Kewp-Oil plummeted because demand did. Schiff had his clients put money in oil and gold because he thought we would be hyper-inflationary now, which we are not. He does not understand the geological restraints on oil which are never going away ever. Actually if China and the US ever ramp up both economies again oil will knock it back down. A resource constrained world is a much different dynamic that the world has ever known and china and the us can’t “grow” without massive alternatives in place, which are not on the horizon. And in a sever downturn not likely to be developed.
The only reason the dollar has strength is because of deflationary forces causing essentially a global margin call.
This has been the dollar “carry trade”, conducted on a huge scale with high leverage. Now the process has reversed abruptly as debt deflation – or “deleveraging” – engulfs world markets. The dollars must be repaid.
Hence a wild scramble for Greenbacks which has shaken the global currency system and shattered assumptions about the way the world works. The unwinding drama reached a crescendo yesterday as the euro fell to $1.28, down from $1.61 in July. The slide in the Brazilian real, the South African rand, the Indian rupee, and the Korean won, among others, has been stunning.
Stephen Jen, currency chief at Morgan Stanley, said US mutual funds, pension funds, and life insurers invested a big chunk of their $22 trillion (£13.5 trillion) of assets overseas to earn a higher yield during the boom. They are now in hot retreat as the emerging market story unravels. “There is a complete rethink going on. People are bringing their money back home,” he said.and because it’s the reserve currency which is under threat
As well as being the reserve currency, which is under threat.
Gold is a different story. The physical price is much higher than the paper for one thing. Another is, in a hyper-inflationary state or the dollar losing reserve currency status would cause gold to soar which will eventually happen.
