Originally Posted by o7media
Right, I understand that if you're looking to invest in physical gold versus oil it's not possible or practical I guess.
But I was actually referring to stocks or etf's. USO vs GLD for example, or mining stocks vs oil stocks.
Oil will have an intrinsic value deemed somewhat important for a lot longer. Also there will be a lot more sustainability to oil pricing. Right now oil is correlating heavily to China. The one thing with oil however, is that this intrinsic value slowly, very slowly decays over time as technology severely increases. There will always be a market for oil and there will always be somewhat of a presence of demand, even though I am bearish on the very very long term, but macro flat on the regular long term..
Given a financial shutdown, oil will always be the preferred thing to own. It does take up a lot of space to control, but in a financial glitch, nothing really matters, right?
Gold on the other hand has no intrinsic value that holds given a financial collapse for an overwhelming percentage of outcomes, and suboutcomes! Also, I don't coin the term financial collapse as meaning one specific outcome, as obviously there can be many associated outcomes. My point is though that the probabilities are much, much, much more in favor of gold having no relative value. Even in the few situations where gold does have an intrinsic value after a financial crunch, it loses it over the time, in most of the situations. So to make that clearer for those who seem to have trouble..... The crunch has that small possibility of leading to gold having somewhat of an intrinsic value. Then that probability is broken down into sub probabilities of gold sustaining any type of intrinsic value consistently. This is where you see yet another small probability of the metal actually maintaining its intrinsic value. While the future can never be predicted a 100% of the time with 100% accuracy, probabilities make it easier to see what is most likely given other factors, right?
Also when I say financial crunch, I define that as markets no longer functioning. I don't really see it as a Dollar vs Gold kind of thing, as everything has it's own characteristics and reasoning for movement in price. Yes there are correlations sometimes for the short term, but take those with a grain of salt imo....
I am not describing the logical implications of why gold is not desired given market failure for the distribution of outcomes, as those are my own ideas that I will not share lol. I give you my opinion, so take it for whatever you think it's worth.
I am not positioned in anything at the moment, except DNNC...lol..
Edited by apples4oranges - 6/3/12 at 2:12pm