Commodities: From Caseys Charts, The Corrolation Between Energy And Currencies

The price of crude oil and the value of the U.S. dollar are almost exact polar opposites: if one goes up, the other will fall by a proportionally equal amount. The U.S. dollar has long been considered a good hedge against the price of oil, but which of these is fundamentally more stable?

The U.S. government bailouts are now estimated to be in the neighborhood of $7.7 trillion dollars, while production at the world’s largest oil fields is peaking and depressed oil prices are forcing smaller, inefficient producers to shut down. Alongside higher inflation from this excessive government spending will come a whole slew of new problems, among them a weakened U.S. dollar – which, as we’ve shown above, will lead to an upturn in the price of oil.