Tremors Reverberate, Focus on Counterparty Risk”. I recommend re-reading that article for a refresher course on the nature of counterparty risk and how it arises. It is I think important to recognize that the financial tremors are indeed reverberating, and are doing so with growing ferocity. http://www.kitco.com/ind/Turk/turk_aug102007.html
The monetary and financial system is rapidly spinning out of control. We are witnessing the unwinding of decades of reckless credit expansion. Borrowers – corporations, hedge funds, homeowners, etc. – who no longer have the financial capacity to repay their debts are defaulting on their obligations in increasing numbers. In that environment, the safety of one’s wealth becomes paramount, to protect against the catastrophe of default in all types of financial assets.
In short, promises are being broken, so in an environment in which financial assets are becoming increasingly doubted, one needs to own tangible assets. Own things instead of promises, and there is only one money that is not dependent upon someone’s promise and that’s gold. So buy gold; it is the best catastrophe hedge. But also buy gold because it remains the best inflation hedge.
For example, gold was $670 on August 10, 2007 when my article on counterparty risk was published, and crude oil was $71.50 per barrel. When viewed in terms of gold, crude oil was 3.3 goldgrams per barrel.
Gold today is $992, and crude oil is $109. So both prices have risen considerably in dollar terms, but the price of crude oil today is 3.4 goldgrams per barrel, essentially unchanged from last August. Gold performed as expected, being a nearly perfect hedge against inflation.
So when considering all of its advantages, gold provides what everyone wants – peace of mind knowing that the portion of your wealth placed in gold is safe.
by James Turk
*****
James Turk is the Founder & Chairman of GoldMoney.com http://goldmoney.com/. He is the co-author of The Coming Collapse of the Dollar , which has been updated for a newly released paperback version, now entitled The Collapse of the Dollar www.dollarcollapse.com.
Copyright © 2008 by James Turk. All rights reserved.
See story here: http://www.kitco.com/ind/Turk/turk_mar142008.html
0
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``https://ebay.us/m/KxolR5
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
A nice graphic representation of the trends. Make your own call on where we go from here. These are great charts.
roadrunner
<< <i>Great thread/article. Once on-demand hydrogen becomes common we won't need any of that oil anymore but we wil need gold! >>
How are you going to produce the hydrogen. You still need oil for the factories.
Since I am no expert in this area I would appreciate those of you who support this article to provide a reference for the price data that is used to make such a strong assertion since I cannot find price data to backup the initial claim. Please note that I do believe we are in dire straights and that our economic situation is very poor. I am also a buyer of gold and silver. Therefore, I am not a "hater" of PMs.
In honor of the memory of Cpl. Michael E. Thompson
Turk is a fairly respected gold-bug. While his views are decidedly pro-pro-gold and then some, I don't find anything he's written to be deceptive. Just my 2 cents. He certainly has not be as deceptive as the FED, BLS, large banks, and the govt where we have typically been fed information from. Yes, he did state oil and gold have been performing in lock step and within the last 5 years, both have sort of shot up, though not in unison. One certainly didn't go broke following Turk's advice since 2001. Gold/oil ratio is in a tighter channel since 2001 which does tend to support them working up together....though not in lock step.
roadrunner
I knew it would happen.
<< <i>The US has recently developed a catalyst using certain metals that when pure water is passed through, oxygen collects on one side hydrogen on the other. In that way hydrogen can be generated on demand and not stored which is the danger today. Sure it will take oil to get it going but once when have power plants doing it in large scale no more oil, coal or natural gas will be needed. The funny thing is most of the oil rich countries don't have a lot of extra water. Ironic. >>
Hydrogen will NEVER replace oil. Never.
It's impractical for more reasons than I care to list, but needing a fuel tank the size of a U-Haul trailer is pretty good for starters.
At one time, it seemed to have promise, but now the shortcomings are surfacing and they are multitude.
It's even more foolish than ethanol, and that has been a disaster.
The is no shortage of oil and there never will be, the planet produces more of it daily than we can ever use.
Contrary to common PC thinking, it is a very renewable resource.
It's this same sot of thinking that has millions of acres of trees dying of old age and falling over, creating fire hazards in the process.
This country used to have 7 major plywood mills, we supplied the world.
Thanks to the Al Gore mindset, we now have three, but actually only one full time major mill when there were seven like it not so long ago.
Check the rise in the price and and the lack of quality in simple plywood over the last 12 years. It's a 600-700% increase in price and a 50% decrease in quality. There is no logical reason for it. Today you have to buy A/B to get the quality of what was C/D. So today we cover our roofs in press board due to cost, of course it dissolves in contact with water. Brilliant!
It's this same thinking that is pushing for hydrogen.
Just more "feel good" legislation. Same reason we have useless catalytic converters adding to the cost of vehicles and doing nothing for pollution in the process.
Today's internal combustion engines are 95% more efficient than those of only 15 years ago and that's simply due to capitalism.
