Tuesday, September 17th, 2019  |  5:24 AM

A Conservative Newspaper Promoting,
Life, Liberty, and the Pursuit of Happiness

Subscribe Now: Get your own copy of The US Journal

Dollars, Gold and Oil - It's All Relative

Written By: Chris Woodward  |  Posted: Sunday, June 5th, 2011

            An expert on world markets is suggesting another reason for why oil prices are still up -- and it has nothing to do with supply and demand or the Middle East.

            According to John Tamny of RealClearMarkets, the price of oil has not fallen much in relation to how the dollar has strengthened in recent days. Proof of that is the relationship between gold and oil.

            "In 1971, when a barrel of oil was $2.50...an ounce of gold at $35 bought 15 barrels of oil. In 1981, when an ounce of gold was $480, it bought 15 barrels of oil at roughly $35 a barrel," he explains.

            This month, gold is trading at $1,500, while oil is trading at close to $100 -- another 15-to-one ratio.

            "The point here is that gold's price is just a proxy for the dollar; gold rises when the dollar weakens," Tamny adds. "What that's telling us is that oil has not become expensive. We don't have a supply problem. We don't have problems in Libya or too many Chinese demanding oil. What we have is that the dollar has been cheapened. Hence, oil is expensive."

Sign into your account to read the rest of this article. »

Share this on Twitter  |  Share this on Facebook  |  Email to a friend.  |  Contact the editor.

What are your thoughts?

Want to read more of this article?

You must be a subscriber to read entire articles.

Gain 24/7 access to all the content on this website by becoming a subscriber.
Choose your subscription plan and get full access in minutes. Subscribe now. »

If you are already a subscriber, sign in now to read more full articles.

More Business News

Subsidies Galore: Corporate Welfare

Gold Backed Currency?

Go For The GOLD!

Poor CEO Demands Raise Because He Can Only Afford $20M Vacation Home

What the Millennials Believe About the Future of Capitalism is Terrifying

Inflation is Coming

Why is Profit So Important?

End of Malls will not make Shopping any Better

Elderly - Get Out of Stocks and Mutual Funds

Thinking Outside the College Box