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Islamic Dinar : 4.25 grams 22 K Gold

Dirham Islam : 2.975 grams Pure Silver
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Tuesday, March 25, 2008

Oil Price Probably Will Still Decline….

In my previous article, amongst others the one dated 9 March 2008, I presented the tight correlation between the volatility of the gold price with the volatility of main commodity prices, especially oil.

In a few days, the oil price will most likely still decline – so will gold price. The triggers of the oil price decline amongst others are:

1) United States of America, the world’s largest energy consumer nation, is having a decline in economic growth, so its energy consumption is also declining. Last weeks report shows the consumption level for the last four weeks dropped 3.2% compared to the same period last year.
2) USA oil inventory is at its all time high, just for this year it is predicted that they have increased their inventory by 1.5 million barrel to around 311.8 million barrel.
3) Statement from King Abdullah – Saudi Arabia last Sunday that Saudi Arabia will cooperate with the OPEC nations and even other oil producing nations outside of OPEC to guarantee the availability of global oil in an effort to avoid destructive speculation. This statement was said by King Abdullah one day after the visit from the USA vice President, Dick Cheney.

For all of us, the decline of oil price is good because the price of daily necessities goods is affected by the oil price. So we hope that it will continue to reduce our cost of living.

For the spreading of Dinar is also good because Dinar is now more affordable; I see an increase of Dinar purchases in this few days since the significant price decline.

Temporarily, those who purchased the Dinar at the high price, especially the last two weeks will feel they are in a “loss”; but InsyaAllah, you don’t have to worry because you can see that the gold price chart for the last year, last decade, or even the last forty years, have an upward trend.

So the decline of oil price and gold price is temporary, can be one – two weeks, one - two months, but then the oil price will rise again following its main upward trend.

So is with gold, the temporary decline can be taken advantage to optimize the spreading of Dinar in the society – before the gold price return to its main upward trend in a long period. Wallahu A’lam.

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Thursday, March 20, 2008

While the Fiat Money is Still Powerful

There is something strange with the capital market and global commodity in the last few days trading. We know that since September 2007 until now the Fed had cut rates six times.

Until the last five cut rates, the impact towards capital markets and commodity is obvious and easy to understand. Every time the Dollar is becoming less interesting, people rush to the capital market or commodity – oil, gold, etc. It means that after the Fed cut rates, usually the stock price increase, so is gold.

This can be seen in the graph, the Dinar price trend for the last year like I always provide in the side of this article; since September 2007 until early this week, the gold price and also Dinar, keeps going up.

The Feds rate cut of 75 basis points four days ago caused a contrary reaction with what has been happening so far. US$ is not down, instead it goes up, indicated by the increase of the US Dollar index in the last three days.

While the experts are busy trying to explain the anomaly, I honestly can’t explain it this time. All I know is that the gold/Dinar purchasing power is stable in all history, like what happened for more than 1400 years, and InsyaAllah will be stable until the end off the world. The decline of the oil price along with the decline of gold during the week, once again proves the accuracy of this gold/Dinar purchasing power theory.

While our fiat money, either US Dollar or Rupiah, is good at this point of time, it is a great time for us to return the the “money” that has a stable purchasing power for all era, the Dinar and Dirham. Dinar is “cheap” right now, in Gerai Dinar, the Dinar price this morning is almost at one month low.

There is a lot of things that we can be thankful of this decline in oil and Dinar Price; first we can breathe better that the scary increase of gasoline price and oil. Secondly, for the people that are not familiar with the Dinar, InsyaAllah the Dinar can be more affordable in the next days or weeks – hopefully enough time before it goes up again.

InsyaAllah the introduction of Dinar does not stop with the holders of Dinar just keeping them, the capital loan (Qirad) program we started in the last three weeks has opened the implementation of Dinar that is Subhannallah.. while there is a lot of time in this long weekend, I will try to write more detail about the capital loan (Qirad) program. May Allah Make Ease of His Way for all of us.
Labels: Dinar Price, Gold Price, the Fed

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Wednesday, March 19, 2008

The Therapy is Effective for Time Being...

This year the US Federal Reserve already tried to save the economy and its currency (US$) several times, take a look at my article, amongst others dated 12/1/06, 26/2/08 and 12/3/08.

The continuous rescue attempt can be viewed from two sides, first we can see how serious is the problem that the Dollar is facing so it needs to be rescued. Second, we can see that the US government is very serious to save its currency.

The first view was seen by the market in previous rescue attempts so the Fed’s efforts were not effective; while last night was different, the second view was seen by the market players therefore the Fed rate cut of 0.75 basis points succeeded in increasing the US Dollar and stock market at once.

In the money market, the US$ strengthens agains 15 european nation currencies, the Euro, from 1 Euro equals US$1.5831 the day before, to recover to US$ 1.5640 in yesterdays closing. In the stock market, the Fed’s latest rescue attempt succeeded in driving the stocks upward significantly. Dow Jones Industrial Average was up 3.51% from previous day, while the NYSE Composite Index was up by 3.97% from the day before.

What does this means for the price of gold and Dinar? The attractive stock market yesterday became the temporary competitor for the gold market. For the some of the players, the gold price is overpriced and was the time to take profit and used their fund to purchase stocks. Thus, the gold price declined to US$985.0/troy oz this morning.

The impact of this decline in global gold price is of course the Dinar in GeraiDinar also declined significantly, 2.25% from yesterday afternoon price of Rp 1,289,200 to Rp 1,260, 200.- this morning.

For every decline in price of stocks or gold, the market players can always have two views. For the decline of gold for instance, the market players can see that this decline will continue or just temporary and will go up again.

Those who view that this decline will continue is based on the reality that the gold price is too high according to them, because even this mornings gold price in US$ is still 51% higher than the gold price last year. Their opinion is that the gold price is too high and tend to decline.

On the other hand, I see that the price is still too low. The basis of my calculation is the real purchasing power of Dinar towards commodities like oil, etc. History has proven that the purchasing power of Dinar is the same in every era; so if it is used to purchase crude oil for example – the purchasing power of gold should be the same.

The steps taken by the Fed last night can only affect the money market and stock market, but the US$ purchasing power towards the majority of commodities like crude oil, nickel, or agriculture products, did not improve. The crude oil price for instance still lays at US$ 108.57/barrel this morning.

In my opinion, sooner or later the gold price will increase again and so will Dinar. But again, this is only my opinion; it can be wrong and don’t have to take my opinion. Only Allah the Most Knowledgeable.

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