All Posts Tagged With: "dollar"

It’s an all-out attack on the greenback and everyone else is winning! The Aussie dollar has reached parity with the Canadian dollar (the Loonie) and is fast approaching its previous highs against America’s number one export (the U.S. dollar). So is this a turning point in the currency wars? Well, like all wars, a sensible question to ask is, what are we fighting for?

If you haven’t sorted out whether gold shares or gold coins or gold bullion should be part of your investment strategy, you still have time to think about it and do something, if that’s what you decide. One reason you have time is that one of the strength’s of gold’s current move is that central banks are buying it instead of selling it.

Gold hit three new record highs last week. This week, following the announcement by the US Fed on Tuesday, it is hitting still more highs…closing in on $1,300 as we write. Gold should go up with consumer prices. But, for nearly two decades – from 1980 to 1999 – gold went down while consumer and asset prices rose.

After its longest run of moving in tandem with the trade-weighted Dollar Index since midsummer 1991 (45 trading days; average correlation +0.58), the gold price in dollars resumed its commonly-assumed relationship with the greenback last Friday, moving opposite to the currency’s forex fluctuations.

Buffett, in his role as aloof spokesman for a bygone era, said, “I am a huge bull on this country…We will not have a double dip recession at all. I see our businesses coming back almost across the board.” All of that is interesting. But only some of it is relevant. Berkshire Hathaway’s shareholders would be more concerned with the actual performance of its units than how Buffett feels about America. But to the extent that Buffett himself has become a brand (cliché)…

For nearly two years, gold hasn’t had a serious decline. There have been pullbacks, of course, but nothing assumption-challenging. In fact, since October 2008, gold’s largest price drop is 10.6% (based on London PM fix prices), and yet the average of all declines since 2001 is 13% (of those greater than 5%).

Before we get into this week’s first episode of “As the U.S. Dollar disintegrates” we should point out that some people are go about the business of making money in almost any conditions. Last week we read a draft version of Dr. Alex Cowie’s latest investment recommendation in Diggers and Drillers. He was writing about the “micro-cap” of base metals. Huh?

Barron’s highlights the big one on this week’s cover:”Why the Fed will soon print $2 trillion,” is its headline. The idea behind the headline is simple enough. The recovery is a flop. All that stimulus spending has done nothing. Unemployment is not getting better. Consumers aren’t shopping. Banks aren’t lending. And the money supply is actually falling.