The US Dollar And Black Gold

The illustrious government of the USA has been spinning a global web of financial deceit for the better part of the past 35 years. Since Richard Nixon closed the Gold window in 1971, and the US last defaulted on it's debt to the world, the US Dollar has been the biggest lie known to mankind.

By hook and by crook the US Dollar became the "reserve currency" of the world as the US and the Saudis in 1973 declared the US Dollar the single barter for Oil. In exchange for a lifetime of military support, the Saudi Kingdom agreed to accept ONLY US Dollars for their Oil. To keep things simple, other Oil exporting nation's soon began accepting ONLY US Dollars for their Oil. This action then created a "demand for US Dollars". The US Government had effectively switched the Dollars backing from Gold to Oil.

As the years passed, this new, and growing, demand for US Dollars allowed the Federal Reserve to begin and perpetuate a monetary inflation unrivaled in the history of mankind. This monetary inflation is soon to reach it's zenith. Soon to be followed by the complete destruction of the US Dollar as a currency, the destruction of the US Economy. and the destruction of a standard of living we have taken for granted for the past two generations.

Much debate has recently swirled within the "mighty G7" nations that it is the "speculators" in the futures markets that are causing the accelerating rise in the price of Oil. In the West, particularly in the US, it's is always somebody else's fault. Nobody ever wants to, or will, stand up and take responsibility for their actions. It is always easier to blame somebody else. This is why we have so many lawyers in our society today. "Then I'll sue!", should be this nations motto. With so many lawyers in our government today, it is little wonder that we continually play the "blame game" when it comes to rising Energy and Food prices. How naive these fools are. How foolish we, as a nation are, to elect these ambulance chasers to be our leaders. Hey, "ya get what ya pay for." Only a collection of US Government lawmakers could come up with such a ridiculous idea as this to pander to the voting public:

US House votes to sue Opec
The US House of Representatives has approved legislation that would allow the nation to bring a lawsuit against Opec for conspiring to keep oil prices up, a move reflecting the rising tensions between energy producing and consuming nations.

“Opec’s concerted manipulation of world oil marketplaces calls for more than begging for help,” said Robert Scott, the Democrat representative from Virginia, during the House debate. “It calls for full anti-trust enforcement.”
http://www.thenational.ae/article/20080521/BUSINESS/57384847/-1/NEWS

Folks, it just can't get any more pathetic than that. Well, it probably can, and probably will, but to even suggest that they can "sue OPEC" and change things, makes one question strongly the leadership of our nation. If this is the best these clowns in Washington can come up with to solve runaway Oil prices, we must then resign ourselves to the fact that things are probably going to get a whole lot worse before they get and better. A WHOLE LOT WORSE!

I am of the opinion that Oil's rampant rise today is a direct result of it's affiliation with the US Dollar over the past 35 plus years. One of the Fed's biggest regrets during the 1970's inflation crisis was that they did not suppress the price of Gold. Today the Fed and it's sister central banks in the G7 work overtime to halt and/or slow the rise in Gold prices. They can do this by dumping their reserves on the market place. By all estimates, Gold should be more than double where it is today just to have kept up with inflation. Strangely it is not...because of the central bank suppression. Oil on the other hand, is not "held in reserves" by central banks, and cannot be "dumped" on the market in an effort to suppress the price. This is why we so often hear about US officials begging the Saudis to pump more Oil.

Thus, with the Dollar effectively backed by Oil the past 35 years, it should come as a surprise to no one this seemingly out of control rise in the price of Oil over the past 12 months. The 70's are being replayed again at the dawn of the 21st century, only this time Oil is playing the role of Gold. As the value of the US Dollar plummets with each new pile of them dumped into the market place by the US Treasury and the Federal Reserve, Oil has no choice but to rise in price.

The "speculators" are only taking advantage of the situation the US Government created and perpetuated over the past 35 years, and simply "profiting " from the exposure of the lie that is the US Dollar. The speculators are not the cause of the rising price of Oil. It is foolish to even suggest it. These speculators are nothing more than vultures circling the soon dead carcass of the US Dollar.

