Posted on 08/15/2008 7:18:22 PM PDT by bruinbirdman
The pound could soon dive to barely more than a dollar and a half while gold prices plunge to $650, experts predicted yesterday amid fresh evidence that the commodity boom is ending and the dollar's resurgence is under way.
Michael Saunders, head of European economics at Citigroup, said it "would not be a surprise" if sterling fell to levels last seen in 2002 - around $1.55 - despite sitting above two dollars as recently as mid-July.
His comments came as sterling dropped to a fresh two-year low against the dollar, down over a cent at $1.8632.
Its recent series of daily falls - down 3pc over the week - is the worst since the early 1970s, although it fell more sharply in the wake of Black Wednesday in 1992. It also rose slightly against the euro yesterday.
The pound's weakness followed the Bank of England's Inflation Report this week, in which it signalled that it is unlikely to raise interest rates in the near future. Its fall has coincided with the dollar's renaissance, as investors sell out of commodities and butt into the US currency, as fears grow for the fate of the eurozone economies.
Goldman Sachs analysts said in a note: "It is time to say goodbye to our long-held dollar bearish stance. For about 10 years we have been negative on the dollar, occasionally wrong but mostly right."
As the dollar fell, gold dropped beneath the talismanic $800 mark for the first time since late last year, dropping to $772.98 an ounce. It has lost a quarter of its value since hitting its record high of $1,032.70 in March.
OPEC yesterday revised downwards its 2008 forecast for global oil demand growth to 1.17pc from 1.2pc, citing the weakness of the world economy.
(Excerpt) Read more at telegraph.co.uk ...
The dollar isn't getting stronger. Everything else is getting weaker by comparison.
There is/was no commodity bubble. All this is normal market fluctuations. We now return you to your regularly scheduled Bloomberg/CNBC talking heads...
My only question is: WHat will Glenn Beck do?
Very close to what it was when I bought my bagpipes, 26+ years ago. Maybe it's time for another set. *\;-)
ahhh... what do you think monetary strength is defined by? Monetary value is a ratio, just as the value of everything. What will X exchange for Y. That is the definition of value..
How can you tell if your bagpipes are wearing out? ;-)
There are ways, believe me...
Thanks for answering that inane comment, saving me the effort.
So rub your two brains together and tell me why the dollar has been getting stronger the past couple of weeks? Is it something internal to our economy and financial system or something outside of it?
Currencies have no abstract strength or weakness, their strength is relative only to other currencies and means of exchange. There is no difference at all between saying one currency is getting stronger than the others vs saying all of the others are getting weaker. It’s a meaningless statement.
With inflation fears seemingly the Fed’s overriding concern, it’s likely that US interest rates will stay flat or perhaps go up, making US currency more attractive to hold.
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