Trace Mayer

Oil Majors Should Just Buy Real Gold

bricki, I think you missed an important argument. "Unlike the current nomenclature I consider gold cash and fiat currencies such as the Federal Reserve Note Dollar, Euro, Yen, etc. to be ‘like-cash’ which will eventually evaporate just as other ‘like-cash’ assets have such as Auction-Rate Securities, Asset Backed Commercial Paper, etc."

"For example, footnote 14 of the 2007 Annual Report for the Bank for International Settlements states, ‘Gold is considered by the Bank to be a financial instrument.’ "

Because the oil majors operate in so many different countries they hold many different currencies. My assertion is they should buy the only currency that does not contain counter-party risk. Additionally, the 5 oil majors could drain the entire COMEX warehouse with an immaterial 0.36% of current assets. How is the cash portion of their balance sheets currently allocated between $, A$, NZ$, C$, Euro, Yen, etc.?

Oil Majors Should Just Buy Real Gold

toomuchgas and bricki, I suppose we differ on our view of a critical issue and underlying premise with which I begin which is: whether the current economic environment is a deflationary credit contraction. If yes then 'when demand rises' and 'economic growth' returns may be a looooong ways away.

Skate where the puck is going to be not where it is and it appears we are skating in opposite directions and only one can be right. Markets are great though because they financially reward those who choose correctly.

dieuwer, exactly my point. The reason why what Shell is doing is wrong is because oil is not money, as such hoarding decreases rather than increases price and the negative interest rate for oil is too expensive relative to gold (which is cheaper to store 20 barrels of oil or 1 ounce of gold?). Shell should stop buying oil and start buying and hoarding gold.

ANTS, if you did not read the article then why did you comment?

Oil was not an integral part of the economy 2,000 years ago. However, the commodity ratios were probably very consistent back then such as wheat/gold, etc. In the current case, the 70 year gold/oil ratio is extremely consistent.

To get to your pet question, I think a better question to ask is how big is yellow, but perhaps you should do some further research. First, the oil the 3 Magi delivered was not the same black gold we use today but a luxury good. Second, there is a historic gold/silver ratio. Third, Judas threw out relative prices for such luxury goods as oil and myrrh (this is the correct spelling). Therefore, you could derive the approximate price. More research would be needed to determine the long-term pricing ratio. However, because of the Roman inflation the pricing data may be inaccurate and need adjustments but that is a start.

Additionally, it is asserted the gifts were probably chosen for the symbolism not their economic properties or relationships. Gold is the Ancient metal of Kings; fit for the King of Kings. Frankincense when burned was believed to carry prayers to heaven which is fitting for the High Priest. Myrrh was an embalming ointment to signify his future death and was used in his burial (John 19:39).