I get back from a relaxing week in Spain to find my portfolio (which was looking a little green around the gills) in complete tatters, gold777's been banned, world central banks embarking on a massive reflation (B of E and the British Government commited to another £400billion) while the markets continue to tank... wish I'd stayed away!

One thing that struck me while away was that everything seemed expensive compared to last time I went abroad. A few months ago people I know were talking about the US being really cheap for a holiday, now that has changed with the rally in the US$.

Ultimately, exchange rates have to reflect purchasing power parity between similar goods in different current zones. Consequently, I can't see the US dollar falling that much against the Euro unless the relative amout of reflation undertaken in the US is much greater than in Europe. Clearly, the Brits are going the same way as the US but I'm not sure the Europeans have made their minds up yet which made the comments a couple of days ago on this board about the Euro breaking up interesting to me.

I've suffered from the fall in the oil price, as I own several Canadian energy producing trusts (being the part of my portfolion that is not in the PMs), but I can't help thinking this is temporary for several reasons:-

1 Rising depletion rates and higher demand in oil exporting countries leading to falling exports entering the traded world market which sets the price.

2 Demand. Yes it will fall as the OECD goes into recession but the developing world will start to consume what is produced instead of swapping it for IOUs. There is a vast consumer market to be satisfied in China and India. By doing the work of making the goods thay are earning the right to use them. Sending them to the West in exchange for nothing but promises to pay is madness. Hence the growth will continue, after an adjustment process, sucking in more oil.

3 OPEC and Russia control oil exports and hence the price. They could agree to supply cuts at any time. I would if I were them.

Some great posts here in the last week.

Cheers

Chris