Like the Oil Spike Never Happened

By: Adrian Ash | Fri, Jul 3, 2009
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Pricing crude oil out of the Dollar this Fourth of July...

SO THIS WEEK'S spike in the price of Brent crude oil to $73.50 was due to a "rogue trader".

His unauthorized dealing through the PVM brokerage reportedly sparked 30 times the typical trading volume and incurred a loss of $10 million.

Whatever the regulators missed this time, that spike hardly compares to last summer's run. But averaging nearly $70 per barrel in June, the price of US crude oil just matched its average monthly price of the last four years.

No, that's not much of a recovery given the monthly top of $132 per barrel hit this month and last in 2008. And it's peanuts next to the record daily close of $145 hit on Bastille Day, July 14th '08.

This Fourth of July, however, and not least if you're out driving, spare a thought for just how much more expensive crude oil and thus transport, heating, detergents and plastics are today than back before the credit bubble morphed into the financial crisis and then into today's global depression.

Also note how the spike of '08 was only slightly tempered for European drivers and households when the North Sea benchmark, Brent crude, is priced out of Dollars and into the British Pound.

Whereas, if priced in Gold - a simple enough concept amid rumors and counter-rumors of Chinese grumping over the Dollar's volatility and the search for a new world reserve basis - crude oil is now back pretty much where it was throughout the low and falling trend of the late 1980s and 1990s.

Just a thought. Happy holidays if you got any independence to mark.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

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