Like gold, diamonds last forever, and often experience similar price fluctuations to gold. These price changes are, in turn, like those of oil, which is also drawn from limited ground-based reserves. The ups and downs of the dollar prices of diamonds, gold and oil tend to follow each other rather closely during periods of accelerated US money supply growth. These co-movements help give insight into an ongoing puzzle about the relationship between oil prices and inflation.

One theory posits that oil prices are relative price changes that cause inflation. Another says the causality is the opposite: that inflation and the expectation of inflation cause oil price increases, and that both are, in turn, caused by the growth rate of the money supply.

In the 1960s and 1970s a popular theory circulated that inflation was not caused by money at all, and that theory has reared its head again, as oil prices and inflation have both risen during the ongoing Covid-19 pandemic and, now, with Putin's war on Ukraine as the pandemic subsides. The oil price theory of inflation is that oil prices are increased by monopolistic “price-gouging” behaviour on the part of the suppliers of oil. The origin of the idea was that oil suppliers are able to form a monopoly, so that they become the only suppliers of oil and therefore are able to dictate a monopolist world price of oil that maximizes their profit.

The monopoly was said to be the Organization of the Petroleum Exporting Countries (OPEC). In September 1960 OPEC began as a group of five nations trying to coordinate new oil production. Prices for a barrel of oil were denominated in US dollars, while the Bretton Woods monetary regime locked the US dollar price for an ounce of gold at $35.

The choice of using US dollars per barrel enabled the price of oil to remain stable as long as the gold standard lasted. The dollar oil price from the start of OPEC until the breakdown of the Bretton Woods system fluctuated very little, keeping at a near-constant $3 dollars a barrel from June 1953 to November 1970.