March 3, 2009

Oil and Gold Prices

Obviously markets flutuate and at one point when oil was at 140 and gold at 800, oil was very expensive relative to gold, as expensive as it has been.

Now oil is as cheap as it has ever been relative in terms of gold. Today one ounce of gold is at 950 and oil around 40, you can buy over 25 barrels of oil with an ounce of gold. This is the cheapest oil has ever been in history.

That is how you can see the depreciation of your money. Because in paper dollars oil is still 10 times what it was when we got out of the gold standard.

The price of oil in paper dollars has risen 10 fold. But in terms of gold, real money the price of oil has fallen by 60 or 70%. Oil prices are much lower then 30 or 40 years ago.
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