Are Energy Prices 'Pegged' To Hard Money?

Tyler Durden's picture

Energy prices are soaring (though down a little this week). However, a strange thing has occurred since the lows in 2009 and the lows in 2011 - both indicative of coordinated and massive central-banking largesse - Oil prices in hard-money have been extremely range-bound. In fact, the price of Oil in Gold and Silver has been rather coincidentally stable over this period - we leave it to the reader to consider the global energy-producing nations' implications of a hard-money 'peg' for energy prices - as Central Banks attempt to inflate their way out of trouble.

Oil - priced in Gold (average 0.0675 oz per barrel of oil - range +/-1.5 sigma)


Oil - priced in Silver (average 3 oz per barrel of oil - range +/-1.5 sigma)


Charts: Bloomberg

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Haager's picture

Usually yes. But anyone should remember: The actual display of "value" is fx-ed, missing any consistency. Only physical contains consistent value.

MillionDollarBonus_'s picture

Unfortunately for goldbugs, forward freight agreements are priced in dollars, NOT gold, so goldbugs and silverbugs will have to give up their dreams about becoming kings of the universe. The US dollar will remain the world's number one safe haven choice, despite the hyperventilating rants of nerdy libertarians and lunatic conspiracy theorists.

LawsofPhysics's picture

You are getting weaker.  The BRICs are already dealing with each other, in their own currencies.

Come on, give us somthing we can really laugh at.

Ghordius's picture

Draghi's temper tantrum a la Hank Paulson?

theXman's picture

I'm both a chart reader and a PM bug. The above charts seem to me that oil will go higher in terms of oz of gold and silver. I also believe that gold and silver prices are going higher, also based on chart reading. In other words, oil price in USD will get a lot higher from here. Today's oil price is a lot closer to bottom than top. I am quite confident that oil will be $200/barrel by 2016. Even $300 is possible at the peak.

Bunga Bunga's picture

Don't worry, Iran will be forced to use Dollars again.

Spastica Rex's picture

The only thing getting weaker is the comedy. It's like listening to Henny Youngman tell the same joke over and over, day after day. It's funny maybe the first ten times. After that, not so much.

Dr. Richard Head's picture

I am going, allegedly, to take your posts and shove them in your ass.  For good measure, I will use some fiat to wipe up.

Bunga Bunga's picture

Troops and drones stand united to force the rest of the world to use worthless paper notes.

ejmoosa's picture

Unfortunately for you, even a billion dollar bonus won't mean what it used to.


But an ounce of gold or silver will always be an ounce of gold or silver.


ParkAveFlasher's picture

And Kitco's platinum historical charts just timed out.  Too much traffic.

mick_richfield's picture

Precious metals people don't want to be Kings of the Universe.

Real money is exactly money that can't be controlled by tyrants.

JohnKozac's picture

house prices down 36% from the peak.

... USO up over 50%;

...GLD up over 200%;

...SLV up almost 300%.


Those who refuse to hedge with Hard Assets are losing out

KingTut's picture

You are not paying attention.

If the Saudis charged 2.5/1000 th of an ounce per barrel, their 100,000,000,000 barrels sold so far would give them the same 8113 tons of gold that the US has.

There are ways to eastablish a private gold standard without the Government having to acknowledge it.

steve from virginia's picture




In the nothing for something economy, what Saudi gets for its oil is empty promises.


The oil is turned into useless gases in the atmosphere, fair trade!


Let them trade gold for oil, nobody will give up their gold. Nobody needs to drive (Saudia won't sell any oil.)


An excess of credit flowing toward oil and it (oil) becomes unaffordable, how much is too much credit? Whatever that amount is it becomes less with the passage of time (because maturing debt must by retired by taking on more new debt).


When currency = oil, there is the currency shortage and nobody gives it up either (Saudia sells no oil). No matter where you turn Saudia sells no oil and that means nobody uses it either.


Conserve energy = buy gold.



BeetleBailey's picture

LOL....MDoucheB...what a total cunt you truly are.

Silver Bug's picture

Oil and gold most definitely are. They have always historically been.

ejmoosa's picture

That's the way it's supposed to be. 

Why should anyone settle for cheap paper if they do not have to?


LawsofPhysics's picture

Sort of, but OIL is a reserve currency by itself (if you have oil, you can do lots of things to create wealth), so one might say hard money is tied to energy sources instead.  Oh yeah, bitchez.

Dr. Acula's picture

No. Oil is not a currency. I can't walk down to the supermarket and exchange a barrel of oil for groceries.

It can be a store of wealth, though. As can tubes of dentrifice.



LawsofPhysics's picture

"I can't walk down to the supermarket and exchange a barrel of oil for groceries."


