The Future Of Gold, Oil and The Dollar

The ability of the stock market to climb since 2008’s financial meltdown has been painful for bearish investors. Indeed, the entire era has been one of consistently poor performance for hedge funds.

Will the pain continue? Macdonald looks at three key markets: Gold, oil and the dollar, which have already had a chance to respond to QE3.

Contrary to popular belief, the Fed is much less concerned about the rise of gold as a challenge to their authority than many presume. Moreover, the Fed has come through a learning curve about oil. Bernanke understands (and has said) that there is a constraint on supply and that cheap oil is a thing of the past. Bernanke also understands that a price ceiling is largely operative in a time of weak economic growth, as economies will continue to balk at oil prices above $120.

Accordingly, given that gold and oil already underwent spectacular price revolutions in the past decade, it can hardly be the concern of the Fed to ‘control’ them now. No such control exists, and the Fed has essentially given up any pretense in this regard. Instead, it’s the US dollar and the US stock market that primarily concern the Fed.

To read Gregor Macdonald article: The Future Of Gold, Oil and The Dollar

Tagged as: Ben Bernanke, Fed, Federal Reserve System, Gold standard, Gregor Macdonald, Hedge fund, Price of petroleum, Stock market