Gold is Up, Dollar Down . . . Again

No, this is not a repeat of last week or last month: the US Dollar continues to slide as gold continues to soar. Where is your money the safest?

Gold jumped to a record price as the slumping dollar boosted bullion’s appeal as an alternative asset. Silver also gained. Gold futures touched an all-time high of $1,174 an ounce in New York, after the dollar fell as much as 0.9 percent against the euro. Gold has posted records during nine sessions this month, and is up 32 percent this year as investors and central banks increased their holdings of the metal to preserve wealth. Russia’s central bank said it bought more bullion last month.

SOURCE: Gold Jumps to Record as Slumping Dollar Spurs Investment Demand - Bloomberg.com

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Weak US Dollar Good for Euro

One man's loss is another man's gain: this time, the guy gaining is holding Euros, not US Dollars.

Just about everyone is down on the U.S. dollar. It has fewer friends than an airline passenger who admits to having swine flu during a flight. Billionaire investor George Soros says it’s creating “dangerous imbalances.” Dominique Strauss-Kahn, the managing director of the International Monetary Fund, talks of a new global currency dominating the world in a decade’s time.

The reasons aren’t difficult to figure out. The U.S. economy is in bad shape, the Federal Reserve is printing money like crazy, and the budget deficit is out of control. It is hard to believe that in five years’ time, the dollar will enjoy the same pre-eminent role it has had in the global capital markets since the end of World War II. In Europe, the dollar’s depreciation is often presented as a threat. But that is upside-down: Ending the dollar’s reign will boost the European economy.

SOURCE: Dollar Woes Are Good News for Europe’s Markets: Matthew Lynn - Bloomberg.com

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Even With Weak US Dollar, Trade Deficit Still Grows

Hey, isn't one the alleged benefits of a weak dollar that our products would be cheaper overseas? That is, of course if we still made anything of value. But no, even that doesn't seem to be working in our favor any more.

A weaker dollar may boost the nation's economy by increasing exports and narrowing the trade gap — but that won't happen anytime soon. Instead, the nation's trade deficit rose in September by the largest percentage in a decade as U.S. exports grew for the fifth straight month, but imports rose faster, a government report showed Friday. That trend is likely to continue until the middle of next year, economists said.

Rising oil prices and higher purchases of foreign goods by U.S. companies drove imports higher. So did more purchases of foreign parts by U.S. manufacturers, which are ramping up production in the fledgling economic recovery.

Weak dollar no quick fix for narrowing trade gap - Yahoo! News

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Broken Record? Gold Hits Record Hit, US Dollar 15 Month Low

Is this starting to sound familiar to anyone else but me?

The Gold rally resumed once more on Wednesday as prices rose more than $15 an ounce, spurred on by the US Dollar’s seemingly endless decline, which continued today as renewed optimism over the economic recovery led to dollar selling. Investors moved away from the greenback in favour of more high risk, higher yielding assets.

As the Dollar fell to 15-month lows Gold pushed higher setting yet another record and was last changing hands at $1,117, meanwhile longer dated 2010 futures breached $1,120.

SOURCE: Proactive Investors UK - Gold chalks up another record high after US dollar hits 15 month low

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Geithner Wants Strong US Dollar

Yeah, don't we all little Timmy. The reality is the rest of us really can't do anything about it, but you and your boss can. The real question is: will you?

Don't hold your breath kids.

Treasury Secretary Timothy Geithner said on Wednesday he believes strongly in the need to maintain a strong dollar and said the United States was determined to get its budget deficit down.

The dollar's decline has been a source of concern in the export-heavy region, especially since top exporter China keeps its currency's value closely managed against the U.S. dollar and so felt less impact on prices for its exports than other Asian nations that let their currencies float freely.

"I believe deeply that it's very important to the United States, to the economic health of the United States, that we maintain a strong dollar," Geithner said in a meeting with Japanese reporters at the U.S. embassy.

SOURCE: Geithner wants strong dollar, will tackle deficit | Reuters

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Blog: Are Low Interest Rates Hurting the US Dollar?

Finally, someone is asking the right questions . . . just hope it's not too late.

Ben Bernanke and the Federal Reserve have kept interest rates low for some time. Interest rates lie somewhere below a quarter point and a zero, giving people very little reason to save. Why should you save money when inflation could work against you and the money will not grow?

Low interest rates also work to reduce the cost of borrowing. This could help businesses that want to expand, or the federal government that has trillions of dollars of debt that it needs to finance.

SOURCE: Are low interest rates hurting the U.S. dollar? - BloggingStocks

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US Unemployment Hits 10.2% and Dollar Rises?

Does this make sense to anyone? Please explain it to me in the comments section below, please. What, unemployed people will use up US dollars by setting them on fire to keep warm?

The dollar rose against most major currencies on Friday as safety-haven demand for the U.S. currency was boosted by high employment rate. The unemployment rate rose from 9.8 to 10.2 percent in October, the U.S. Bureau of Labor Statistics reported. It was the first time the unemployment surpassing 10 percent in 26 years. Most analysts have forecasted a slighter increase to 9.9 percent.

Nonfarm payroll employment continued to decline by 190,000 in October, the smallest decline since August 2008. The largest job losses over the month were in construction, manufacturing, and retail trade.

There were positive signs in the first significant increase in temporary employment in this cycle, and an increase in manufacturing overtime. Combined August and September job losses were 91,000 less than previously estimated.

SOURCE: Dollar rises as U.S. unemployment jumps above 10%_English_Xinhua

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Time Magazine: Is the Dollar Dying a Slow Death?

Well, look who just showed up? Time Magazine, late as usual, is now asking the right question. But it is still coming up with the wrong conclusion: that the US Dollar, somehow, will rebound.

