The dollar has reached all-time lows
against the euro
Posted on 10/18/2007 6:07:42 PM PDT by bruinbirdman
The dollar has plummeted to all-time lows against both the euro and a basket of global currencies amid growing fears of a disorderly rout as the US property slump spreads to the broader economy.
The greenback dived after the US 'Philly' business index dropped 10.9 to 6.8 in October, with a shock fall in new orders and inventory, raising the chances of further rate cuts by the Federal Reserve this month.
The dollar has reached all-time lows
against the euro
David Page of Investec Securities also noted that sales of toys and games were high due to fears that stocks would not meet Christmas demand following Mattel's toy recalls. Shoppers seem to have shrugged off any impact of the recent market turmoil, prompting economists to speculate that the Bank of England may wait until next year to cut interest rates.
Other data lent support to this view. Bank of England figures showed that growth in the country's broad money supply, which can fuel inflation, cooled in September but stayed high at 12.8pc.
Growth in total lending by banks and building societies, known as M4 lending, appeared entirely unaffected by the credit crisis, rising from 12.3pc to 13.1pc. Vicky Redwood of Capital Economics said: "With inflationary pressures still strong and retail sales figures supporting evidence that the economy grew more strongly in the third quarter than the Monetary Policy Committee expected, interest rates look likely to stay on hold until next year."
The housing market, however, showed signs of cooling. Data from the Council of Mortgage Lenders revealed a stark 12pc decline in mortgage lending over the month, around twice the average fall in August.
Separately, the ONS released data giving a gloomy picture of the state of the public finances, in a fresh blow for new Chancellor Alistair Darling.
Public sector net borrowing, the Government's preferred measure of the public finances, rose to £7.4bn last month, the highest September borrowing on record and above expectations of £6bn.
Howard Archer of Global Insight said: "With slowing growth, a softening housing market and substantially lower City bonuses all likely to weigh down on tax revenues, the prospects for the public finances look worrying."
Ok, point made. Sorry about that.
Hats off to anyone meaningfully in gold the last two years, and I know would actually agree, that 1000 on gold is not just possible, but probably will happen. The chart would indicate that the next few months will be very strong. But after that.... the chart is very similar to many bubble charts, same type of volatility moves, steeper up as she goes.
A chart like gold, usually is one that cannot endlessly be sustained. Ok, help me out, where does gold price belong, 1000, 2000? And like any financial instrument that gets rolling, you don’t think it eventually goes beyond the real price, as speculators take over, run it way beyond the norm? What, that cannot happen to gold?
LOL! Trying to show the value of gold over US currency by posting a plot of USD/oz vs year isn’t logical. Gold is simply an object subject to demand. It is not currency anymore than gravel is. They are both trade items. Your valuation is given in dollars, because otherwise you’d have no unit to value it in, other than tons of gravel, ect..., which also have an equivalent dollar measure.
The gold folks here though, might point out that the value of gold cannot only be explained by currency. It has far exceeded that exchange.
But, I’d suggest that what gold is doing, is based a whole bunch on demand outracing supply, due to a number of factors. I’d assume speculators are turning towards it, investors for the long haul, and maybe even large investments by foreign govts as a way to invest their current windfall, especially some of the in favor emerging markets?
It has an inherent demand as a fundamental component of ornamentals and electronic parts. That keeps it's value stable. Any other commodity that has an inherent demand could and does serve the same purpose.
It has a mysitique which speculators can take advantage of, that extends the magnitude of volitile swings. Since the swings are usually larger, more $s can be made selling the stuff on an upswing and during it's return to a rational price.
I should have said, "keeps it's rational value stable".
Believe that at your own peril. No skin off my back
LOL! Doom, gloom and peril are all part of the various cons promoted and perpetrated by arosing fear in the mark. In order to counter what I said, logic is required.
Coffee at $10 a cup shows you who is nuts. The market is hugely distorted right now. If the seller of the $10 per cup of coffee can buy 4 cups of same coffee in the US for the same $10, it is irrational. The Europeans must be making some big bucks if they are willing to pay the equivalent of $10 per cup.
100% agree
Another enlightened one. Which is exactly why FDR made the following rather extraordinary decree in 1933.
“I, as President do declare that the national emergency still exists; that the continued private hoarding of gravel and bricks by subjects of the United States poses a grave threat to peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interest of our people. Therefore, pursuant to the above authority, I hereby proclaim that such gravel and brick holdings are prohibited, and that all such coin, bullion or other possessions of gravel and bricks be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government. All safe deposit boxes in banks or financial institutions have been sealed pending action in the due course of the law. All sales or purchases or movements of such gravel and bricks within the borders of the Untied States and its territories, and all foreign exchange transactions or movements of such rocks across the border are hereby prohibited...” - Proclamation by President Franklin D. Roosevelt, April 5, 1933
That is basically a worthless chart, in that it’s not corrected for dollar inflation (depreciation).
Adjusted, the gold bull has only begun to run, and must pass $2,000 to reach the 1980 top.
yitbos
It's not logical to base a monetary system on a commodity. The value of the commodity usually gets fixed artificially and both the money and commodity are valued in terms of each other in an arbitrary fashion. The "extrordinary degree" was given as part of a remedy, to replace an illogical system with a rational monetary system.
"politicized inflation... shadow govm't statistics...
Nice chart there. The 1-800 # guys at the trading desk need to smile again, like they did around '79-'80. They sure helped folks weather the hard times of the '80s, '90s, and '00s.
Only $1300 more to go to get back to it’s inflation adjusted high!
And it will get there soon.
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