Oil And Gold Excited As USD Leaks Lower

Tyler Durden's picture

As EURUSD toys with 1.38 and AUD outperforms, the USD is leaking lower (-0.2%) from Friday (after closing the week almost perfectly unchanged Friday-to-Friday). Gold and Oil appear to be basking in the glow of increased macro and geopolitical tensions as $1795 and $99.50 (respectively) have already been broken this evening. It appears Silver and Gold are tracking each other as Oil follows the USD and Copper is the major outperformer so far (in early trading).


Commodity (and USD) performance from Friday's close - Gold/Silver (+0.35%) outperforming Oil (+0.14%) as it tracks the USD and Copper outperforms (+1.39%).


UPDATE: TSYs just opened (after being closed Friday) with a 4-7bps bear steepener and 2s10s30s rising 8bps. ES is pretty much in line with CONTEXT at 1269 now all the risk drivers are open.

Chart: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
XtraBullish's picture

Huge moves coming in gold and oil to record highs....the currency vigilantes are going to re-train their sights away from EU and into the U.S. of A as the SuperCommittee struggles to figure out how to impose "austerity" onto Joe SixPack.

TheSilverJournal's picture

No "austerity" will be imposed. The cuts are over ten years, and they probably won't even start right away. In addition, it's not like they're actually going to pay down the debt..they'll just be overspending less than they were otherwise planning on overspending. The debt super committee is really just politicking over the best way to hide the fact that they're not going to cut spending. Regardless, oil and gold will rise because the only way to keep the game going is kicking the printers into high gear.

Pladizow's picture

Washington defines a cut not as a reduction in current spending but as a reduction in future spending INCREASES.

So they are guaranteed to spend more then they are right now, just not as much as the hoped.

How is spending more, a cut?


trav7777's picture

yeah, slower growth = cut in DCspeak

fuu's picture

I had some time to kill today so I made you a theme song video.


Trav's Theme

akak's picture

Now that was fucking hilarious!

Somewhere, a gay leather nightclub is missing its music.

catch edge ghost's picture

The long answer to your rhetorical question begins with y = x2.

A quicker answer:

Using an extreme example, if you double GDP and spending remains the same in nominal terms, you could say spending is cut in half.  Your pants wouldn't catch on fire and you'd be considered a viable candidate for the Senate.


WmMcK's picture

... parabolas that can cause cardiac arrest in a yak - W.Allen

erg's picture

It sounds as daft and nebulous as saying we saved a million jobs. Not created...saved.

In bedrock...twitch, twitch.

caerus's picture

the "super committee" is a joke...november 23 here we come

infinity8's picture

they better be wearing tap shoes to keep it interesting - a rerun of this summer's debt ceiling drama will do nothing but piss everyone off for the holidays. . . I would think but, who the fuck knows?

RafterManFMJ's picture


Huge moves coming in gold and oil to record highs....the currency vigilantes are going to re-train their sights away from EU and into the U.S. of A as the SuperCommittee struggles to figure out how to impose "austerity" onto Joe SixPack.

Joe FourPack?

Smiddywesson's picture

Yes and no.  If you have physical. amen to that brother.  However, if you are trading paper, you may be put through Hell.  

Paper is the domain of The Dark One.  You can't beat The Dark One at his own game.  Only a fool believes he knows where paper will go.  

When the great collapse comes, one possible result is that everyone can run to USDs and paper gold collapses just before the almightly buck.  Of course, that will seize the phyaical markets and bring about the grand decoupling, but the path of paper is the path of pain.

Cashing in the 401k now, before income taxes go up will nullify that 10% penalty.  Physical not only eliminates the counterparty risk of paper, it protects one from unreasonable taxation and means testing for everying you have chipped in for during all of your life.


J 457's picture

Barring Iran invasion or outright QE3 by FED, no chance of WTI moving much higher from here.  It's already stiffling growth.  Rest assured WH already discussing more SPR releases if we break $100.  However, gold still has room to rise as a safe haven as global currency uncertainties remain. 

Nate H's picture

i would argue the dynamics very different for oil and gold

oil has strong negative feedbacks (i.e higher price will cause less demand and more (slightly) production)

gold will have positive feedback - the more people that own it/want it, the more it will go up.


note: i strongly believe we will never see $150 again in oil and that we will see $2500 in gold next year

High Plains Drifter's picture

two of gaddafi's sons escaped.  their former sas bodyguards (mercenaries) have said that the libyans are a people of revenge.  if and when the resistance there recovers and starts operations again, what if libyan oil is disrupted? then couple that with any idiotic move against iran and to say we will never see 150 oil again is a bit premature, correct?

CrashisOptimistic's picture

There is some powerful analysis on oil and its price and how there MAY be a cap on it from demand.

$120 oil could smash the global economy GDP and that, of course, smashes consumption (remember, always, consumption is not the same as demand).  With consumption destroyed, the price would fall.