Let the free market reign. That would bring about the immediate death of hydrogen as a common fuel source, as well as ethanol made from corn.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
<< <i>The US has recently developed a catalyst using certain metals that when pure water is passed through, oxygen collects on one side hydrogen on the other. In that way hydrogen can be generated on demand and not stored which is the danger today. Sure it will take oil to get it going but once when have power plants doing it in large scale no more oil, coal or natural gas will be needed. The funny thing is most of the oil rich countries don't have a lot of extra water. Ironic. >>
Hydrogen will NEVER replace oil. Never.
It's impractical for more reasons than I care to list, but needing a fuel tank the size of a U-Haul trailer is pretty good for starters.
At one time, it seemed to have promise, but now the shortcomings are surfacing and they are multitude.
It's even more foolish than ethanol, and that has been a disaster.
The is no shortage of oil and there never will be, the planet produces more of it daily than we can ever use.
Contrary to common PC thinking, it is a very renewable resource.
It's this same sot of thinking that has millions of acres of trees dying of old age and falling over, creating fire hazards in the process.
This country used to have 7 major plywood mills, we supplied the world.
Thanks to the Al Gore mindset, we now have three, but actually only one full time major mill when there were seven like it not so long ago.
Check the rise in the price and and the lack of quality in simple plywood over the last 12 years. It's a 600-700% increase in price and a 50% decrease in quality. There is no logical reason for it. Today you have to buy A/B to get the quality of what was C/D. So today we cover our roofs in press board due to cost, of course it dissolves in contact with water. Brilliant!
It's this same thinking that is pushing for hydrogen.
Just more "feel good" legislation. Same reason we have useless catalytic converters adding to the cost of vehicles and doing nothing for pollution in the process.
Today's internal combustion engines are 95% more efficient than those of only 15 years ago and that's simply due to capitalism.
Let the free market reign. That would bring about the immediate death of hydrogen as a common fuel source, as well as ethanol made from corn. >>
Um...wow. I do hope you are joking.
<< <i>
<< <i>The US has recently developed a catalyst using certain metals that when pure water is passed through, oxygen collects on one side hydrogen on the other. In that way hydrogen can be generated on demand and not stored which is the danger today. Sure it will take oil to get it going but once when have power plants doing it in large scale no more oil, coal or natural gas will be needed. The funny thing is most of the oil rich countries don't have a lot of extra water. Ironic. >>
Hydrogen will NEVER replace oil. Never.
It's impractical for more reasons than I care to list, but needing a fuel tank the size of a U-Haul trailer is pretty good for starters.
At one time, it seemed to have promise, but now the shortcomings are surfacing and they are multitude.
It's even more foolish than ethanol, and that has been a disaster.
The is no shortage of oil and there never will be, the planet produces more of it daily than we can ever use.
Contrary to common PC thinking, it is a very renewable resource.
It's this same sot of thinking that has millions of acres of trees dying of old age and falling over, creating fire hazards in the process.
This country used to have 7 major plywood mills, we supplied the world.
Thanks to the Al Gore mindset, we now have three, but actually only one full time major mill when there were seven like it not so long ago.
Check the rise in the price and and the lack of quality in simple plywood over the last 12 years. It's a 600-700% increase in price and a 50% decrease in quality. There is no logical reason for it. Today you have to buy A/B to get the quality of what was C/D. So today we cover our roofs in press board due to cost, of course it dissolves in contact with water. Brilliant!
It's this same thinking that is pushing for hydrogen.
Just more "feel good" legislation. Same reason we have useless catalytic converters adding to the cost of vehicles and doing nothing for pollution in the process.
Today's internal combustion engines are 95% more efficient than those of only 15 years ago and that's simply due to capitalism.
Let the free market reign. That would bring about the immediate death of hydrogen as a common fuel source, as well as ethanol made from corn. >>
Sorry, but I'm afraid you are totally wrong. This is the future and the future is now. Look at the hydrogen BMW. And no it is not worse than the disaster waiting to happen ethanol. On demand hydrogen is derived from water and when it burns it combines with O2 to produce water vapor. What is not to love.
<< <i>Um...wow. I do hope you are joking. >>
Not at all. I don't believe in junk science.
Just like the global warming nonsense.
The worst part is the PC thinking by our so called leaders that bring about this garbage.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
The battery powered car is another interesting concoction. It might make sense if everyone were given free solar panels with every purchase. But for now, you'll have to be content to recharge your batteries via an electrical outlet leading to coal-fired generators in the midwest somewhere. Not so green after all. And what's not to like about mining 25 tons of ore to build that new car?
roadrunner
"The is no shortage of oil and there never will be, the planet produces more of it daily than we can ever use.
Contrary to common PC thinking, it is a very renewable resource."
off with a few ounces of lead in their weapons,
then a few ounces of gold in the house.
Camelot
Much of what you've stated is seemingly opposite of EVERYTHING we hear daily.
I will reserve judgment however, since I don't necessarily trust those we're hearing it from!
Any more info you've got to back up your post would be appreciated.
As for global warming, it's a cyclical trend throughout time. Someday the planet will get too
hot and unless we figure out how to adapt, humans will perish like the dinosaurs.
Luckily for us, that time is many, many hundreds of years from now.
