US Dollar and Price of Oil Directly Linked

The Dynamic Wealth Report
October 17, 2007

Oil Burning Brighter Than Ever

Oil Prices reached new highs this week, driven higher by concerns over
additional conflicts in the Middle East, and specifically by recent
nuclear announcements made by Iran.  Also contributing to the unsettling
nature of the market is the saber rattling by Turkey about potential
military moves into Iraq.  This news flow is clearly an external factor
that will continue to make investors question the stability of oil
supplies, and will drive prices higher on news and rumors.

Interestingly I have noticed that very little has been noted in the
general financial press about the pricing pressure created by the
declining dollar.  Most people don’t realize that the price of oil is measured
in US dollars.  Therefore, as the US dollar falls it actually cuts the
price of oil to international consumers.

This little fact creates an interesting cycle, as the dollar falls, the
price of commodities falls.  This reduces the overall expense to
international consumers allowing them to bid up the price of these
commodities without actually impacting their own financial situation.

-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?

Our own small-company specialist, Robert Morris, has found a way to 'sniff out' tiny penny stocks on the verge of a major breakout.  And the timing for this has never been better.

You see, the system takes advantage of an obscure SEC regulation that sends penny stock prices through the roof.

We've seen some stocks gain 852%... 5,450%... even 17,496% in no time flat.

Click here for the details...
-----------------------------------

The Fed with its continued rate cut mentality is contributing to this
continued cycle.  They are attempting to compensate for the ridiculous
bubble in the real estate market by cutting interest rates.  The rate
cut is only going to scare away foreign investors who normally buy US
securities, as they search for higher returns.  As they flee the country
with their investment dollars, they will need to sell more US dollars,
further decimating the price.

The US dollar is clearly linked to many of the commodities in the
market.  Watch this connection closely, as a bounce in the US dollar could
result in a negative move in the commodities.

 

•  Ethanol (New low of $1.50)

Ethanol prices have bottomed out over the last few weeks with ethanol
prices hovering around a low of $1.50. This has not however resulted in
a drop in corn prices. Apparently the excitement has waned for this
alternative energy product.

 

 

 

 

 Print Page                                                   Bookmark Us