How and/or when will Gold benefit from these "exorbitant" Oil prices? Gold is historically cheap relative to Oil right now. Gold at a very minimum should be double today's price relative to today's Oil prices. A likely scenario may unfold as we move into summer and Oil prices "correct". Money will move from Oil into Gold [and Silver] as the Oil trade unwinds. However, because rising inflation is baked into the next several quarters, falling Oil prices may not necessarily lead to falling Gold prices. Very soon, and quicker than many believe, Gold is about to pick up the torch in the Inflation Hedge Sweepstakes. It's a lot easier to buy Gold as an inflation hedge than it is to buy barrels of Oil. A lot easier to store as well. The next leg up in this secular Gold Bull market should prove to be spectacular as "investors" flock to the Precious Metals as an Inflation Tsunami washes over the US.


It’s not an Oil Crisis it’s a Dollar Crisis
By: Peter Schiff, Euro Pacific Capital, Inc.
In their search for explanations as to why oil has surged past $130 per barrel, Washington, Wall Street, and the financial media are as clueless as cavemen after a freak summer snow storm. Despite the head scratching, the blame game is nevertheless in full force. Speculators and big oil companies are being trotted out as scapegoats, and increased margin requirements and taxes on windfall profits and futures trading have been mentioned as appropriate sanctions. It should be clear that this is pure farce, and that no one understands what is actually happening.

The reality is that after years of reckless consumption and dollar debasement, Americans are now being priced out of markets over which they formerly held unchallenged title. As more affluent foreigners consume more of the resources and products they previously supplied to us, Americans are being forced to cut back. The rising dollar-based price of gasoline is simply an illustration of this global trend.
http://news.goldseek.com/EuroCapital/1211569200.php


How to Fix Everything
by Adrian Ash
Speculating in the commodity markets is a bad thing, a very bad thing indeed. Congress ought to do all it can to protect the public interest – starting with its own re-election.

The Committee therefore recommends closing the US commodity futures market, and imposing sanctions on any foreign state that doesn't do the same, to prevent speculative funds simply moving elsewhere

This policy – undertaken for the good of the international community – will thereby force speculators back into more socially beneficial activities, such as trading those subprime-mortgage backed bonds now stuck on the balance sheets of New York investment banks.

Fixing that crisis is what both the economic stimulus package and the Federal Reserve's cash-for-crap liquidity injections are intended to achieve. Sub-zero real rates of interest should in no way be allowed to encourage or fund trading outside socially "good" speculations like residential real estate.
http://news.goldseek.com/GoldSeek/1211566207.php


Germany in call for ban on oil speculation
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.

In the long run, any scheme to ban futures trading would be extremely hard to enforce as the markets would tend to move offshore. Hedge funds are probably not the culprit in any case.

Oil markets are likely to shrug off the moves as political posturing, instead focusing on Norway’s suspension of crude output at three platforms, cutting supply by 138,000 barrels a day.

The news comes as Lloyd’s Marine Intelligence reported Opec oil shipments fell by 1m barrels per day in the four weeks to May 4, confirming suspicions that the market has been chronically short of supply.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml


Silver Technicals 2
Adam Hamilton, Zeal Intelligence LLC
If you’re a pure silver trader, you should take comfort that silver is basing high for its next major upleg. Now since silver follows gold, and gold’s seasonals are very unfavorable in summer, we may have to wait until autumn for the next major gold and silver uplegs. Both of the past two uplegs started in Augusts of their respective years. But if there was ever a summer for gold to buck seasonal trends, 2008 is it. The coming inflation scare is going to be the worst seen since the 1970s, great for gold investment demand.
http://news.silverseek.com/Zealllc/1211559828.php


The International Forecaster - Bob Chapman
Note that the rollover of gold futures contracts will be completed next week. The initial tally on April 30 had June contracts of open interest at 248,355 and August at 47,406. As of Thursday, those numbers stood at 163,127 and 143,608, respectively, meaning that June contracts of open interest have decreased by 85,228 contracts while August contracts of open interest have increased by 96,202 contracts. That means that the rally still has legs, and that after the current rally peaks next week based on short-covering, there will be a short period of consolidation after which gold and silver are up, up and away! This rally has legs. The correction is over and those who are waiting for the usual summer slump are going to get a very big surprise. Wait until you see what happens in July when the seasonal adjustments that have artificially lowered official CPI and PPI are removed and all the suppressed inflation flows back into official numbers. Gold and silver are headed for the moon, so don't miss out on the coming rally. Take your position now and sit back and watch the precious metals go to town.
http://news.goldseek.com/InternationalForecaster/1211836205.php