Thursday, March 1, 2012

How do you hedge the cost of rising oil?

We know the price of oil has gone up in dollar terms and we know gold has gone up in dollar terms. So, if we price oil in an alternative currency, say gold, how has the price of oil changed?

Sovereign Man provides the answer, courtesy of

 Click to enlarge

Oil has been in a deflationary down trend since 2008, which makes sense given a global slowdown that has not found a strong recovery. That leaves the value of the dollar (oil is globally priced in USD) as the primary factor in the nominal increase in the price of oil.

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