is oil the FIFTH currency?

[jk]

ej owns the internet domain: fourthcurrency.com , a site not really developed but keyed to the idea that gold is increasingly functioning as a store of value [if not a medium of exchange], because of the continuous devaluation of the 3 big global currencies- the dollar, the euro, and the yen. so, here's my question about oil:

QUESTION: has crude oil been monetized? in the case of gold, investment as an inflation hedge has come to dominate gold demand, outstripping jewelry demand. gold is rising not because people want to fabricate more rings and necklaces, but so they can store it, using it as a store of value. WILL DEMAND FOR OIL AS AN INVESTMENT OUTSTRIP DEMAND FOR OIL FOR USE AS A FUEL? it's not as easily stored as gold, of course, but we hear reports of tankers floating out at sea, fully loaded with oil but not going anywhere to deliver it. small time investors, do not play in that league, but we have some ways to indirectly hold oil. i have thought of that sea-borne crude as a supply overhang, ready in a sell-off to drive oil prices even lower than a global depression would otherwise lower its price. but perhaps that supply will NEVER be delivered, because that oil is being used as a store of value, not as a feedstock for petrol.

[reminds me of a joke with the punchline- "those are trading sardines, not eating sardines."]

[sn1p3r]

Re: is oil the FIFTH currency?

should i register www.OilVault.com? Perhaps we can make a holding company for others oil investments

[Sapiens]

Re: is oil the FIFTH currency?

During the war, petrol or gasoline was money for us. From a gallon to a 5 gallon jerrycan you could purchase any of life's necessities and pleasures. I used to lend it at interest and did quite well.

[flintlock]

Re: is oil the FIFTH currency?

During the war, petrol or gasoline was money for us. From a gallon to a 5 gallon jerrycan you could purchase any of life's necessities and pleasures. I used to lend it at interest and did quite well.

What war would that be? WWII I presume?

[Sapiens]

Re: is oil the FIFTH currency?

What war would that be? WWII I presume?

Does it really matter? All are the same, for example:

http://truckandbarter.com/2003_12_01...71979916019020

[jk]

Re: is oil the FIFTH currency?

anyone want to hazard a metric for measuring the "moneyness" of crude? days of supply in storage? stored volume/gdp? slope of contango?

the use of petroleum is so high, it's hard to imagine storing enough so that its role as a store of value outweighs its role as fuel. if that's the case, you'd expect economic activity to outweigh investment demand in affecting crude's price. so why is oil at $68/barrel during the worst recession since the 1930's?

[GRG55]

Re: is oil the FIFTH currency?

should i register www.OilVault.com? Perhaps we can make a holding company for others oil investments

You can have it. I'm going for "WhiskyVault.com". If TSHTF in a big way I suspect it'll be easier to trade Ballentine's or Black Label for those other life necessities compared to crude oil...:p

And in the worst of circumstances, with nobody able to afford to drive their government subsidized GM [Green Motors] Eco-Car, one can always drink the whisky if no one will trade with you. Try that with crude...

[GRG55]

Re: is oil the FIFTH currency?

anyone want to hazard a metric for measuring the "moneyness" of crude? days of supply in storage? stored volume/gdp? slope of contango?

the use of petroleum is so high, it's hard to imagine storing enough so that its role as a store of value outweighs its role as fuel. if that's the case, you'd expect economic activity to outweigh investment demand in affecting crude's price. so why is oil at $68/barrel during the worst recession since the 1930's?

One of the arguments in the past has been that very little oil trades at the WTI spot price.

Be that as it may, what I find really interesting right now is that not only is the price of light, sweet crude apparently rather lofty given the fundamentals, but in the midst of the "deepest recession in 80 years" the differential between heavy crude and light, sweet is persistently narrow [in other words the discount that lower grade heavy, sour crudes normally experience is smaller...much smaller...than historical norms]. There have been times in recent months where some trades were made at zero differential.


Makes me recall this learning:

"Information is always in the divergences. Market action conveys an enormous amount of information...not simply by obvious trends, but how various elements of the market action diverge from how they would be expected to behave, given the surrounding context"
--Dr. John Hussman--

[don]

Re: is oil the FIFTH currency?

In the Goldman Sachs expose on the commodities spec. bubble, wasn't a barrel of oil traded 23 times before it was sold?

[jk]

Re: is oil the FIFTH currency?

One of the arguments in the past has been that very little oil trades at the WTI spot price.

Be that as it may, what I find really interesting right now is that not only is the price of light, sweet crude apparently rather lofty given the fundamentals, but in the midst of the "deepest recession in 80 years" the differential between heavy crude and light, sweet is persistently narrow [in other words the discount that lower grade heavy, sour crudes normally experience is smaller...much smaller...than historical norms]. There have been times in recent months where some trades were made at zero differential.


Makes me recall this learning:

"Information is always in the divergences. Market action conveys an enormous amount of information...not simply by obvious trends, but how various elements of the market action diverge from how they would be expected to behave, given the surrounding context"
--Dr. John Hussman--

perhaps that spread between sweet and sour crudes is a measure of moneyness. they should be priced to reflect the different costs of refining, but that's true only if they're going to be refined. it's like that joke about trading sardines and eating sardines. it doesn't matter how trading sardines might taste.

[GRG55]

Re: is oil the FIFTH currency?

perhaps that spread between sweet and sour crudes is a measure of moneyness. they should be priced to reflect the different costs of refining, but that's true only if they're going to be refined. it's like that joke about trading sardines and eating sardines. it doesn't matter how trading sardines might taste.

It's trying to tell us something jk. Not sure exactly what, but some possibilities in addition to your thesis:

• declining production of heavy crudes from Venezuela and Mexico [Maya crude is about 22 API];
• increased heavy, sour refining capacity upgrades which has increased demand for same;
• concerns about peaking of light, sweet crude supply rates.

[LargoWinch]

Re: is oil the FIFTH currency?

I strongly believe that Oil is the only currency.

jk, do you think something comes out ahead of Black Gold?

[pwcmba]

Re: is oil the FIFTH currency?

Just for fun I'll give the same retarded comment that you get for gold as money-

You can't eat or drink gasoline or take it into a store and buy a loaf of bread.;)

[pwcmba]

Re: is oil the FIFTH currency?

oops! I meant "oil" which is even a bigger mess. Those 42 gallon barrels get a bit unwieldy don't they?

[jk]

Re: is oil the FIFTH currency?

I strongly believe that Oil is the only currency.

jk, do you think something comes out ahead of Black Gold?

saying something has value is not the same as saying that it's money. e.g. land has value, it's not really useful as money. money serves as a medium of exchange and a store of value, or at least it's supposed to. currency/cash is our only efficient medium of exchange, but it continues to lose credibility as a store of value. gold is serving increasingly as a store of value, but is not a medium of exchange at this time. my question is not whether oil has value, it is whether it is being used increasingly as a store of value.