Another Day, Another Dollar
December 8, 2004
Looks like December's buying opportunity in gold is getting exciting. The dollar spiked again today, but after all the drama it closed about where it did with last week's spike. This time, gold was sent for a deep dip and commodities of all shapes and forms got whacked. The buying opportunity in oil got even more attractive as the U.S. Energy Department announced inventories rose last week, and the speculators responded appropriately. Even more interesting, the 10-year Treasury rallied hard with the yield dropping by around the same one percentage point it dropped last Friday. Once again, on the eve of another Greenie short-term rate hike, longer-term yields are refusing to follow suit.
So you tell me, is the dollar finally bottoming out…?
It sure looks
like some kind of bottom could be happening. I am not clear on why now or here
(pending Fed meeting?), but given the extremely heavy selling that has pounded
away at the dollar since September, some kind of counter-trend rally should not
surprise anyone. But given the longer-term prospects of American budget and
trade deficits from sea to shining sea, gold will remain quite attractive as
the anti-dollar investment for some time to come. And given increasingly
voracious oil consumption from the likes of