Time to dump gold and buy oil?

Pincher

What bad news can beat oil down further?

I would buy some RDBS and BP next time I have some spare money. They pay dividend, so it's not that bad through the lean years.

Atreyu107

Biggles wrote: »

Neither of them are real investments. But the graph isn't visible at the moment, so I'm afraid your point is lost.

Back up now. Original site must have removed it.

I'm aware of how commodities work; I was stating the fact that I don't invest in either gold or oil producing companies, nor do I trade futures (for which you can trade the underlying asset) on either, or in any commodity for that matter.

Sam_J12

Oil production is going into overdrive at the moment in the US with shale and the reaction of the OPEC companies. I read today that due to the massive surplus there is a risk of storage space for oil running out and the price plummeting to $20 a barrel. I would not invest in oil right now.

MJ12

EdGasket wrote: »

Gold should go up as it is not subject to dillution like currencies are with QE. I don't know why it has gone down and not up?

I have a theory. The vast majority of traded gold (and other PMs) are in fact I.O.Us, and much of the "allocated" gold are in fact unallocated(or allocated on to the same lump of gold multiple times).

One of these days, people will realise they can't take delivery anymore, and paper gold will come off the gold standard, you just wait. :rotfl:

Glen_Clark

Kendall80 wrote: »

perhaps an improving short term outlook for equities?

Draghi is suggesting more 'stimulus' but the German Government can borrow for 10 years at 0.5%, and you have to pay them to take your money for 2 years! Despite record levels of personal (and UK Government) debt the Nationwide are sending out letters paying people £25 just to accept a credit card from them.!
We are already awash with QE. So what is there to boost equity prices in the 'short term' ?

bigadaj

Glen_Clark wrote: »

Draghi is suggesting more 'stimulus' but the German Government can borrow for 10 years at 0.5%, and you have to pay them to take your money for 2 years! Despite record levels of personal (and UK Government) debt the Nationwide are sending out letters paying people £25 just to accept a credit card from them.!
We are already awash with QE. So what is there to boost equity prices in the 'short term' ?

Lack of alternatives.

The points you raise above just show the effects of qe and loose credit, at least for those that don't really need it.

Base rate at near zero, advanced economy governments being able to borrow at incredibly low rates means that there is a wall of money chasing yield. Much of this has flooded into property, whether it be owner occupied or buy to let. Buy to let is being made less attractive for many people, so equities at current levels with uk shares yielding 3% plus then that is going to translate into a good level of support and increase in the short term, potentially at least.

panter

MJ12 wrote: »

I have a theory. The vast majority of traded gold (and other PMs) are in fact I.O.Us, and much of the "allocated" gold are in fact unallocated(or allocated on to the same lump of gold multiple times).

One of these days, people will realise they can't take delivery anymore, and paper gold will come off the gold standard, you just wait. :rotfl:

Yes, the paper gold market dwarfs the physical market. But so what? Derivatives markets dwarf actual securities, so you could say the same there.

Paper gold traders often have the option to settle in cash rather than physical gold, so the idea that one day there won't be enough physical gold should people want delivery is flawed - they may not have the right to demand physical delivery.

No, I'm afraid you have fallen for a line pushed by the gold bugs.

panter

Oil is bombed out. Demand for oil is falling. Oil production exceeds supply. There are full oil tankers floating around with nowhere to go. Gas supply is growing. Electric vehicles will be economic within maybe 5 years. Why would anyone invest in oil.

When the above message becomes the dominant meme, invest in oil. Until then, don't try and catch a falling knife. When the knife is on the floor, pick it up. A couple of years maybe.

shaun_from_Africa

panter wrote: »

Oil is bombed out. Demand for oil is falling. Oil production exceeds supply.

The worldwide demand for oil is not falling at the moment, it is in fact steadily rising. The relevant figures for this can be found from many different sources:
https://www.iea.org/oilmarketreport/omrpublic/
http://www.yardeni.com/pub/globdemsup.pdf

The reason for the massive glut of crude at the moment is simply because the rate of production is increasing faster than the rate of demand due to OPEC refusing to cut production levels to allow for oil shale fracking.