Oil, Gold And the United States Dollar

The United States Dollar has appreciated significantly in the last two years.

The price of gold, denominated in USD has tanked inversely related to the appreciating USD.

Oil price has risen actually, be it currently at a lower level than two months ago.

Actually, oil is serving like a backing commodity for the USD, much like gold did decades ago.

So it is not surprising that oil has appreciated along with the United States Dollar.

Actually, I think gold stocks are grossly undervalued. Soon the raising of the general level on interest rates by leading central banks, chiefly lead by the Federal Reserve and the European Central Bank will break the economy.

Almost all sectors of the global economy, from industrial companies, through technology companies, commodities producers, retailers, healthcare companies etc. are over-leveraged, that is they have borrowed too much money, compared to their profit earning power. And if interest rates levels go up too abruptly as they are now, something in the global economy will break.

I forecast, the turmoil will start first from the repurchase agreements part of the banking sector much as in 2008, because it is banks which have given out this huge amount of loans.

And when the banks stop the short-term lending via commercial paper, companies will starve for cash with which to pay workers' salaries and other administrative costs. And we will again have a Great Recession as in 2008, but I think the coming one will be deeper.

And of course, the Federal Reserve, the European Central Bank, Bank of England and the Bank of Japan will run to the rescue of mainly banks and the global economy by printing trillions of USD, EUR and etc. fiat currencies by buying up government bonds and overnight repo lending, yet again, I estimate

And as it is logical, in my view, the price of gold will shoot up and gold mining stocks' prices will just explode.

And yes, I do think oil is undervalued. I find it shocking that the price of oil is not at 150 USD for example. Once the United States Dollar, USD starts depreciating because of the future money printing of central banks the prices of both Brent and West Texas Intermediate Oil futures could surpass 200 USD and the prices of stocks of oil producing companies will just explode, go exorbitant, I think.