Friday, November 24, 2006

The US Dollar

Thursday the dollar got whacked overseas, and I mean whacked hard. Then, on Friday, the dollar plunged to a 19-month low against its competitor, the euro. The yen joined the parade, surging 0.65 along with the euro which was up a big 1.46 to close at 130.79. As if waiting for the dollar to sink, December gold closed up 10.00 to 639.00 -- in so doing, gold closed at its highest price since September. Dec. silver closed up a large 43 cents to 13.40.

Immediately, the smart boys come out with their explanations for the dollar's weakness. "Europe might be raising its interest rates, while the US may be lowering its rates." "Productivity in the US is slowing." "The war in Iraq is going badly." "Bush is useless, he's now a 'dead duck'."

Of course, it's just possible that the dollar turned weak because US deficits continue interminably. And no currency can hold up in the face of an economy that survives on borrowed money and debt.


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