Forgive me if you've heard this one before.
One sday in the markets, trader A decided to open bidding on a can of Olives. He offered it at $1. It was snapped up by B at $2, who sold it to C at $3. D jumped in at $4 and E finally prevailed at $5.
Proud owner E opened the can and found the Olives had gone bad. He went back to A and complained, " You sold rotten Olives! I want my money back."
Grinning, A said, "Son, those weren't eating Olives. Those were trading Olives."
Anything can be made into a store of value if everyone agrees. Western societies have had a fondness for gold and precious metals, but any material will do. The Mayans used feathers.
Oil and commodities are increasingly being used as a store of value as inflation concerns make the wisdom of relying on financial instruments seem dubious. But per the little story above, once participants quit seeing commodities as an inflation hedge, they will revert to their fundamental price level. And the indications increasingly are that those values are well below the price the market currently assigns them.
One sday in the markets, trader A decided to open bidding on a can of Olives. He offered it at $1. It was snapped up by B at $2, who sold it to C at $3. D jumped in at $4 and E finally prevailed at $5.
Proud owner E opened the can and found the Olives had gone bad. He went back to A and complained, " You sold rotten Olives! I want my money back."
Grinning, A said, "Son, those weren't eating Olives. Those were trading Olives."
Anything can be made into a store of value if everyone agrees. Western societies have had a fondness for gold and precious metals, but any material will do. The Mayans used feathers.
Oil and commodities are increasingly being used as a store of value as inflation concerns make the wisdom of relying on financial instruments seem dubious. But per the little story above, once participants quit seeing commodities as an inflation hedge, they will revert to their fundamental price level. And the indications increasingly are that those values are well below the price the market currently assigns them.
