Gold & US Dollar Up Big

Read about that possibility a few days ago. Doesn't make any more sense today than it did then. Like anchoring a wall to the leaning tower of Pisa.

Yep... and on the side toward which the tower is leaning.

The Swiss either peg their currency as they have or their exports become so uncompetitive that they lose both industry and jobs going forward. I believe their government made 30+ Bil today so I'm not crying for them just yet. So where is wealth running to today...well the U.S. dollar seen as the best of the worst at the moment. That drove down pm's today. Longer term is a tough call.

Well the fall has continued to close to the low 1800's and silver is back around 41 an some change....

An you say this is probably due to the dollar gaining some strength?

Any strength the dollar gains is only temporary. It won't last.

This is a very impressive bounce in the US$, as far as I can tell it hasn't been this high since last March. It looks like it is hitting some resistance here though. This might be about it on the up side.

as an outside observer, in Australia, I find it interesting that the Aussie dollar has varied between USD 0.50 and USD 1.10 over the last decade. During that time, I have visited Indonesia a half dozen times. Formerly, the Indonesian Rupiah was very volatile, but those days, it seems to me, are now gone. The Rup (as Aussies call it) has only varied bewtween 7,500 and 8,800 to the Aussie dollar. Which means that it has gone up, compared to the greenback, over the same time.

Why ? I think that there are two factors: the decline of the greenback, discussed above, is one. The other is a new strength in the Indonesian economy, which coincides with the term of their current president. Underlying that, the president has made a concerted effort to eliminate corruption.

In 1998, the then-leader of P.R.China, Jiang Zemin, had a crackdown on corruption. It is interesting to see how their economy has advanced since then.

It seems that the only thing holding up the greenback is its status as World Reserve Currency. The Chinese have so many dollars that it must be unappealling to allow them to be devalued. Once that passes, it will go into freefall. The interesting question is: what will replace it ? The Euro ? Gold ? Yuan ?

That is one of it remaining virtues. Unfortunately for the US dollar, creditor nations around the world are getting tired of being paid for their goods in shrinking dollars. They are putting pressure on other nations to seek out or create a new WRC. At some point, I am thinking that they will succeed.



There is an old saying in banking that goes like this: "If you owe the bank $100,000, they own you. If you owe the bank a billion dollars, you own them!". When you owe someone so much money that they cannot afford for you not to pay it back, you have some serious leverage on them. China is VERY interested in diversifying out of US dollars and who can blame them for that? They are spending a lot of dollars these days to buy real assets, such as mines, farmland, oil fields, and other income and raw materials producing properties. I would guess that they have made a significant investment in Australia in such assets and they probably used US dollars to make those purchases.



I don't think that the currency of any one single country will ever be the WRC again. People are quickly learning that they do not want their financial futures in the hands of and at the whims of any single country. I expect that a trade currency of some kind will develop. It might be a basket of several currencies or it might be either backed or partly backed by commodities of some kind. A basket of commodities from around the world would likely make sense... wheat, oil, lumber, gold, silver, cotton, sugar, beef, soybeans, rubber, edible oils, etc.