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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: JimisJim who wrote (186877)12/4/2014 1:02:36 AM
From: Elroy Jetson2 Recommendations

Recommended By
JimisJim
Land Shark

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Jim - You emailed me the link for the Federal Reserve of St Louis, which really is the best source. Thanks.

Using that website, here's two charts. The first chart shows the trade weighted value of the U.S. Dollar over the past 20 years.

The second chart below, shows the same Dollar data compared with the price of oil (WTI and Brent) over the past 20 years.

A.) You can clearly see the price of WTI fall below Brent since 2011, as extremely low natural gas prices create domestic competition for oil in the United States.

B.) Oil price tends to fall during recessions, the shaded areas on the chart. No surprise. And the 2008 recession/depression was whopper compared with 2002.

C.) If someone sees correlation between the value of the U.S. Dollar and the price of oil, they'll have to explain what they're seeing, because I just don't see it.

There should not be a correlation between the Dollar value and oil price because oil is a very small part of U.S. GDP, either imports or exports.

D.) The U.S. Dollar was arguably somewhat over-valued in 2000 at the height of the tech stock bubble, as foreign investors bought Dollars to invest in U.S. tech stocks. The 9/11 attack followed by big government spending on wars certainly helped send the U.S. Dollar back down. But is the U.S. Dollar currently over-priced? Absolutely not. The U.S. Dollar is under-priced.

Webpage Link -- research.stlouisfed.org The Dollar line looks flattened-out only because the scale on the left has been enlarged.
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