Thursday, May 10, 2012
Gold, Oil and the Monetary Base
It's uncanny how closely the week to week trading patters of Gold and Oil have tracked the rise and fall of the US Monetary Base. Since late '08 when the Fed began QE Gold and Oil have seemed to rise and fall with the Monetary Base. For oil especially, note the coincidence of short term peaks and consolidations which seem to lag the movement of the monetary base just slightly. This seems to me to be pretty compelling evidence that monetary policy has been the primary driver of commodity prices.