Tuesday, October 06, 2009

Gold Up, Dollar Down

Rumors that oil producing nations are considering dropping the dollar as the main trading currency for petroleum is pounding the dollar and driving up the price of gold. Gold can never be used as a medium for international trade. There isn't enough of it but it benefits from the rumors anyway. In London trading Tuesday, the yellow metal broke the $1030 an ounce price barrier. This is just below its March '08 historic highs.

I don't know if gold is poised for a breakout but it may be establishing a new, historically high, trading range. I'd be satisfied with that. For now.

Let's see how it does later, in New York.


Steve Harkonnen said...

Ah yes. So much for Fiat Money. This was expected.

But Obama's reaction to this plot - I wonder how long it will take him to respond?

What do you think America should do about this crafty maneuver behind our backs? My answer might surprise you.

beebs said...

It's sad. The dollar was a beacon of stability from 1794 until 1971 when Nixon took us off the gold standard.

US deficits are measured in trillions of dollars, most of the dollars created electronically. No wonder that OPEC wants a real currency for its oil.

What happens when China dumps the dollar and the bonds it holds and all those dollars "come home"?