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

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To: LoneClone who wrote (101349)	5/22/2008 3:17:12 AM
From: elmatador	of 206093

that's not accurate. I need to buy a barrel of oil. I take BRL, give to the Brazilian Central Bank, which gives me the USD to send to a GCC OPEC country. Say in the past bought that barrel when it was 100 USD and BRL was 1.7/USD. I gave BRL170 to the Brazilian Central bank to pay for my oil Today was 129 and the BRL is 1.65/USD. lets see how much BRL I had to give to the Brazilian Central bank today even though the BRL appreciated against the USD. I gave BRL212.85 to the Brazilian Central bank to pay for my oil. The Saudis has now more and more USD for the same amount of oil. See what happen at their end. The oil company gets Elmat's USD and give to their Central Bank. They print Saudi Rials ( at fixed rate since it is pegged to the USD) and give the newly printed Saudi Rials to the oil company. The more the USD price of the oil increase the more the Saudis have to print the more they cause inflation on their country. As you can see oil priced in USD is inflationary in both ends of the trade. At a given point somehting must be done: Saudis give up the Dollar Peg or pricing the oil in a basket of currency and not in the USD. Both means dismathling the USD with major colateral effects.

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