So fucking what, without any oil you wouldn't get to the fucking market or even have the selection you do at the market.  Sorry, did you have a fucking point?  I have traded diesel with folks next to me already for things, so you are quite wrong on that point as well.  

Dr. Acula's picture

>Sorry, did you have a fucking point?  I have traded diesel with folks next to me already for things, so you are quite wrong on that point as well.  

Then it sounds like diesel is a barter good. Not a currency.

"LawsofPhysics", I suggest sticking to physics. Economics does not appear to be your forte.


laozi's picture

It can be used inbetween nations to settle deals. Wtf... Didn't you see Mad Max?

Stuck on Zero's picture

I thought water was the most precious commodity in Mad Max.

The worst trader's picture

Who turned on the BTFD switch?

fonzannoon's picture

No one turned it off. All the bullshit about a sept selloff was just another creation by cnbc so we could "climb another wall of worry" and they can celebrate the power of the markets to overcome adversity as they play rock music and sound bytes by asshole "economists".

ParkAveFlasher's picture


This Labor Day I sat at the picnic table with my father (67 years old, truckdriver, can not retire).  He has a mortgage with Hudson City (now M&T) and my mother exclaimed that he can't get his money out of his Fidelity account. Good times.

One of his other sons is moving in with his three kids, because they just took out a loan to add a third bedroom and need a place while the "renovation" takes place.  The "renovation" will cost approx. 40% of original price of the house.  They can not compete in their market otherwise, so they are risking that just to get a sale. Good times. 

One of his other sons traded tech stocks for UBS on the floor of the exchange until 2007.  His wife has recently gone back to work as a school teacher, because their property taxes are so high that at the rate they pay them, they are losing the equity in their homes and must have either more savings or higher pension.  Good times.

They all ask me if I'm back on drugs when I start talking about precious metals.  I seem to be the only one having a crisis of confidence.

Don Keot's picture

Fox Business is also fitting that description.  F_ _king cheer leaders.

Haager's picture

Sorry, I did. Thought it was the Burn-That-Flat-Down switch.

101 years and counting's picture

when its all priced in fiat, it does appear that way.  the less your fiat is worth, the less real things you can purchase.

SaveTheGreenback's picture

The dollar should be pegged to a basket of currencies...


Oil (energy), gold, and silver should be in the basket...


There isn't enough gold or silver to back $16 trillion of debt at today's price....but, there is probably enough oil and natural gas...



fonzannoon's picture

At todays price? No, At their correct price....yes.

SaveTheGreenback's picture

At the correct price, we all become serfs (unless they let us keep our metal)   :)

ParkAveFlasher's picture

They can come and try to get it. 

At the correct price, we all become enlightened.

LawsofPhysics's picture

Right, now about the 700+ trillion dollar CDS market....

Ghordius's picture

it's a fantasy. a trick. a garbled mass of contracts to be banned. a price cartel hidden in plain view. a scam. the supreme ponzi

LawsofPhysics's picture

Thanks captain obvious, do you have any information I can actually trade with?

My "contrarian" prediction is that the banks all get to gether and "call it even".  wiping it all out, with no consequence (to them), then the printing and inflation really gets started in earnest.

Ghordius's picture

what part of "it's over" and "the last forty years were special" did you not understand?

you won't make the same sort of money by "trading" anymore. except if you have immense databases that give you the shape of how the others are positioned (the above mentioned trillions). and even those five banks will struggle

and you can forget about "shorts". go long and hold on what you think will be fine in ten, fifteen years. keep liquidity ready. that's it

your prediction might work on sovereigns or on banks being forced by sovereigns. the banks themselves? they believe in their own propaganda

PiratePawpaw's picture

"There isn't enough gold or silver to back $16 trillion of debt"

I have heard this arguement before, and it makes no sense. You divide the ammount of fiat backed by the ammount of STUFF you are backing it with and that is the value of STUFF in fiat terms .You could back all the worlds currencies with one special magic paperclip if you wanted to. It would just be a REEEEEEALLY expensive paperclip. In terms of fiat.

SaveTheGreenback's picture

Yes, except I said at today's price

huge difference....we all know the price of gold and silver is depressed severely...


Vagabond's picture

The other posters handled your idiotic gold/silver claim.  Now about oil and natural gas... What kind of an idiot would use a flamable commodity that gets "used up" as currency?  Please review Aristotle's #1 quality that makes for good money, and put in some thought to your next "save the world" idea.

mick_richfield's picture

I burn money all the time, man.

SaveTheGreenback's picture

Yeah, using the world's most valuable and precious commodity as a currency-base is a terrible idea.  Keep reading Aristotle.  He was a smart guy who, I'm sure, contemplated the future of human technology and transport: autos, gasoline, and airplanes and the fuel they require.