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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: SliderOnTheBlack who wrote (41968)	4/15/2005 9:34:20 AM
From: Think4Yourself	Read Replies (3) of 206326

Let me see if I understand this because my mind is failing after a week of looking into how currencies, deficits, and central banks work. Oil is bought/sold in USD. The USD has been falling to help exports reduce the trade deficit. The Japanese and Chinese central banks have been buying dollars to support their pegs, which they promptly use to buy T-bills and T-notes. The Euro isn't pegged so it has appreciated against the dollar. As a result since the Euro is floating and has appreciated oil costs a lot less in Euros than it does in Dollars. Since China and Japan ARE pegged, their chart lines would basically track the USD line. The conclusion is that the real price of oil hasn't changed significantly. The rise in price is mostly due to the falling dollar. An additional effect is that countries who peg their currency to the dollar are seeing the value of both their currency and dollar reserves falling as the dollar falls, AND they are paying more dollars for anything denominated in USD. Is that the gist of it? If so then all of this is actually STARTING to make sense.

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