There's No 'Money' Gene

The vast majority of the headline analysis about oil implies the recovery in price since 2009 has been a direct result of rising demand from the economic recovery. The sharp rebound, however, is largely currency induced. While the slow upward drift in the ‘real’ (ounces of gold) price suggests demand outstripping supply over the long-term, its muted rebound reveals the influence of currency devaluation on US dollar prices over this period. In other words, the sharp rally fanning the nation’s fear over rising gasoline prices has more to do with excessive money creation than market fundamentals or CME margin increases.

Does this distinction matter? Is there a difference between night and day? Although human DNA is encoded by millions of years of evolution that helps discriminate the difference between night and day, science has yet to find the ‘money’ gene. This is why the cycle of boom and bust regularly repeats within the game of money and capitalism.

West Texas Intermediate Crude Oil (OIL) AND Oil to Gold Ratio (OILGLDR):


Headline: Crude Oil Futures Drop on CME Margin Increase, Projected U.S. Supply Gain

Crude oil dropped in New York after CME Group Inc. raised margins and on speculation U.S. stockpiles increased to near the highest level in two years.

Oil fell as much as 2.4 percent after the exchange late yesterday increased the amount of money traders must hold as collateral for their crude, gasoline and heating oil transactions, effective after the close of business today. The Energy Department will probably report tomorrow that supplies rose last week, according to a Bloomberg News survey.

“The market tumbled hard on news that the CME was raising margins,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re up from the day’s lows because of strength in the equity markets.”