So in the meantime, buy gold
commoncents123, JrGMan2004, Coll3ctor (2), Dabigkahuna, BAJJERFAN, Boom, GRANDAM, newsman, cohodk, kklambo, seateddime, ajia, mirabela, Weather11am, keepdachange, gsa1fan, cone10
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A person only has to look at the U.S. and our nearly 50% decline from peak production in the early 70's (Predicted by M. King Hubbert) to see clearly that oil is finite, and that it will soon be more expensive to extract than it is worth to burn in automobiles as gasoline in the coming decades, and that Peak oil is a reality that will change all of our lives forever.
Here is a fun site of doom and gloom where the naysayers can get raked over the coals as a non-believer in PO, or become informed. Peak oil web site. Enter at your own risk.
Tyler
<< <i>
<< <i>On demand hydrogen is derived from water and when it burns it combines with O2 to produce water vapor. What is not to love. >>
You have to use more energy getting hydrogen from water than the hydrogen produces when it is burned. >>
Sorry, you are wrong as well. Do you still own your Betamax?
<< <i>Deadhorse, I am going to keep heeding your indispensable advice concerning metals, agree with you on hydrogen being a dead end "energy source", and pretend I never read what you said about oil being a replenishing energy source.
A person only has to look at the U.S. and our nearly 50% decline from peak production in the early 70's (Predicted by M. King Hubbert) to see clearly that oil is finite, and that it will soon be more expensive to extract than it is worth to burn in automobiles as gasoline in the coming decades, and that Peak oil is a reality that will change all of our lives forever.
Here is a fun site of doom and gloom where the naysayers can get raked over the coals as a non-believer in PO, or become informed. Peak oil web site. Enter at your own risk.
Tyler >>
I've done a little reading on the website.... very eyeopening info.
<< <i>Deadhorse, I am going to keep heeding your indispensable advice concerning metals, agree with you on hydrogen being a dead end "energy source", and pretend I never read what you said about oil being a replenishing energy source.
A person only has to look at the U.S. and our nearly 50% decline from peak production in the early 70's (Predicted by M. King Hubbert) to see clearly that oil is finite, and that it will soon be more expensive to extract than it is worth to burn in automobiles as gasoline in the coming decades, and that Peak oil is a reality that will change all of our lives forever.
Here is a fun site of doom and gloom where the naysayers can get raked over the coals as a non-believer in PO, or become informed. Peak oil web site. Enter at your own risk.
Tyler >>
First, let me say thank you.
As far as the petroleum situation goes; Do people in the US realize we are the only modern civilized nation that still teaches that petroleum comes from dead dinosaurs and fauna? Nothing could be further from the truth. Keep drilling and you'll find even more petroleum below those layers of strata. What? What? How could that be? It would infer that petroleum was here long before the Dinos and other life forms. Then again, we've recently found an entire world of petroleum in our own solar system. That would be the moon Titan orbiting Saturn. This alone should cause some of us to ponder about the origin of hydrocarbons, especially when the prevailing belief is that hydrocarbons are assumed to be derived from buried biomass on earth. A warm day there is around -179 degrees Celsius. Not the sort of place to expect life to form. Hardly a place where the entire planet is composed of hydrocarbons due to biomass.
To put Titan into perspective; Titan has hundreds of times more liquid hydrocarbons than all the known oil and natural gas reserves on Earth, scientists report. A satellite smaller than earth with no observed life, has more oil than earth?
Does this mean that there are carbon-based life-forms on Titan? Surely not, so how on earth are these hydrocarbons being formed. In fact the researchers are concentrating their work on how life evolved from these "organic" compounds, implying that the "oil" produced life, not the other way round.
Look at the Russian model, they've had it right for a long time now. The Russians are hardly given to follow PC thnking
Nearly all the oil wells in the US are capped as they were long ago thought to have been pumped dry. These caps and wells are checked regularly. The dirty little secret is that that are refilling. Many are back up to capacity. Perish the thought if the big oil companies made that knowledge public. Prices would drop overnight. You'll find scarce evidence regarding this for that very reason.
In one early case, it was made public. It caused a great deal of interest and suddenly the story was buried.
That would be the story of Eugene Island 330.
More on Eugene Island
Now some "experts" will tell us that Eugene Island is just a once on the planet happenstance, but really now, what else could they say?
Dwindling Oil Unfounded
Peak Oil Debunked
Peak Oil Scam
Abiotic Petrolem
Timing of "peak Oil"
Fleecing the Sheep
More on abiotic Oil
Origins of petroleum
I have many, many more documents in my library of peak oil myths.
Several have been removed from the net, no surprise there, and while I could post them in their entirety, it would be a very long post. Nearly a book in itself.
You can do your own due diligence and decide on your own. I've never been one to buy into the herd mentality and have studied this subject for many years.
To keep this on gold(which was part of the OP's topic) and precious metals, $30 silver is in the cards shortly, $1200 gold will be on us soon and $1650 could be here by year's end, silver should be around $35 at around that same time. However, not before we have one more large shake down and prices drop hard. it will scare many away, but for most of us, it will be a buying opportunity as the rabbits run. That time is coming towards us quickly, very quickly, IMO.
OK, I could go on, but this is a long enough and should give you ample reading along with enough links to continue your research.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Box of 20