Gold, Oil Down Because the Dollar is Up
October 26th, 2008 by Dylan
Something weird is going on, because the prices of everything are going down rapidly, including oil, gold, silver, etc. However, this is mainly a reflection of the dollar going up against foreign currency:
Prices of commodities are being crushed. Gold, the barometer of inflation, is being crushed in the USD even as I write, even though I reported last week that it set all-time highs in the Canadian dollar, Indian rupee, South African rand, British pound, and Australian dollar. The USDX is a nice number to look at (although technically it’s for the birds) but it has climbed sharply where some factors I did not register such as foreign dollar-denominated bank accounts redemptions, especially in places like Europe, are forcing banks to buy dollars and sell Euros, and most likely some derivative movements hidden from view.
This means gold is at an all-time high in the UK, while down more than 20% in the past few weeks in the US. So, now that everyone is in debt, and owes more on their house than it is worth, the only thing not going down in value in the US is your debt!