First thanks for replying instead of just downvoting. I might argue that the commodities you're referencing and precious metals are a little different. What y

First thanks for replying instead of just downvoting. I might argue that the commodities you're referencing and precious metals are a little different. What you want to look at is the size of the stores versus the yearly production. I don't know what the crude stockpiles are worldwide above ground, but they don't amount to much more than a few months worth of consumption. So if you were going to pick a single commodity to use, you probably wouldn't pick crude. Because there's very little buffer, supply or demand shocks quickly work their way into prices. This is not ideal. http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves http://en.wikipedia.org/wiki/Global_strategic_petroleum_rese... Diamonds do satisfy the "large reserves relative to production" as DeBeers supposedly has many decades worth of diamonds locked up in vaults. This is to keep the price higher than it otherwise would, made possible by demand they manufactured through advertising. So while diamonds do have the buffer we want, they aren't divisible. Take a barrel of crude and pour it into two different containers. Each is now worth basically half of the first container. But split a diamond in half, and its value isn't cleanly divided in two. Diamond prices are based more on the carat square or cube (http://forums.udacity.com/questions/100166221/power-law-or-exponential http://forums.udacity.com/questions/100166221/power-law-or-e...) so dividing a diamond in half makes each of the halves worth 1/4 of the whole. Not a good feature of something monetary; getting change for a dollar doesn't destroy any value. Gold and silver on the other hand are divisible, fungible, and have high value relative to size and weight. Gold doesn't tarnish at all and silver very slowly and whatever oxide it does produce is protective. Also the yearly production of gold and silver from mining only represents a few percent of world stockpiles so supply or demand shocks have to be very large indeed to make drastic price changes; also a nice feature. Diamonds aren't fungible nor divisible. Crude doesn't have large stocks and has much lower per-unit value.