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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (66680)	7/17/2007 2:29:04 PM
From: The Vet	Read Replies (1) \| Respond to of 116555

mish, your comment "anyone in London can walk into a gold dealer and buy gold in the British Pound or Euros even though gold is priced in dollars" is true of course but it's not always the best way to buy and sell. In fact many gold dealers quote their buy and sell prices using the USD but on conversion to other currencies they add the spread of the currency exchange to their normal transaction spread. This makes the transaction in any currency other than USD far more expensive for the buyer by few points either way. Just check the Canadian gold dealer Kitco. His prices are quoted in USD and he will accept CAD (his native currency I presume) but only at the buy and sell rates on the forex market. That adds quite a disincentive to purchase in anything other than USD. Kitco USD sell prices online.kitco.com Then click on CAD and see the rate offered. Kitco USD Buy prices. online.kitco.com And then check the CAD rate.. There is always a spread between the buy and sell conversion for any currency except USD. Most other bullion dealers in other currencies and other countries do the same thing.

To: mishedlo who wrote (66680)	7/17/2007 7:01:45 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 116555

At any rate, where Iran HOLDS currency DOES matter IMO. What oil is priced in is totally irrelevant IMO. Not if what currency a country holds depends on what currency oil is priced in. Take India, for example. It holds large amounts of USDs in its reserves primarily because oil is priced in USDs. The reason for holding USDs and not any other currency is to avoid uncertainty on the currency fluctuation front. That oil prices fluctuate makes things uncertain enough. Imagine holding some currency (in India's case, say, the rupee). Now in addition to fluctuating oil prices, there is also the issue of fluctuating currency rates. If oil prices rise AND the dollar becomes stronger against the rupee, then it is a double whammy. If oil is no longer priced in USDs, the reason for holding a large reserve of USDs will go away too. The two aspects are like the two sides of the same coin.