Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (101349)	5/21/2008 8:36:55 PM
From: Bearcatbob	Respond to of 206093

LC, The value of the US dollar is irrelevant to the recent run. The $ vs the Euro has been steady lately. Oil has not. Bob

To: LoneClone who wrote (101349)	5/22/2008 3:17:12 AM
From: elmatador	Respond to 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.