![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Posted on 11/25/2009 5:49:52 PM PST by SeekAndFind
Is a continued weakening in the dollar in the first half of 2010 a fait accompli? Not so fast.
The median prediction in Bloomberg's survey of as many as 43 strategists shows the dollar gaining against the euro, British pound, yen, Swiss franc, and Swedish krona by September 30, 2010, Bloomberg News reported Monday.
However, the Bloomberg survey also indicated that the top, or most accurate forecasters in the survey predict that the dollar will continue to weaken even as the U.S. Federal Reserve starts to increase short-term interest rates, which Fed officials have said is an extended period away.
The dollar weakened about 1 cent on Monday at mid-day to $1.4982 and $1.6609 versus the euro and British pound, respectively. It rose about one-quarter yen to 89.15 versus Japan's yen.
So far in 2009, the dollar has weakened about 8% versus the euro, about 7.5% versus the pound, and roughly 4% versus the yen. Even so, the dollar is basically flat versus the euro since the financial crisis' acute stage in the fall 2008, while it's risen about 18% versus the pound, and plunged about 18% versus the yen.
Currency Analysis: A weakening dollar would seem to go hand-in-hand with back-to-back, trillion-dollar U.S. budget deficits. However, currency values are not determined solely by fiscal policy. An economy's strength and interest rates also play a large role, as well.
Moreover, if the U.S. economic recovery gains momentum in 2010, that would certainly support the buck. Add a Fed rate increase in the second half of 2010, and Congressional action to cut the deficit (including health care reform), and a dollar-decline hardly becomes a slam-dunk for 2010.
Also, investors assuming or counting on a declining dollar in early 2010 should also keep this in mind: if the U.S. economy shows strength in Q4, currency traders will begin to push the dollar up almost immediately. In other words, there is a scenario in which the dollar does not fall at all in 2010, but rises throughout.
I remember not so long ago when the dollar and Euro were near to par — this hurts. But then again I bought my bagpipes when it was about $1.90 per pound. Maybe time for a new set?
There are about a million scenarios that have the dollar rising. War in Iran, China invades Taiwan, North Korea attacks south, any huge terrorist attack, global recession goes deeper, foreigners stop buying T-Bills forcing interest higher, the US actual does the right things and stops spending, etc.
The combination of irresponsible gov spending and artificially low interest rates are the one-two punch against the dollar.
![[Most Recent XAU from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_xau_en_2.gif)
Lets see... A Marxist president and half of congress... YES!?!
Lets see... A Marxist president and half of congress... YES!?!
I’m telling you, blam, the dollar is the contrarian play of the year! Maybe the century! :-)
What everyone is watching for is a total collapse of the dollar, which would, IMHO, cause riots and bloodshed, along with anarchy and starvation. The past history of the dollar being a safe place will have to be destroyed to get that far down the line. At the Obama rate of spending, it is already talked about.
It would be useful to study past collapses as in Argentina. It would almost always bring about a governmental collapse with a dictator, military or otherwise, as a result. Of course, all your money, 401k, IRA, home equity, ect would dissolve overnight. Those that trust gold to save them have never lived under a dictator. That saying about why men rob banks would come into play,...That's where the money is! The dictator wouldn't allow peons to own gold because that would be real money and he needs it. As FDR wrote the executive order to take gold in the '30's, he knew he was about to inflate the fiat money, so he needed all he could get.
No one is barrowing so there is no artificially low interest rates - it is the market reacting by lowering the price to get more buyers.
The little guy is screwed however because the banks get huge loans, don’t give it out and charge 30% on credit cards.
Okay. Send me your silver and I'll send you my dollars.
LOL, that's your (taxpayers) money they're charging you 30% on.
I don’t see anything “good” coming our way ,,, if we’re lucky maybe we get a bit less “bad” ,, that’ll give us a tiny boost ,, enough to slow but not halt the dollars descent. With the marxist in chief and a congress full of his henchmen that really does make the dollar a contrarian play ... You do understand that most long shots are sucker bets? You’ll be betting against the “rulemaker” , Soros...
If you send me enough of your dollars, I'll be happy to send you my silver! I have some other commodities too if you're interested. Mostly scrap metal that Mrs. Tick is bugging me to get rid of.
>> You do understand that most long shots are sucker bets?
Probably ALL long shots are sucker bets... that’s why they’re long shots!
By the way, I’m not real serious about the dollar contrarian thing... sort of an inside joke.
Although I DO think there’s a gold ‘n equities bubble on right now, which is why I traded some of my equities shares today for more worthless dollars.
I’d pay a lot of wooden nickels to accumulate that german silver.
“Add a Fed rate increase in the second half of 2010, and Congressional action to cut the deficit (including health care reform), and a dollar-decline hardly becomes a slam-dunk for 2010.”
...I almost believed half of it until those two nugget of BS about “Healthcare reform” and “Congressional action to cut the deficit”, what a joke!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.