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Your Oil Stocks Aren't Coming Back

Some of us are considering oil stocks as a reasonable store of value. Gold is tradable, but the transaction costs are great and ultimately it cannot be used. (If we get to the point of needing gold to buy groceries, then holding value is probably the least of our worries.) Oil is necessary for the world to operate. While we may transition to other forms of fuel, the cost of the Great Recession will limit these investments. For the foreseeable future, oil demand will be relatively inelastic. With the marginal costs of replacement approaching $65/bbl, the price of oil cannot stay significantly lower long term.

For me at least, I am storing some of my assets in gold and oil - equal parts in each.