Gold, oil fortunes tied to dollar misfortune

March 13, 2008

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Here are two outstanding examples of the ripple effects around the world when the dollar stumbles. Oil is at a record high at $110 and gold has topped $1,000 an ounce for the first time, while the dollar has fallen below 100 yen for the first time in more than a decade. Most commodities are priced in dollars, so the weaker the greenback, the cheaper it is for holders of other currencies to buy gold and oil. Gold is also generally seen as a hedge against oil-led inflation. Gold has jumped 19 percent this year on top of a 32 percent rise in 2007.

Comments

We invest in gold that we dont need as much as we need aluminium. We need more aluminium capacity to make more aluminium to make lighter cars and stuff to cut down on oil. But we invest in oil because we are still using too much heavy steel and iron which is fine for bridges and buildings not cars anymore. We need to save every drop of oil and aluminum can help us conserve a lot more oil . We still do not have enough aluminum to put in all cars by most part.

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