It's all connected

First I will post the Model Portfolio results and then my take on why this is happening. 

DDM	100	125	136.37	-	-	$+1,137.00	+9.10%	$13,637.00
SCO	100	26.38	51.31	-	-	$+2,493.00	+94.50%	$5,131.00
Total						$ 3,630.00	23.98%	$ 18,768.00

As you can see my bet the price of oil would go down is up an astonishing 94.5%. Almost as astonishing is my bet the Dow would go up is up 9.10%. Now we get to the everything is connected part. It all goes back to the Saudis and Roosevelt. Roosevelt made an agreement we would keep the Saudi Kings and Princes in power as long as they kept the price of oil cheap. At that time gold was $35 an ounce. The Saudis agreed to keep the price of oil at a ratio of about 1/15 the price of an oz of gold. Wonderful. Everyone was happy. The Saudis had stable oil prices and we had cheap oil. This all came about because the Saudis do not understand fiat currency. To them dollars are just pieces of paper but if they could sell 15 barrels of oil for one ounce of gold they were happy. Gold they understood but not paper money. Then along came Nixon who did away with the gold standard. This created OPEC which was an attempt to regulate the flow of oil to maintain the old 15-1 ratio. For the most part it worked. There were lags on the way up and lags on the way down but for the most part the oil gold ratio stayed at 15 to 1. Recently we had $1500 gold and $100 a bbl oil. Now we have $1100 oil and $70 oil. All of this is driven by the dollar index. As the value of the dollar goes up the price of gold goes down and vice versa. Recently the dollar has been getting stronger which means the price of gold is going down and the price of oil is going down with it. It's all connected. Ok, where does that leave us. The dollar is getting stronger because it is the least bad of all the other fiat currencies. As the world's economies swirl around the toilet bowl there is a flight to the safest currency which is the dollar. That drives the dollar up, the price of oil and gold down. At a minimum I would look for $900 an oz gold which should give us $60 a bbl oil. If things get as bad as I think they will in 2016 I would look for $600 gold and $40 oil. This would drive the dollar up to about 120 or so from it's current level of around 90. The Dow will go to unimaginable heights because Central Banks are no longer buying bonds or lending money but buying stocks in anticipation of government defaults on bonds. If this thing plays out you will see Dow 20,000 to 25,000. The next couple of years are going to be very interesting.