With Oil in mid $30s, It is better than Gold

The price of Oil has dropped from $140+ to the mid $30s in a matter of months. It was too high at $140 and it is far too low at $30, even if one factors in a serious decline in global economic activity. Contracts for oil futures, only months out, are much higher, and safe and quick returns can be made in the futures market and by buying oil and related stocks. Even in these bad times, these investment will pay off and pay off big time. It is a slam dunk.

Green alternatives, which we will all hear a lot about, are years down the road. Building toward these may help bring the economy back, but economic recovery will be fueled by oil, and it will be part of our lives and reality for decades to come. It will be fun to watch alternative energy sources grow, but the fact remains that almost 90% of the world’s energy comes from fossil fuels and that’s a huge share to ignore. Supply, however controlled by producing countries, is finite. It is a rare resource, even today, and its value over the next months and years will only rise.

So if you want to complement a conservative strategy of buying CDs and treasuries, investing in oil at this time (even if the price drops further in the short term) is equally conservative and smart.