As we can see from the chart of the US Dollar the fall continues from the 82.0 level in mid August to 78.61 yesterday for a loss in value of 4.3%.

The US Dollar is now trading below the much-watched ‘80′ level having been clobbered by a 50 basis point cut by the Federal Reserve.

To the holders of large amounts of the US Dollar this must be extremely painful, foreign governments must be asking themselves why they are still have such a poorly performing currency in their portfolio. How long will it be before the voters notice that their elected representatives have been sound asleep when they are the ones elected to keep an eye on such matters?

Talking of voters there is an election coming along in the United States of America, which the incumbent’s party would dearly like to win. So the decision to sweeten the deal for the voters and allow the US Dollar to go into free fall appears to have been sealed. The question now is just how far will it drop and at what speed? It now appears inevitable that we are in for a period of rampant inflation but we should not be surprised, gold has been telling us this for the last few years as it acts as a leading indictor for inflation.

Gold continues to perform inversely to the US Dollar, however beware of a snap back as this sometimes happens with precious metals when they get this far ahead of their 200dma.

It is nice to see though isn’t it!

Finally if you have the time you might want to watch this video of Jim Rogers on Bloomberg alerted to us by one of our readers. He gets back to the basics of a free market and questions why the Federal Reserve is behaving in such a manner as it is today, launching financial life boats into the private sector, etc.

Have a good one.