Hey people, just wanting to know your opinions about the possible increase in oil price and the effect it will have on PM prices and gold and silver shares. Will we have another repeat of the 70's where oil went sky high. and because the price of gold is linked to the price of oil (and silver is to gold), gold price went high and silver price went up also? I'm under the impression that high oil prices may result in deflation because because everyones personal costs will go up and therefore have less money to spend on consumables, causing decrease in demand and result in falling prices. Im not sure how other commodities fared during the late 70's, but PM's went well in that environment. Personally, i think if there was to be a shrinking supply of oil due to crisis in the middle east(or any other factor that may result in high oil prices).. gold will go higher.. and silver will see an even higher increase and shares higher still. Currently im seeing All ords/DJI falling while PMs and PM stocks increasing.. do you think this trend will continue(if the price increase of oil also continues)? Would appreciated all your thoughts
Well I think so, but the deflation will be actually inflation since all those commodities go into making the consumables in question. So expect to see the prices remain the same, or drop slightly, and the inflation to appear in the new quantity you purchase. e.g 125gm becomes 100 gm, 200 sheets becomes 180 sheets, loaf of bread loses some slices etc.
