Currencies

June 29, 2009 - Since March 23, 2001, we have been holding goldgrams as our Core Currency Position.

On May 4th traders sold the US dollar by shorting the Dollar Index at 83.97. Stop out this trade if the Index closes above 81.30.

Note how the Dollar Index approached this resistance level on June 15th, but was stopped dead in its tracks. Thereafter, the dollar declined, and closed Friday at 79.88. Overall this performance shows pronounced weakness. It implies that the Dollar Index will soon be making new lows, which is not too surprising given that the fundamentals for the dollar continue to deteriorate.

Spending by Washington’s politicians is simply and totally out-of-control. What’s even worse, they keep coming up with new ways to spend money they don’t have, adding to the already gargantuan federal debt burden. As an example, the new proposed health-care scheme is simply an added expense that the federal government – and indeed, this country – cannot afford.

The dollar is headed for hyperinflation. The dollar is headed for the fiat currency graveyard. Do not lose sight of this important point. Do not believe the propaganda of government officialdom that they know what they are doing and will take care of your best interests. The fact is, they don’t know what they are doing, and they are not looking after your interests.

There are of course exceptions, like Ron Paul. But people like him in D.C., unfortunately, are few and far between. The dollar will suffer as a result.

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