subject: Is Oil the New Gold? [print this page] Is Oil the New Gold? Is Oil the New Gold?
Trading is not one of easy substitution. A commodity can't simply replace a metal. Trading is not linear, nor is it limited - there are many layers of potential trading. Binary options can be used to explore these directional elements.
Market transition need not be about replacement or supremacy; rather it can be used to infer a different option or pathway of equal potential. Developments within the oil industry are beginning to etch out a new trading route. Oil is at the center of a growing ring of market volatility. Binary trading can be utilized to respond to the latest economic indicators.
Oil has matched gold in its increasing sustainability. This is certainly not the first time markets have experienced rising oil prices building a growing sense of sustainability, oil is moving beyond the realm of spikes and into a more stable pricing structure, comparative with Gold.
Recent oil developments are certainly refreshingly new' and by implication of context many traders may consider a shift in strategy. Gold is often used as a hedge against sovereign instability and forex oscillations, serving as a well fleshed out global currency. Oil offers an alternate geopolitical hedge against the current turmoil within the Middle East. In the same way investors are drawn to gold based on risk adversity, investors' may also be increasingly drawn to the concept of including a percentage of oil within their portfolio, creating a safety net against geopolitical debris.
The risk of contagion from Libya to Saudi Arabia is an immediate factor. Many argue that Saudi Arabia's reassurance of protection and ability to replace supply problems alleviates this immediate factor. The growing combination of fundamental variables could suggest otherwise. The fusion of differing ideologies within Saudi Arabia, could lead to a potential trigger old leaders are matched with a notably young populous. In the trading world this pressure need not be a reality as just the perception that this is a possibility is enough to evoke reactive trading patterns. The brittle nature of the Saudi Arabian infrastructure is exposed for all to see, failing to subdue the pricing tail risk.
Immediacy aside, oil may form part of a broader trading strategy protecting against the budding seeds of unrest already sewn by political discord. Granted the oil industry has yet to level out and is still exhibiting the effects of rash political movement. Highlighted within the resource and pricing relationship, as oil moves upwards by approximately 20% the GDP ascends by around 25 base points. These effects may lead those deemed as natural sellers' to divert from selling long due to the possibility and fear of rising oil prices. When the pricing structure quells the natural order of trading, buy and sell relationships will be restored and the balance between long term oil and gold strategies almost certainly tactically re-assessed.
Long term impacts on demand may further stretch into a broader trading overview. We live in times of high unemployment and the fusion between high levels of unemployment and the growing cost of gasoline may impact public spending creating a domino effect on future trading.
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