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At the start of the summer, when oil was setting records and trading at ~$135/barrel I showed an interesting graph which showed the price of oil in gold.
I wanted to show that even priced in this currency - which many feel is superior to the beleaguered US dollar - crude oil was just too expensive and ready to come down to more realistic levels.
Since then the price of crude oil has fallen to ~$96 and many see it continuing the slide lower.
Elizabeth asked for a followup now that a few months have passed so here is a more recent chart:
To get an idea whether oil is still expensive, priced in gold, it depends how far you want to go back. If you look back just a few years, it has a bit more to fall. But if you go back to 1994 or 1999, then oil could potentially fall much, much more.
While attempts at a new financial bailout is plodding through the halls in Washington, the consequence of any sort of bailout is that the price of oil will remain high. This article from Forbes explains why.
My personal conviction is that there should either be absolutely no bailout - allowing rotted financial institutions to declare bankruptcy. Or if the government gets involved, it should be state capitalism, not socialism. Which means that the US should follow the Swedish model and ask for equity. If they want to hammer out a deal quickly, they can use similar terms that Buffett got from Goldman Sachs (GS).
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