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The deadly combo of low oil prices and a high U.S. dollar

Martin Pelletier: Investors have finally caught on that collapsing oil prices and a high U.S. dollar are destabilizing not only emerging markets but those closer to home as well.

I was recently a guest panellist at Mount Royal University’s employment forum and faced a barrage of interesting questions. Particularly, one student asked our thoughts on whether the government is doing enough to assist the markets, particularly with the collapse in oil prices.

This question isn’t surprising due to the average 20 to 30 years of age hasn’t experienced the anguish in the sizable market correction, either financially or perhaps the employment market. Today’s teenagers also provide only known ultra-low rates, with stories in the double-digit rates in the 1980s sounding as being similar to stories our parents or grandparents spoke of walking miles upon miles with the snow simply to get to school.

Markets also provide understand such stability, because of continual intervention by governments centered on protecting asset valuations regardless of what. It is reached where central banks have invoked negative rates and many, such as the Bank of Japan, have resorted to really buying stocks directly through ETFs to aid their equity markets.

The problem is the higher the dimensions and amount of such interventions the higher the chance that things will go terribly wrong once the programs ended. Take phone summer of 2014 when pundits started positioning before a U.S. Fed rate hike.

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Gold’s rise in January bodes well for commodities for rest of 2016

When the price of gold rises in January C as it did last month by 5.3 per cent C it usually means investors can expect the rest of the year to be a good one for the world's commodities.

When the cost of gold rises in January C because it did recently by 5.3 % C it always means investors could possibly get other year being good one for the world’s commodities.

In fact, when gold has increased in January, the S&P GSCI, a catalog comprised of 24 commodity futures, went onto record an annual gain 72 percent of times, according to an analysis by S&P Dow Jones Indices. With gold being up recently, there’s a 72 percent chance that the S&P GSCI will rise this season. 

The index has lost a little over 6 % up to now in 2016 C but tanked 26.One percent in the best Twelve months.

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