The Gold Price is not Discounting the Full $ Story!

By: Julian D. W. Phillips | Fri, Nov 30, 2007
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Gold Forecaster - Global Watch

Below is a snippet from the last week's issue from |

The foreign exchange markets are not solely about exchange rates. They are about values, smooth flowing of international trade, about trust and reliability. The sight of the $ falling over a long period of time, with bounces and recoveries that don't change the downward trend is far more than simply a drop in value!

The $ is steadily weakening, but more than a drop in the $' international value is happening here. The loss of confidence is in the $ is accelerating each time it slips one or more percent on a persistent basis, with small short recoveries being seen in the midst of this decline. How important is this loss of confidence? Critical for it precedes policies, which long-term will lessen the role of the $ to one of the world's top 5 currencies. Growing surplus holders don't want to dump the $ for fear of losing value in the remaining ones in their portfolio, but don't think that a dumping of the $ is what it will take to remove it from the position of principal global currency. All realize that it is the knowledge of the declining value of the $ that will bring on a major toppling of that currency. So it is a choice of a steady ‘controlled' fall or a steep decline to disaster. To get perspective on the global scene what is the thinking out there?

This list of important $-holding entities concerned about the $ and one that's getting longer by the day.

We are moving to the end of the U.S. $'s 62-year reign as the world's main international currency for trade, financial transactions and central-bank reserves? Unless something is done to give real value to the $, we believe that the process has to accelerate, rupturing the global monetary system, only to bring back Protectionism in the large trading blocs, exacerbating political and economic instability. We see this rising wave of concern moving forward to a major crisis. Any calming of the situation will cause a short-term strengthening of the $ to be followed by steeper declines.

On the back of this, confidence in the precious metal markets, particularly gold and silver, will climb as a counter to the decline of the $.

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Julian  D. W. Phillips

Author: Julian D. W. Phillips

Julian D. W. Phillips
Gold Forecaster

Julian D. W. Phillips

"Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price.

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