Sure.

The U.S. dollar seems to have as many lives as a cat. Even before 2008's financial crisis, as the dollar slumped against other major currencies, countless pundits and economists predicted its demise as the global economy's No. 1 currency. The doomsayers seemed vindicated when the U.S. economy descended into the worst recession since the 1930s, with its financial sector in tatters. How could an already weakened greenback maintain its value as American economic prowess withered? But then — surprise! — investors around the world decided the good old greenback was a safe haven in a time of great uncertainty. The dollar was resurrected, reversing years of slow decline.

SOURCE: The Dollar's Value Against Foreign Currencies Declines - TIME

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Expert: US Dollar Will be Dethroned Sooner Than You Think

Okay, so the US Dollar is briefly back up, but that seems like only a temporary recovery. The real end game is on the way . . . and sooner than everyone thinks!

Let’s take a look at the three key reasons that this shift away from the U.S. dollar happening – and sooner rather than later:

1. The Asian Region Currency Partnership: Japan, once the staunchest of U.S. allies, is leading the charge to form a regional currency partnership based on closer ties between itself, China and South Korea. Ostensibly part of the second trilateral “leader’s meeting,” that happened earlier this year, financial cooperation was front and center on the agenda (at Japan’s invitation) as a means of coping with the ongoing global financial crisis and with the subsequent resumption of worldwide financial growth. It was also key to the Association of Southeast Asian Nations (ASEAN) discussions that took place this past weekend – with the waning influence of the U.S. economy again playing a key role in the discussion amongst potential ASEAN trading block partners.

The Dethroning of the U.S. Dollar Will Happen Sooner Than You Think

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Drudge Report Blamed for Declining US Dollar, Increase in Stupid Hats

Really Politico? This is the best explanation you could come up with? That the decline of the US Dollar is because Matt Drudge is linking to stories (not writing them, mind you, just LINKING TO THEM) on his site, The Drudge Report?  Yes, shoot the messenger. Surely it has nothing to do with our massive national debt, bloated government, or lack of a clean plan of how the US will really reshape its economy.

And don't call me Shirley!

On Tuesday, Matt Drudge ran a headline about the weakening U.S. dollar on his website, Drudgereport.com. In and of itself, that would be unremarkable, except that it was the 18th time Drudge had posted a link to a story about the weak dollar this month.  And October was only 20 days old.

Clearly, Matt Drudge has developed a fascination with the declining U.S. dollar.  “He’s fixated on it,” said Tom Rosenstiel, director of the Pew Research Center’s Project for Excellence in Journalism. “There’s no question that Drudge can alter what people are paying attention to.”  Market watchers say it’s unlikely that Drudge is actually moving the currency markets with his relentless attention.

“I don’t think that anyone who seriously trades currencies reads The Drudge Report before making important buy or sell decisions,” said Chris Roush, a professor of business journalism at the University of North Carolina at Chapel Hill.

But Drudge does have the ability to put news items on the radar screen of major media outlets and political figures in Washington. And other people are paying attention to Drudge, too: A source close to the U.S. national security community said that Drudge’s link to a story in the [London] Independent earlier this month instantly grabbed the attention of senior American officials.

Zeroing in on the dollar's decline - Eamon Javers - POLITICO.com

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Australian Dollar Breaks 93 US Cents, Strongest Since August 2008

You have to wonder how bad things are getting when the Australian dollar starts to kick the US Dollar's ass. How long does it take to fly down there?

The Australian dollar briefly rose above 93 U.S. cents as the central bank said it was “possibly imprudent” to keep borrowing costs at a half-century low in minutes of its October meeting. New Zealand’s dollar slipped.  The so-called Aussie traded near its strongest since August 2008 as Reserve Bank of Australia policy makers said keeping rates at “very low levels” for an extended period risks higher inflation. Futures traders are betting on a more than 30 percent chance the benchmark rate will rise another 75 basis points by year-end. Demand for the two South Pacific currencies was trimmed on speculation gains this month have been too rapid.

“The market has taken the RBA minutes as reasonably upbeat, but it’s already there in terms of the rates priced in for year- end,” said Phil Burke, chief foreign-exchange dealer at JPMorgan Chase & Co. in Sydney. “The dips are going to be very shallow because there’s strong underlying sentiment for Aussie dollar, but it’s going to be a slow grind higher.”

SOURCE: Australian Dollar Breaks 93 U.S. Cents on Central Bank Minutes - Bloomberg.com

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Broad US Dollar Sell Off Likely to Continue

Well, that's what the guy's in Hong Kong are saying right now . . . and they're the one's with all the real money, so maybe we should listen to them, eh?

A sell off in the U.S. dollar continued globally as investors switched to riskier assets, leaving the Hong Kong dollar at the strong end of its trading band against the U.S. unit late Tuesday.   The U.S. dollar will likely stay weak and hover near HK$7.7500 in the near term, traders said.

In late Asian trade, the U.S. dollar was at HK$7.7501, unchanged from late Monday. The U.S. unit was also fixed at HK$7.7501 earlier Tuesday. "The U.S. dollar's broad weakness has prompted selling by both investment and commercial banks, which could trigger an intervention by the Hong Kong Monetary Authority later," a senior trader from a U.S. bank said.

Under Hong Kong's currency board system, the Hong Kong dollar is allowed to trade between HK$7.75 and HK$7.85 to the U.S. dollar.  The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 201 points to the spot rate, compared with a 188-point discount late Monday.  "I saw many selling positions for the U.S. dollar by local and foreign banks. I don't see any sign of a turnaround in the near term," another trader from a U.K. bank said.

SOURCE: HK Dlr Steady Late; Broad US Dlr Selloff Likely To Continue - WSJ.com

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