TYING INTEREST RATES TO THE GOLD-OIL RATIO

Commodity prices play a major role financial markets globally and impact the world economies in a significant way. Record prices in agricultural commodities, energy and metals have brought about a new aggregate demand element that enriches exporting countries’ revenues and casts a pall on trade balance in importing countries. Gold and oil prices have made records and left forecasters challenged because of the unprecedented levels that these commodities attain. As opposed to looking at these two commodities separately, an examination of their interrelationship can provide a valuable overview of the global economy, and the economy of the US in particular. Continue reading →