If you wondered why gold was above $1,000 an ounce and oil was surging
The truth is out there!
I have been doing some ‘virgin trader’ talking to ‘the broker‘ again, this time about gold, oil and the dollar.
Now, not normally the sort of person to mince words, he said that the US economy relies very little on the international market, it is a massively domestically fuelled economy. The Chinese are to a large extent the same. Europe and especially the UK are dependent on international trade and in particular the trade in imported commodities i.e oil. He thinks that opening the X-File on the dollar will harm Europe’s fledgling recovery and make recovery in the UK more difficult to achieve, especially if sterling splutters and dies, which it may do for the same reasons as the dollar – there are just too many of them about.
Resources stocks took the FTSE over 5,000 (although it has now fallen back) as they would receive higher dollar prices for their commodities – the problem arises (a realisation that has brought the FTSE back below 5,000) when a lower dollar makes the US more competitive at the same time as high commodity prices choke of any signs of industrial recovery.
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