http://seekingalpha.com/article/143...f-fulfilling-prophecy?source=article_sb_picks One questions the need to regulate oil as an investment asset class.... Oil prices which are clearly being moved upward as demand shifts down should be noted.... ........................................................ Possibly the best solution is a truly universal securities exchange....whereby any individual or other entity can hedge vs adverse price movements.....not only on oil but items such as their own currencies....This is the cost of insurance.... The next move is to further reduce the cost by making all transactions tax free.... This makes capital more efficient ...thus all prices should become more efficient.... As it is most desirable for one to pay for what one uses....Thus the movement to consumption taxes only....worldwide.... ........................................................ The major point being that as the internet saturates each market....it should be a normal process for all individuals to become educated with respect to preserving their wealth by use of a truly universal/international exchange.... Price volatility which happens for reasons out of one's control should be understood to the degree it can be guarded against....at one's choice....
Wait a sec, doth my eyes deceive me? Firstly, the author of this piece of research uses $/CHF, for no better reason than to have more data, blithely ignoring the fact that $/CHF is a pair that has its own idiosyncrasies, so god knows what he ends up measuring. Why doesn't he take cable, which also pre-exists the Euro? Why not take the obvious (and much more logical) choice, i.e. the trade-weighted $? Secondly, he is measuring the statistical relationship between oil/$ and $. Am I the only person that thinks that there's something VERY funny about both his premise and his conclusions?
............................................................. Exactly the point.... At the moment ....there are countries who have energy budgets that are affected more than others....with incremental change.... And one supposes the "insurance" venue would be a better solution.... Particularly with a better....broader based universal exchange.... Price volatility itself....is not going away.... The point being....what can one do.... One can react.... or buy insurance....versus trying to predict....
No, you misunderstand me... The points you make may or may not be valid. All I am saying is that, in my view, the piece of research you've quoted is so deeply flawed on so many levels, it's impossible to draw any inferences from it.
....................................................... Certainly a real possibility.... But does bring into further questioning as to the relationship between the dollar vs oil prices....
I agree with Martinghoul. Why the Swiss Franc? This would be more scientific if he used all major $ currency pairs... Euro (shorter history)/Yen/Pound. Plus why does he use the GSCI instead of Light Crude Oil from NYMEX? Does oil consistently move with other commodities? I wouldn't think so.
Agree 100%... I think the point you're making is absolutely valid, but it's a VERY complicated issue.
......................................................... What is particularly interesting are the recent moves ....namely weakness in the dollar....higher prices in oil.....strength in dollar....weakness in oil....etc.... My major point is exactly the point that you are making.... Regulation of participants .....current demand....future demand....increases in supply....decreases in supply of the components..... etc.... are impossible to predict....or manage.... What this leaves are two possibilities.... One can buy insurance.....or one can react ....these processes need to be very efficient.... Volatility is not going away....
I'll my add my two cents again. Maybe the relationship between the $ and oil is by chance. The US dollar has been weakening for a decade. The supply of oil has been decreasing and therefore prices have been rising. (some blame Index funds for having oil go up to 150 at one point) Plus we can bring up inflationary fears from the increase of the money supply... hence the rise in all commodities.
Or maybe it has to do with the obvious.... Oil is traded in US dollars. Thus, as the US dollar weakens dramatically, in order for foreign oil-producing nations and firms to attain the same level of revenue in their home currency, the price of oil must rise in US dollar terms. Price of oil increase --> Constant foreign revenues due to weakening exchange rate