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Oil Hasn't Been This 'Cheap' Since 1988
The last time an ounce of gold could buy 29 barrels of oil was 1988...
Oil is the cheapest it has been relative to gold since 1988...
"cheap" is relative
Charts: Bloomberg
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Gold is well priced versus oil. Neither are so versus the dollar.
All this shows is that gold price follows oil prices.
No market manipulation here. Move along....
The big market manipulation yo usee in the chart is during the "good times" of 2002-2007. Historically. high oil prices are associated with bad times...except during that period 2002-2007
Not saying that low oil prices will result in good times, just saying that the economy struggles when prices are above a certain level.
The big market manipulation you see in the chart is during the "good times" of 2002-2007. Historically. high oil prices are associated with bad times...except during that period 2002-2007
Not saying that low oil prices will result in good times, just saying that the economy struggles when prices are above a certain level (maybe when you get fewer than 15 barrels per oz of Au).
This will be a great trade real soon...thanks td
I guess that's great if you're driving around in plastic cars?
Excluding CL and the daily hammering of GOD's inflation indicator, everything is pretty fucking *expensive!
* APPL employees get a discount, as iShit is edible.
You can't eat oil.
Don't tell that to Popeye
Gold bowed to the Silver Margin call today. Maybe they are trying to improve that price issue.
People are insane if they are not buying oil right now. I know I know, everyone is waiting for 30, but seriously, when it spikes and you are not on the boat, you will cry
I have to agree. For better or worse I've been dollar cost averaging a few of the bullish oil ETFs. I too was going to wait for it to go lower but then I realized 1) the information above concerning gold/oil, 2) Muslims are bad shiite crazy and will likely bomb a Libyan port at any time, 3) hungry Venezuelans who can't wipe their azz can do some serious damage to a cluster of oil rigs, 4) you just can't call the bottom! and 5) the Saudis will eventually freak if they realize that they will have to deficit spend for the next 3 years.
IMO oil is currently the LEAST manipulated of just about anything in the market cuz 1) peeps gotta have it and 2) paper cannot have a lasting effect under the current supply/demand relationships.
Pinch your nose and BTFD.
Seriously, if the Dow crashed tomorrow, what would happen to oil.....maybe 30 and thats it.
Arabs are going to wait until June to cut production, but cut they will. It will be more than enough time for crisp the Shale here and Mother Russia.
They dont ring a bell at the bottom, but seriously....
Yep, I've been doing that (BTFD) every time there's been a drop since $47/bbl. And yes...I have to pinch my nose every time as it's counter-intuitive to my reasoning!
Wait for China's housing crisis. Oil is going down to $10 a barrel. Let's just imagine the most insane shit happening.
livermore famously said he never bought at the bottom and never sold at the top.
Cuz gambling is where it's at, man! Give'er! And if you can't afford them calls, just lever yourself.
Crossing the street is gambling.
No it's not. At least I can see what's coming before I make a decision. These markets, not so much. Just look at the random 11% hike on silver margins.
UCO call options baybeee!
In 1930 oil went from a buck a barrel to ten cents.
Gold held steady at 33 bucks an ounce.
"That's a lot of oil for an ounce of gold."
Oil can go MUCH lower. "A collapse in price generally speaking creates a commensurate fall in demand as the commodity is simply no longer needed."
In other words let's say US production falls from 9 million a day to seven.
More than likely consumption will fall from 7 to five.
Or worse...
LOL...
"Gold held steady at 33 bucks an ounce."
That's because gold was THE MOST manipulated "commodity". In fact, in 1930 its price was 100% CONTROLLED!
And it sure as shit wasn't 33$ per oz. It was $35. In 1931 it was $20.80 for the same oz.
And in 2015 gold is only $42.22 per ounce.
Why does everyone ignore the market price and use the official price during one period, and ignore the market price and use the official price in another period?
There has been a market price of gold established every business day for hundreds of years. But yet "adults" keep falling prey to an elementary school-level statistical manipulation and logical fallacy.
Welcome to the Idiocrisy!
Spring of 2009... I was trying to build a steel mill, in the middle of nowhere. We were, unfortunately, getting nowhere with JV proposals to a bunch different Steel Company CEOs. Being "small picture, small brain, small dick..." c-suite guys they were focused on such minor and trivial issues as their own over-capacity and under-utilization of assets. What they couldn't understand was the simple fact was- that this factory was going to be built. (period.), and certain business was going to be directed to it, and that business would have otherwise and previously went somewhere else (like one of these bozo's companies), but TPTB wanted thing built so their existing assets were going to be moar under-utilized, regardless...
In spring of 2009 the entire market cap of X was about 1.5 billion, or a little more than its cash balance, never mind any enterprise value associated with its inventory, order books, and actual steel mills (which start at about a billion a pop). The rest of the publicly traded industry was similarly valued. Being my intemperate self, and just slightly younger, I said- "Fuck It! Let's stop wasting our time and simply and buy an entire steel company and restructure it to meet our needs." Then someone got tasked with sitting down and explaining to the black sheep how the world worked...
