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Silver Exchange

The importance of dollar-priced oil for the US and its implications for gold

by Julian Phillips, www.GoldForecaster.com / www.SilverForecaster.com

A break in the link between the dollar and the oil price could well hurry gold’s emergence into the monetary system Julian Phillips says.

JOHANNESBURG (Gold Forecaster) –

There was much more to Hilary Clinton’s China and India trip than meets the eye. It was an acid test of the power of the U.S. to press its political will upon the world. The issue at hand was the U.S. trying to halt sales of Iranian oil worldwide and to offer India the same amount of oil from other sources. Supplies from Saudi Arabia to replace Iranian oil were already in the market place. The halting of the Iranian oil from the market would have lost 3 million barrels a day, but it seems Saudi oil capacity has added that much. The oil price before the visit was over $100 a barrel; today it stands at $92.49 a barrel. In the first week of May, crude oil supplies climbed by 1.9 million barrels per day to 377.8 million barrels per day, a rise not seen in more than 21 years! We’re led to believe that supplies remain at high levels.

The last fortnight in the oil markets was one of great pertinence to gold, a week in which the oil price fell 10%. It seems that the extra supply coming from Saudi Arabia is not compensating for Iran’s oil but now coming in addition to it -hence the fall to almost lower than break-even point for the oil producers. Unless, either Saudi Arabia withdraws this extra supply or China and India accede to Clinton’s requests, the oil price will remain at these levels or fall lower.

Dollar Oil Price is the ‘Vital Interest’

Read More @ MineWeb.com

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