You could have trouble getting $200 oil for this reason.  It guarantees widespread death and killing.


High Plains Drifter's picture

well you are using arguments based upon fundamentals.  let us look at interest rates. the fed is charging between 0 and 1/4 percent for money to primary dealers. the fed maintains the interest rates no matter what happens in the real world. could it not be said that oil prices could be controlled in a similar manner for whatever reason?  just sayin......

Uchtdorf's picture

Correct. And another simple way to destroy the "never" argument is to go back 3 years when gold was around $900 FRNs. Most would have said it would "never" double in price, and yet it has. Inflate the dickens out of fiat and a loaf of bread could even cost a trillion deutsche marks. What a shock.

High Plains Drifter's picture

remember when prechter was going around saying gold was going back to 600...........ha ha ha 

davepowers's picture

I remember when he said it would never get to $600.

I also remember when someone asked him what it would take for him to abandon his negative position on gold. He said if it got over $400.


akak's picture

Hey Robert Prechter, watch my hand: here's an "Elliot Wave" for you, as I wave bye-bye to your "crushing deflation".  But you just keep holding those dollar bills under your mattress, waiting for that historically-unprecedented appreciating fiat currency.  Maybe, in the meanwhile, you can argue with Karl Klownshoes Denninger over which one of you is going to be the next president of the Flat Earth Society (or, in Karl's case, Der Flacheerdenfuhrer).


CrashisOptimistic's picture

Gold is not relevant to the argument.  It doesn't define GDPs as oil does.

I am receptive to the idea of attempts to create oil by decree.  I think they will be tried.  But . . . unlike 0s and 1s and unlike Eurostat or BLS numbers, oil is burned.  It disappears after it is used.  You don't recycle it.  It doesn't return to the economy.  It's gone.

Again, it's not really oil PRICES that are relevant.  It's barrel total.  This is the schism of reality.  This is the apex point where hand waving sciences like economics and finance come face to face with a science like physics.

Physics can't be changed by decree, but I agree 100% they will flail about and try.  They will declare good news here and there and more or less cover up towns dying because trucks had no fuel to bring them food.  They might even try to decree an oil price, but see, the problem with that is a decree by a consumer country can be ignored by a pumper country.  Or a pumping company.

Arkadaba's picture

I probably won't be around to see it but I think what happens in the Arctic will be interesting in the next 50 years or so.

Flakmeister's picture

Agreed, but short of a real physical disruption, I do not see Brent above $130 for a sustained basis. The economy simply starts shutting down...

DaBernank's picture

Does anybody remember Silver?

Long-John-Silver's picture

Silver is just hiding from the Manipulators. Silver knows not to shoot for the moon at this time, just a slow steady pace upward, for now.

WonderDawg's picture

Yeah, because silver is sentient that way.

erg's picture

When I'm travelling down The Road, my bludgeoning weapon of choice is a sock full of silver coins. Maybe an ingot thrown in for good measure.

steelrules's picture

I remember when quarters were 80% silver and would buy a glass bottle of pop.

Today that same quarter buys $5-$7 so yes silver is money, has been for 3000 years!

akak's picture

Actually, that would be pre-1965 (why do SO many people continually get that year wrong?).

And Steelrules above would be correct, if he/she is Canadian (post-1920, pre-1968).

knukles's picture
Silverio Berlusconi.
Some folks have the attention span of a walnut.
High Plains Drifter's picture

did they have a bunga bunga going away party yet?

Jendrzejczyk's picture

Burlesqueoni is the proper spelling I believe.

Chuck Walla's picture

Whats wrong with walnuts? You nuts or something?

SRSrocco's picture


Furthermore, total world silver production will probably decline in 2011 compared to 2010.  United States silver production is down 10.3% JAN-AUG from same time last year according to the USGS Silver Mineral Survey.  The Red Dog mine which was the largest silver producer in the USA in 2009 has decreased an estimated 33% in silver production in the first 9 months in 2011.

You can read in more detail from my post on the SILVERGOLDSILVER forum at the link below:


trav7777's picture

silver's production peak will give it a price tailwind, but it's heavily industrial these days.  If industrial production starts to crawl downward, less silver will be needed or used.  Simple as that.  It will track oil consumption like other industrial metals

TheSilverJournal's picture

You underestimate silver's monetary role. When fiat disappears, people will try to save their wealth.

High Plains Drifter's picture

people always discount silver as being mostly industrial. maybe, maybe not. we shall see..........

Dave Thomas's picture

They almost always mention emulsion film camera technology.


It's 2011 Hello!!!


Still using a fucking Kodak Brownie?

Arkadaba's picture

Agreed. I tend to be somewhat bullish on silver ....maybe a little undervalued right now ...

topcallingtroll's picture

When fiat disappears.

Hahahahahahaha! Woohee!
That was a good one.