Public traded equity and enterprise valuation should be mutually exclusive notions. If TPTB want "your" oil company based on what you think the stock "should" trade at with oil at USD2.00 per barrel, TPTB can get it, and you will be compensated to the tune of a $28 barrel loss, if they chose to buy you out of the falling knife you caught before it rebounds.
Even the introduction of "efficient markets" "transparent markets" and "honest markets" could not prevent this sort of dog-eat-dog activity when there is blood in the streets, because of the very nature of an actual "market". Your investment thesis leaves a bit to be desired based on the "integrity" you would appear to attribute to both the current market price, and the marketplace itself.
Global depression
How about an OIL vs S&P or Dow metric. How about OIL to national debt metric.
so gold must be overpriced
Only if you look at Gold as a commodity. As a currency it is under priced. As JP Morgan said turn of the 20th century, "Gold is money, everything else is credit."
In which case oil is MASSIVELY overpriced!
.
One year, 1987. Savings and Loan. Texas. Low oil prices.
We now produce more oil than Saudi Arabia, and none of it will make a profit. Dollar is toilet paper.
Gold is priced properly, less some minor accounting for market "manipulation."
"Cheap is relative."
Exactly. Not sure how anyone can square that oil is "cheap" compared to gold when it costs miners $1200 or more to dig it out of the ground. Fact is, gold is so undervalued compared to stocks and bonds and the FED's monetary base it is laughable.
http://research.stlouisfed.org/fred2/series/BASE
OK get your story straight. If gold costs $1200 to dig it up and turn it into a bar, then it is worth $1200, give or take for profit margin. Now say that oil costs $80 per barrel (yes I know it varies), then why would it be worth more than $80?
Simple...supply and demand. Trust me, gold is indeed "manipulated" but so is everything. And if gold was really in that much demand, no amout of paper manipulation would alter its fair market price. Manipulation <> Price Control.
What kind of bullshit are you trying to peddle? Seriously, do you actually believe that crap you just wrote?
Yes, I do...seriously. Just think about it. If global PM demand starts completely outstripping supply, there's not a damn thing that the paper traders can do except to stand by and watch the cost of physical skyrocket. We aren't there yet.
I would contend that we have "been there" for several years now. It is a game musical chairs (with derivatives and leverage) where 100 paper claims are made on each and every physical ounce available. That game will stop suddenly one day and we will see who has the goods and who doesn't. My guess is that much of the Western gold is long gone to the East and it isn't coming back.
I don't know if you have any insight as to how bulk gold purchases are being made in China. They are all brokered and "spot" is effectively a joke. Gold goes for $1800ish per ounce there because large lots are NOT easy to come by. Here's how you will really know we are there:
You go to JM bullion to get your periodic purchase, and yep, spot happns to be $1350, but strangely, JM bullion's markup is now $250 per ounce. Either the paper traders get the price right OR the bullion distributors will raise margins to control the flow of bullion.
Like I said, we aren't there yet.
Right. When the Federal vaults are emptied, the fireworks begin. The Swiss are getting some cheaper gold now.
What Supply? The GLOBE is in recession!
If gold is being manipulated downwards, then it's being massively shorted by the Fed. What happens if gold rises? They'd intentionally bankrupt themselves. For them to win that bet, they'd have to... tighten. Oh God. I think I'm going to be sick.
BoP the Bond Chart 'Meister' knows exactly what's going on.
Europe is going through Inflation, NOT Deflation. If commodities are so cheap, then why aren't the costs passed on to us?
Leverage you say?
In order to service the multiple layers of debt accumulated over decades, currencies were/are devalued through "PRINTING".
Now the Chicken is coming home to Roost! Bitchez.
Nothing is getting cheaper, and a 2% inflation target is just a smoke• screen. Prices are rising because of devaluation.
How can you have inflation with devaluation? Purchasing power is eroded through devaluation.
Are you listening Dr. Krugman?
Bingo.
calls for a spread trade: long wti / short xau
So...why are we pricing this in gold?
Because chickens won't stay in one spot long enough to get an accurate measurement.
Time for a good old fashion ground war. Plenty of demand when the war machine gets going. Set a few oil feilds ablaze to pinch supply and we're off.
Again none of u are focused on the bullseye that most dont get.....even GS baffoon with $30 oil abmits oil has to a normalized price....he thinks its 65, while i think its ovrr 70 to spur production...so stay focused on the bullseye....watch for rig count to fall more than 75 tommorow.....and if think oil cos will jusy jump back in even at 70 ur mistaken cause they wont get screwed by GS thugs again.
Typical sheep. Stay the FUCK away from CL! Do I need to tattoo it on your forehead?
