If you invest in commodities such as precious metals, industrial metals and crude oil you may or may not be aware that prices we see on the US markets are determined by two things:
- The actual price movement due to trading.
- The price movement due to strength or weakness in the US dollar.
It’s actually quite interesting and useful to know if the underlying commodity is really going up, or if its price is being driven up by weakness in the dollar. Of course, we’ll always take a profit, but it’s good to know if a price trend is coming from the commodity or is being driven or hindered by the dollar.
I consult this chart from Kitco frequently: http://www.kitco.com/kitco-gold-index.html. As you can see gold itself actually traded down today but closed up a tad thanks to “help” from the dollar. This page from Kitco gives me real insight to what’s going on under the hood of commodities. If you trade or invest in these things, you might want to check it out frequently too.
