Should i invest in Crude Oil?

[ClayTrainor]

I've been slowly accumulating more and more gold and silver over the past few months, and I'm starting to feel like i need to diversify a bit.

Logic is telling me that now is the perfect time to buy some oil stock since Gasoline is WAY down in price, and since the economy is clearly going to get worse, we can only expect oil prices to escalate in the future. Am i correct in this reasoning?

Is it wise to invest in oil at this time?

IF you already had 25% of your assets in gold and silver, and were looking to diversify, what would you do? Diversify or buy more Gold and silver?

I'm totally new to the whole investment game, any advice is appreciated

 

[gls]

I've been strongly considering the same thing. The easiest way to do it would probably be through an ETF like USO.

http://finance.google.com/finance?client=ob&q=AMEX:USO

 

[weatherbill]

no no! do not buy oil at this time. In a recession or depression, oil goes down becasu eof lack of demand and supply levels coming up....don't do it!

wait for a market bottom, like a dip below $50 a barrel........commodities still have a bit more on the down side to go.

be patient and wait it out.

 

[danberkeley]

Buy oil now, if you want. Dont be foolish enough to think you can catch the bottom. Also, if (another) war breaks out (say against Iran), expect oil to shoot up.

 

[DrCap]

I've thought about this and almost bought USO and then looked also at DIG but thus far I've not pulled any triggers. I think we are seeing global deflation due to credit destruction and so the price of everything is coming down, thus any bull move is still catching falling knives...
My timing often sucks though so, keep that in mind.

 

[danberkeley]

I've thought about this and almost bought USO and then looked also at DIG but thus far I've not pulled any triggers. I think we are seeing global deflation due to credit destruction and so the price of everything is coming down, thus any bull move is still catching falling knives...
My timing often sucks though so, keep that in mind.

Not a big fan of the ETFs. I would rather hold the physical stuff.

 

[jclay2]

What about storing physical gasoline? Just in case things really go to the crapper, you could have a means to have transportation. Also, I saw this episode of Jericho and it was some really scary sh**!

 

[DrCap]

Not a big fan of the ETFs. I would rather hold the physical stuff.

How do you buy physical in any meaningful way? it seems with something like oil you will have counterparty risk. I guess you could buy a drilling rights, with your counterparty being your government.

 

[DrCap]

What about storing physical gasoline? Just in case things really go to the crapper, you could have a means to have transportation. Also, I saw this episode of Jericho and it was some really scary sh**!

If you do this use fuel stabilizers, and a large quantity may be illegal and void insurance. I consider it a good practice to have a few extra gallons, but I try to rotate into my car and refill the gas cans.

 

[danberkeley]

How do you buy physical in any meaningful way? it seems with something like oil you will have counterparty risk. I guess you could buy a drilling rights, with your counterparty being your government.

Well, I could take physical delivery of oil (all 42,000 gallons of it) when a futures contract settles. Not sure where I would put it though.

 

[Cowlesy]

10% in USO isn't a bad idea if you are "investing" and not "trading".

Don't use DIG or DUG for investing. These really play on price volatility and it is very easy to get on the wrong side of a trade. For instance, DUG (UltraShort Oil) was $80/sh when oil was about $56 after some violent, repeated down moves. Then some up moves wiped it out, and even after the slow precipitious decline, DUG is still only about $40.

USO is the way to go to go long oil.

 

[DFF]

I've been strongly considering the same thing. The easiest way to do it would probably be through an ETF like USO.

http://finance.google.com/finance?client=ob&q=AMEX:USO

Agreed. You know it's gonna skyrocket back up in the Spring/Summer - especially when in inflation starts roaring like a mofo as a result of all these bailouts.

 

[Epic]

oil is highly correlated to gold - they are both commodities and are valued in dollars, hence a move in the dollar will effect both of them.

there are some charts of gold vs. oil over time:
here's one: http://www.gold-eagle.com/editorials_05/images/hommelberg071906g.gif

also, remember that we are headed for a period of deflation to a contraction of credit: http://globaleconomicanalysis.blogspot.com/2008/11/cpi-drops-most-on-record-whats-ahead.html so gold/oil may suffer until deleveraging stops and the new printed money comes online. Gold rallied in the great depression, but back then we were on a gold standard, so gold=dollar. Now, gold is not coupled to the dollar.