I'd say SELL GOLD, but this is ZeroHedge and that's not allowed.
the current gold price fairly reflects gold demand. as long as the cbs keep hoarding gold the price will remain at production/supplychain cost to ensure product. the reason gold was under 300 dollars in 2000 has everything to do with a booming, full capacity economy. gold at 1200 has everything to do with a disaster in the making in an apparent shift in global economics and political power away from the west. gold has always been the anti-disaster trade. show me where the green shoots are and i will gladdly sell.
CB's were selling back then, too.
http://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002
And China wasn't buying or allowing it's citizens to buy. They stole this page from the US, who was forced to re-legalize US private ownership in 1974 or watch it all disappear. There is never a good time to sell. It's either being manipulated down a little, or a lot, by the counterfeiters(CB's).
comparing that chart with the sandp says the spikes on the lower chart coincide with a rising sandp, well after the spike pulls back. in 1987 we had the dollar crisis. 2008 is obvious. how long before this spike breaks? it kind of points to the fall? so next year? what will blow up our wallets this time?
The economists have been saying that oil and gold price have a direct price relationship that does not seem to make sensse in the last 6 months.
Gold has risen by 10% in the last 4 months
Oil has fallen in the last 4 months by 50%
The price of oil could be cheap because of this:
As yet another dead cat bounce fools the Drill Baby Drill oil suckers, we continue to have the ill informed commentators trying to make sense of something way beyond their comprehension.
Oil has lost half its value in six months, you would think they would get a clue.
The Fossil Fuel Age is dead.
A verified working LENR killed it.
Scientists working for the organisation that decides who gets the Nobel prizes good enough for you?
Scientists working for the Swedish Royal Academy of Science and Swedish Energy Research Institute Elforsk, completed a verification of a working LENR in February, they finished the report in June/July, when it started doing the rounds in scientific circles, where it soon reached the eyes of those who had been shorting the Market in preperation for the verification, after a lot of critiquing and review they released the report that they had verified the working reactor at the beginning of October:
http://amsacta.unibo.it/4084/1/LuganoReportSubmit.pdf
It has been replicated by an independent Russian Scientist:
https://docviewer.yandex.com/?url=ya-disk-public%3A%2F%2FejFRuMB3GiCF6ZXZHI9lIxg2OeCo5GTI6HuLUo5jb5Y%3D&name=%D0%90%D0%BD%D0%B0%D0%BB%D0%BE%D0%B3%20%D0%A0%D0%BE%D1%81%D1%81%D0%B8.pdf&c=54a72ecd60ef
http://www.univrmagazine.it/sito/vedi_articolo.php?id=2820
And according to other sources has been involved for some time.
A primitive version was demonstrated in front of an invited audience, including representatives of Big Oil and various other big industry players in September of 2011. This was the trigger for Big Oil to sell their oil fields, though Shell who had a department watching this particular Black Swan started to divest their oil fields even before then, Big Oil then gave the cash from the sales to the merchant banks along with a nod and a wink, the commitment of traders report shows they then built the massive short position in oil that we are now experiencing.
http://oilprice.com/Finance/investing-and-trading-reports/Why-Are-the-Bi...
Big Oil did not want the SEC to blab on them so they:
http://uk.reuters.com/article/2013/03/27/oil-derivatives-regulation-idUK...
http://uk.reuters.com/article/...
After the demonstration and additional testing a $2 Billion US company: Cherokee Investment Corp's Industrial Heat bought up the inventor and all his IP and have been developing it for market, it got tested and verified by them and other scientists and then the full independent test above. Since then they have been running a pilot plant at an undisclosed customer site believed to be in the US, and have negotiated with the Chinese to build a mass production facility there.
There are a dozen other players in the race to market including major names and research organisations.
It will take a conservative maximum of 30 years until LENR is fully adopted in all energy markets. New technology adoption times are 12 years on average though the speed of adoption is increasing exponentially, read your Ray Kurzweil.
Saudi Arabia knows all this they have enough money to employ the best and brightest minds to work out their strategy and it is simple. If the fossil fuel market its dead then it is time to have fire sale.
Saudi Arabia has more than enough reserves to drop its prices right down to $10 per barrel, with that it it will kill off 98% of its competition. Then it can take all the market for the last thirty years of oil as a fuel and prevent any competion in a post LENR market for lubricants and chemical feed stocks for plastics etc.
So Saudi Arabia's strategy is the classic stack em high sell em cheap Tesco tin of beans strategy and it is dropping the price of oil to its bare minimum to slow down adoption of LENR and so that Saudi Arabia can maximise its profits by taking thinner margins on higher volume, by wiping out all its competition.
http://uk.businessinsider.com/r-saudis-naimi-says-opec-will-not-cut-outp...
Not this shit again. Pseudoscience.
This will be a short term manipulation experiment to try to help the "economy" serving as a dual purpose to screw Putin and eliminate smaller player by the big oil companies to gain control or their assets. Start buying oil futures now while they are still saying the stock market will go to 4000, oil will stay at 30 dollars a barrell at which point they will do a 360 jack up oil prices and tank the market.