Monday, May 30, 2016

Keep Oil and Gold In Your Portfolio, no substitutes renewables world reserve currency

No Oil Substitutes

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Oil and Gas - Despite what many western governments and environmentalists are saying, the world has not moved away from oil.  While it is true that many modern vehicles are equipped with hybrid fuel technology, they still depend on gasoline for 80-90% of their fuel needs.  Virtually every home built twenty or more years ago is heated with oil and the cost to change that is high making the change to electricity an additional expense most homeowners simply cannot handle in a depressed economy.  Additionally the more popular modern power generators are only fueled by oil and gas.

Gold - The yellow metal holds a unique status in everything from religion to jewelry to wealth storage.  Even central banks and world governments look to gold as an inflation hedge and trade gold in times of economic trouble (2016 - Venezuela); no other metal enjoys this distinction not even platinum and there's no reason to think that will change anytime soon.  The last time fiat currency wasn't being used world trade relied fundamentally on the gold standard.  With the US dollar losing popularity as the world reserve currency and China looking to gold to prop up its own currency it appears as if the gold standard will once again run the world economic system.

Oil production still powers the economies of many key nations

And these are nations of influence - Saudi Arabia, Russia, Iran, Canada, United States.  Other key countries such as Nigeria and Venezuela are developing vast oil reserves as a source of future economic growth.  As long as oil is available there will be a market for it.  (nigeria oil reserves)

Renewable Energy Sources Continue To Be Too Expensive

With the world economy slumping along there is no reason to expect people to voluntarily shift to expensive sources of energy anytime soon.  Even the cheapest of these - energy derived from corn (corn demand, ethanol) in South America - is already wreaking havoc on commodity prices in that part of the world because it takes too much of the crop to replace just a fraction of the energy it needs.

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