Gold jumped to $1033 per ounce on Tuesday, hitting a record high. Oil rose $1 per barrel. The December dollar contract is at $76.53, down $0.305 (as of 8:11 EDT).
Why is gold moving up? A news story in The Independent, a British paper, reported that secret talks are underway to dump the dollar as the currency for oil transactions. Included in the talks were China, Russia, Japan and France. They want is to replace the U.S. dollar with a basket of currencies and gold.
One thing is sure in these markets -- they move on rumors. Even though the idea of a basket may not be practical, just the fact that secret talks are going on; that gold is to be a component in the basket; and that the dollar is to be scraped was enough to move gold higher.
On Monday, cocoa prices moved sharply higher. Just to show you how fast the market moves -- cocoa surged $195 in one minute on the ICE exchange. Dealers were worried that they could face a supply deficit for the fourth straight year. The reason is that existing cocoa trees are aging and have been affected by disease.
Among the base metals, copper rose 1% to $6062.5 per ton. Aluminum rose 1.8% to $1834 per ton.
Do you believe that the dollar will continue to weaken?
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Reader Comments (Page 1 of 1)
10-06-2009 @ 12:05PM
Alfred Kumar said...
Oh, I know why, because Jamie is an idiot. Right? Yes, the dollar will continue to weaken. We need economists to fix the economy, not politicians. Whats so Federal about the Federal Reserve? What about the looming commercial real estate crash? And I hate to mention derivatives. In times like these, intelligent investors turn to gold.