Disclaimer: The following post is not intended as investment advice. Your capital is at risk when you invest in anything – you can lose some or all of your money, so never risk more than you can safely afford to lose. This post is solely for purposes of discussion. Always seek personal advice from your investment adviser, if you are unsure about the suitability of any investment.
1) Oil, The US Dollar
In his article titled US-Dollar Is The Best Looking Horse In The Glue Factory, Steven Syre (Globe Columnist) states a common perception among financial-market-players: 'The value of the dollar and the price of oil move in opposite directions on a dependable daily basis'. This perception is validated continually by empirical evidence -- it can almost be viewed as a law!
According to an article summary on KurzweilAI.net, General Motors is currently collaborating with thirty utilities in 37 states, and, with The Electric Power Research Institute to develop a charging infrastructure for electric cars. After reading that, one thing is certain: fossil fuel powered vehicles will not be a part of our future. This got me wondering: What will happen to the US dollar and the global price of crude oil, when electric cars (or cars with engines that are powered by a non-fossil fuel) become ubiquitous?
The demand of crude oil would be curtailed by wide-spread-global-adoption of non-fossil fuel powered vehicles. Obviously, this would have an adverse effect on the price of crude oil. But does this imply that the US-Dollar is set to appreciate rapidly (ceteris paribus), when electric cars become widely adopted (since 'The value of the dollar and the price of oil move in opposite directions on a dependable daily basis') ? Also, how will this affect Gulf economies, that solely depend on oil as a revenue source? Will their Sovereign Wealth funds have the ability to insulate them from the effects of falling oil prices?
One thing is certain: One can never go wrong by investing (with a long-term focus) in electricity generating ventures and in ventures that develop safe durable technology for electric car charging stations.
2) The Vietnamese Dong, GoldAccording to an article summary on KurzweilAI.net, General Motors is currently collaborating with thirty utilities in 37 states, and, with The Electric Power Research Institute to develop a charging infrastructure for electric cars. After reading that, one thing is certain: fossil fuel powered vehicles will not be a part of our future. This got me wondering: What will happen to the US dollar and the global price of crude oil, when electric cars (or cars with engines that are powered by a non-fossil fuel) become ubiquitous?
The demand of crude oil would be curtailed by wide-spread-global-adoption of non-fossil fuel powered vehicles. Obviously, this would have an adverse effect on the price of crude oil. But does this imply that the US-Dollar is set to appreciate rapidly (ceteris paribus), when electric cars become widely adopted (since 'The value of the dollar and the price of oil move in opposite directions on a dependable daily basis') ? Also, how will this affect Gulf economies, that solely depend on oil as a revenue source? Will their Sovereign Wealth funds have the ability to insulate them from the effects of falling oil prices?
One thing is certain: One can never go wrong by investing (with a long-term focus) in electricity generating ventures and in ventures that develop safe durable technology for electric car charging stations.
According to an article on Bullion Vault, Vietnam is 'the second largest market for gold exports in the world, Vietnam has already imported 60 tonnes of gold valued at $1.8 billion so far in 2008, an increase of 100% over the same period last year'
Recently, the Vietnamese government temporarily banned gold imports to contain the country's ballooning trade deficit (which tripped this year).
Will this move help to shore-up the Vietnamese Dong? How will the Vietnamese property market respond to this ban? How will speculators trade the Dong when the ban is lifted?
I'm confident about one thing: the value of the Dong will plummet when the ban is lifted.
Why?
Gold is a US-dollar denominated asset, so when the ban is lifted, Vietnamese market players will scramble to trade in their Dong, for US dollars to purchase gold with. This will cause the price of US dollars to appreciate in terms of the Dong. By what margin? It's hard to tell.
I also believe that the price of gold will appreciate sharply when the ban is lifted; the majority of the price spike will be driven by speculators.
Note: I don't have a position, long or short, on oil futures or the Vietnamese Dong. I may have a combination of positions on Gold and the US-dollar. This post reflects my opinions and NOT the opinions of companies and charities I'm affiliated with.
...Lets see what happens!
Recently, the Vietnamese government temporarily banned gold imports to contain the country's ballooning trade deficit (which tripped this year).
Will this move help to shore-up the Vietnamese Dong? How will the Vietnamese property market respond to this ban? How will speculators trade the Dong when the ban is lifted?
I'm confident about one thing: the value of the Dong will plummet when the ban is lifted.
Why?
Gold is a US-dollar denominated asset, so when the ban is lifted, Vietnamese market players will scramble to trade in their Dong, for US dollars to purchase gold with. This will cause the price of US dollars to appreciate in terms of the Dong. By what margin? It's hard to tell.
I also believe that the price of gold will appreciate sharply when the ban is lifted; the majority of the price spike will be driven by speculators.
Note: I don't have a position, long or short, on oil futures or the Vietnamese Dong. I may have a combination of positions on Gold and the US-dollar. This post reflects my opinions and NOT the opinions of companies and charities I'm affiliated with.
...Lets see what happens!
