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« Gold: A quick Look at the Chart | Main | The Reserve Bank of India raises Rates »

The Tail Wags the Dog

USD Chart 21 March 2010.JPG

The US Dollar has bounced over the last two days to close at 80.75 on the US Dollar Index as shown on the above chart. India raising its interest rates played a bit part in this resurgence, however, the prime mover would appear to be the Euro which is clouded in uncertainty regarding an amicable solution to the financial problems in Greece.

The European Union will not want to lose a member as they believe that big is beautiful,so a solution must be found. However a bail out is unpalatable and who amongst us would expect the Greeks to adopt an austerity package, they have no history of doing so and as they say a leopard does not change its spots. So the drag on the Euro continues and the flight to a safe haven pushes dollar higher. So here we have it, a European state which only accounts for around 2% of the European GDP has got the Euro at its mercy and is bolstering the dollar at the same time. We cant ignore it but to us it is a ridiculous state of affairs. As we are on the subject of ridiculous you might want to take some light relief from this short video clip of German and Greek philosophy, just click this link.

Now if you think that things are not too bad for the dollar then please take a peak at the US Debt Clock, not a pretty sight and for those interested in gold prices you can also checkout the league table of just who owns gold.

Going forward the only certainty that we have is change and in our tiny arena that change is going to become more dramatic as the oscillations in gold prices become more violent as prices swing in both directions. So its time to find your sea legs and hold on tight.

Have a good one.

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Reader Comments (3)

the debt clock doesn't matter until deleveraging process is complete, if this is a greater depression you can have a lot more debt than in 1929 with rising dollar. and one more thing, the gold stocks didn't start to rise until 1933, when the depression was over.

March 21, 2010 | Unregistered CommenterDi

Gold is in a state of predicament, completing a small reverse head and shoulders pattern Friday, but failing to break out.
Gold Price guys state it well about Greece only making up 2% of the Euro...but of even more concern for investors is, when one sees a mouse (Greece), one anticipates finding more and bigger mice (PIS, UK, etc.). Hence the run-up in the US$, which is looking more likely...will be watching closely to see what happens this week.

March 21, 2010 | Unregistered CommenterMark

Di and Mark,

Both good points - well said.

March 21, 2010 | Unregistered CommenterGold Prices

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