The Dollar vs. Gold and the World Economy

In some strange way which I can’t prove simply because I’m too lazy to find the supporting evidence, the Dollar and gold are like opponents on a see-saw. When one goes up the other down. Or in that same retrospective, one rises in value when the other takes a beating.

Why you may ask? Which brings me to my next question. How much do you know about government debts, expenditures and deficits? I do know that a if government that prints money when they run out of it is at risk of devaluating the currency. In recent weeks, the Singapore Dollar has risen against the Greenback. There are claims that the Dollar is now worth no more than 4 cents?!? If that is the case, why is the world economy stll pegged against the dollar? Shouldn’t it be pegged against gold?

Is the US slipping into recession? How will it affect all of us? Being the world’s largest economy and the world’s currency benchmark, how will it affect your local economy? How will it affect the security of your own jobs? These have been the questions I have asked myself over the past 2 weeks or so and I think they are valid questions we should ask too. These are answers analysts, economist and bankers don’t want to and can’t answer because even they don’t know the answer.

So who has the answer? The Federal Reserve. A non-government agency in the U.S. who are nothing more than a representation of private banks. The Federal Reserve is as ‘Federal’ as Federal Express yet they are the U.S. Central Bank and they dictate the world economy. Freedom for America? Or is this the Corporate America?

If you are a U.S. citizen.
If you are a U.S. alien.
If you are a citizen of an independent country.
If you are a national of a sovereign state.

You should watch the video link below:

For the same reason, I would vote for Ron Paul. Well, my vote doesn’t count.

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”

Congressman Ron Paul

When the cause of human events…

Channelnewsasia.com

Dollar steadies as gold sets new record
Posted: 12 January 2008 0629 hrs

Photos 1of 1

US dollar banknotes

LONDON : The dollar gained slightly in European trade on Friday after tumbling a day earlier and the price of gold raced to a record above 900 dollars an ounce, traders said.

Traders said disappointing trade data from the US would normally be negative for the dollar, meaning the US unit had probably benefited from a technical bounce.

The Commerce Department said the US trade deficit in November swelled 9.3 percent to 63.1 billion dollars, its highest level in 14 months, owing to record crude oil prices.

“The deterioration in the US trade deficit had little immediate impact on the dollar,” said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon.

The price of gold on crossed 900 dollars an ounce for the first time in New York trading, driven by the prospect of a significantly weaker dollar as the market bet on new US interest rate cuts.

Gold futures hit a record 900.10 dollars on the New York Mercantile Exchange.

The falling dollar makes gold, which is priced with the US unit, cheaper for buyers using stronger currencies.

In London, at the evening fixing the price stood at 891 dollars an ounce, from 884.25 on Thursday, after earlier reaching a record high of 898.03 dollars.

Sterling hit a new all-time low against the euro and ten-month trough versus the dollar on expectations of another interest rate cut from the Bank of England at its next meeting in February.

In late European trading on Friday, the euro slipped to 1.4786 dollars from 1.4807 dollars in New York late on Thursday.

The dollar dipped to 109.13 yen from 109.27 yen late on Thursday.

The factor driving the foreign exchange market is the US Federal Reserv, which is expected to cut interest rates at its meeting at the end of the month.

“Whether the Fed cuts 25 or 50 basis points will depend upon the outcome of next week’s torrential deluge of US economic data highlighted by CPI on Wednesday,” said Woolfolk.

The dollar tumbled yesterday on expectations of further cuts to US interest rates after Federal Reserve chairman Ben Bernanke said the US central bank was ready to trim interest rates again amid lingering economic uncertainty.

Lower interest rates typically weaken a currency as speculators prefer to invest in currencies where interest rates are higher, or are perceived to be heading higher, in a bid to reap higher returns on their investments.

Traders ratcheted up their expectations that the US central bank would unleash a 50 basis point cut to 3.75 percent at a policy meeting scheduled for January 29-30.

Bernanke’s comments on Thursday came after the European Central Bank decided to keep its main interest rate at 4.00 percent against a backdrop of rising inflation and slowing economic growth.

“While the Fed seems to be on a mission to lower rates, the prospect of an early cut in ECB rates looks like mission impossible right now,” said David Brown, chief European economist at Bear Stearns.

Rate cut expectations continued to trouble sterling on Friday, as the euro struck a record peak of 75.86 pence. The British pound meanwhile slumped to 1.9484 dollars — the lowest point since March, 2007.

In European trading on Friday, the euro changed hands at 1.4786 dollars against 1.4807 late Thursday, at 161.32 yen (161.85), 0.7549 pounds (0.7548) and 1.6305 Swiss francs (1.6330).

The dollar stood at 109.13 yen (109.27) and 1.1028 Swiss francs (1.1028).

The pound was at 1.9587 dollars (1.9613).

- AFP /ls