Investing in Oil instead of T-Bills

[shekib82]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

 

[ABikerSailor]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

Hey STUPID........wanna talk about the fact that gold has gone UP while oil has gone DOWN?

Fuck.......just last week, oil was under 80 bucks/barrel. It used to be around 110 buck/barrel.

Gold has gone from 300 bucks per ounce (In 1998) to over 1600 (and at one time it was over 1700) bucks per ounce.

Don't watch the markets closely, do ya?

 

[KissMy]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

Hey STUPID........wanna talk about the fact that gold has gone UP while oil has gone DOWN?

Fuck.......just last week, oil was under 80 bucks/barrel. It used to be around 110 buck/barrel.

Gold has gone from 300 bucks per ounce (In 1998) to over 1600 (and at one time it was over 1700) bucks per ounce.

Don't watch the markets closely, do ya?

Exactly - It cost a lot of money to store oil. It cost next to nothing to store gold.

 

[konradv]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

Hey STUPID........wanna talk about the fact that gold has gone UP while oil has gone DOWN?

Fuck.......just last week, oil was under 80 bucks/barrel. It used to be around 110 buck/barrel.

Gold has gone from 300 bucks per ounce (In 1998) to over 1600 (and at one time it was over 1700) bucks per ounce.

Don't watch the markets closely, do ya?

But that's just a bubble. Gold has very little intrinsic value beyond jewelry and some manufacturing applications. It's all in the minds of the buyers and, when their minds change, the last ones in are going to find their gold woth half of what they bought it for.

 

[ABikerSailor]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

Hey STUPID........wanna talk about the fact that gold has gone UP while oil has gone DOWN?

Fuck.......just last week, oil was under 80 bucks/barrel. It used to be around 110 buck/barrel.

Gold has gone from 300 bucks per ounce (In 1998) to over 1600 (and at one time it was over 1700) bucks per ounce.

Don't watch the markets closely, do ya?

But that's just a bubble. Gold has very little intrinsic value beyond jewelry and some manufacturing applications. It's all in the minds of the buyers and, when their minds change, the last ones in are going to find their gold woth half of what they bought it for.

Wrong. Every nation throughout history has used gold as a currency, with many of them basing their economy on how much they have of it.

 

[MaggieMae]

Today on the CNN show GPS with Farid Zakaria, the anchor had a segment about China's complaint regarding the US bond downgrade. He has said that the Chinese are angry at their government for investing in US securities and that they see themselves as doing America a favor. He went on to counter this last statement by saying that China has no alternative then to invest in US securities as the EURO is on shaky ground and Swiss Francs and the Pound sterling can't provide enough currency for china's growing government reserve.

This got me thinking: it is true that as a currency there seems to be no alternative to US securities, furthermore the value of Gold is very speculative so it no longer makes sense for government to invest in it. But this said what about another commodity that is being traded, that can be stored safely and easily and that will always have value: Oil.

Indeed, if china wanted to store its wealth in something, Oil would be the best solution. Another would be iron, or copper or really any other materials used for industry or that can provide energy. I think in trying to find a future global reserve currency the governments of the world should seriously consider one that is values in real world commodities that are used and will continue to be used for energy and industry.

Now of course if china were to try to buy a lot of oil immediately it would raise the price, but it could do it gradually. Same could be done for any other commodity.

Oh but they already are. Never underestimate the Chinese capability to recognize potential long-term problems and invest immediately in short- and long-term solutions. It has become a forward thinking country, unlike the USA which once led the world in critical strategies. Sad, really.

China

China’s Foreign Oil Investments

Because of China’s growing future oil demand and its growing reliance on oil imports, its national oil companies are investing in overseas projects. China is taking advantage of the economic downturn and lower asset values overseas to increase its global acquisitions and financing of projects whether for direct investment in energy resources or in loan-for-oil deals where China provides loans for infrastructure development in oil-rich countries in return for future supplies of oil. While several oil-rich countries have been strapped for cash during the credit crunch of 2008 and 2009, China has foreign exchange reserves that it can use to leverage such investments. China has loan-for-oil deals with Russia, Brazil, Venezuela, Kazakhstan, Ecuador and Turkmenistan, among others.[xx]

China agreed to loan companies in Russia and Turkmenistan to construct oil and gas pipelines in exchange for future energy shipments. The loan to Russia is for $25 billion to finance the East Siberia Pacific Ocean oil pipeline in exchange for 300,000 barrels of oil per day. The loan to Turkmenistan is for $3 billion for a natural gas project to feed the Central Asia Gas pipeline. Brazil’s oil company, Petrobas, is receiving $10 billion for oil development in return for 200,000 barrels of oil per day. Venezuela’s loan of $4 billion is to finance infrastructure projects in exchange for its exports to China to increase to one million barrels per day, an almost three-fold increase.[xxi]

More recently, state-owned Sinopec (China Petroleum & Chemical Corporation) invested $7.1 billion in Brazil’s Repsol stock offerings, giving China a 40 percent stake in that business and access to Brazilian offshore sub-salt oil fields.[xxii] China’s national oil companies are also negotiating exploration rights off the coast of Cuba, 40 miles off the coast of Florida, where Cubapetroeo, Cuba’s oil company, estimates that Cuba has up to 20 billion barrels of oil in its offshore areas, although other estimates are less.[xxiii]

When China expands its refinery capacity to include sour and high-sulfur crude types, which it plans on doing, that investment will pave the way for similar deals in other regions of the world with less favorable crude types. This year, China’s Sinopec International Petroleum Exploration and Production Company agreed to buy, for $4.65 billion, the 9 percent interest that ConocoPhillips holds in Syncrude,[xxiv] a Canadian business involved in the production of oil sands (an asphalt-like heavy oil).[xxv]

One of China’s strategic objectives is to offset its growing import dependence with production in oil-rich countries by acquiring access to enough of their oil reserves overseas. According to Michael Wang of IHS Herold, China consumed nearly 9 million barrels of oil per day in 2009[xxvi], with less than 4 million barrels per day of domestic production, creating a gap of nearly 5 million barrels per day. And while China has assets of 1.2 million barrels per day in international oil production, according to Wang, another 3.8 million barrels per day is needed to bridge the gap, without even considering future demand increases. According to Wang, that will require another 12 billion to 20 billion barrels of oil equivalent resources, and at a going rate of $25 per barrel for proved oil reserves, it will cost the Chinese national oil companies an additional $300 to $500 billion.[xxvii]

Most recently, China’s CNOOC is trying to invest in an oil field in southern Texas, paying up to $2.2 billion for a one-third stake in Chesapeake’s Energy’s assets that could result in up to half a million barrels a day of oil equivalent. This is China’s second try at investing in a U.S. oil field, having failed 5 years ago to buy California-based Unocal Corporation. In this current deal, if it proves successful, China will also be gaining technical expertise in drilling in hard-to-get deposits in shale rock.[xxviii]