Trading a Slippery Oil Headline

A blockbuster news report Tuesday about oil added fuel to the dollar and gold frenzy. Even though a close look at this article reveals it to be nonsense, we can still find opportunities to profit from this sort of event.

The Independent, a London-based tabloid, published an article by Robert Fisk that stating there were "secret" talks between the OPEC nations and China, India, Russia and France to stop pricing oil in dollars and a find new basket of currencies with which to base trading. This idea is hardly shocking, as we've heard talk before about the potential abandonment of the dollar as the primary pricing vehicle for oil before. But this particular newspaper report was not convincing.

First and foremost, Arab ministers were plastered all over the TV Tuesday denying any such secret meetings, and although it makes for a great story, it's hard to believe that a secret cabal of interested nations could undertake a significant plan in the repricing of oil trade with only Robert Fisk capable of learning about it. The British tabloid reader loves this sort of James Bond, MI6 intrigue, and there's a general desire among Europeans to see the U.S. lose its stature in world finance. Such a report causes glee across the pond and on the continent and sells newspapers.

Click below to see a video of Dan Dicker discussing this story:

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Of course, any indications that China will diversify its currency holdings must be taken seriously, and reports like this add gasoline to an already roaring blaze of dollar weakness and an almost shivering fear about the enormous amount of U.S. debt already on the Chinese balance sheet.