Here’s What’s Moving Oil and Gold

The prices of both crude oil and gold have climbed higher over the last few weeks?year-to-date, WTI crude is up over 4 percent, and gold has soared an amazing 17 percent.

In a recent trip to New York, Frank Holmes had a chance to sit down and give his viewpoint on the movements with several prominent media outlets.

Starting with Pimm Fox and Kathleen Hays of Bloomberg Radio, Frank explains that to understand the price of oil and gold going up, investors should simply follow the dollar. “It’s all inversely related to the dollar,” Frank explained. “And it’s all related to what they call ‘real rates.’”  You can listen to the full replay of that interview by clicking here.

Frank also had the opportunity to speak with Alix Steel and Scarlet Fu on Bloomberg Television. Focusing on gold, he comes back to the importance of interest rates and explains that the metal shares an inverse relationship with this economic indicator.

Gold has tended to respond well when inflationary pressure pushes real interest rates below zero. To get the real rate, you subtract the headline CPI from the U.S. Treasury yield. When it’s negative, as it is now, gold becomes more attractive to investors seeking preservation of their capital. The yellow metal has risen more than 18 percent so far this year. Watch the full replay of Frank on Bloomberg TV.

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Frank Holmes – U.S. Global Investors