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Gold/Mining/Energy : Gold Price Monitor
GDXJ 109.28+3.8%Nov 28 4:00 PM EST
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To: ramcc54 who wrote (58530)9/21/2000 9:29:47 AM
From: BigBull  Read Replies (1) of 116790
 
ramcc54, the scenario you describe is feasible and I'm sure some will try it, however it does entail a tremendous amount of risk that would probably scare off many from trying it.

Imo the chief problems with the dollar at this point are these.

1. It poses a grave threat of inflation to the countries it is strong against.

2. It imposes what is effectively a huge worldwide tariff against US goods and services.

The world wide CB's do not like number 1 at all as it makes their job tremendously more difficult. I expect the Bundes bank hates it worst of all.

US companies and US based internationals hate number two. I mean the ceo's of these firms are probably pulling their hair out right now because of the tremendous disadvantage dollar strength puts them at. Imagine being a salesman of US goods in Europe right now. As soon as you walk in the door you are at a 27% price disadvantage. Earnings report after earnings report are now forecasting lower earnings due to the Euro. Kinda makes me wonder why people love the dollar so much. Dollar strength is rapidly sapping the US economy of strength. This is a fact that is born out by both corporate reports and the soaring trade deficit. When the psychology will turn I don't know, but I expect the almost universal bearishness on gold means sooner rather than later. We'll see.

BTW the G7 is meeting this weekend and I'm sure the Euro will be on the agenda. It remains to be seen if anything will be done in the way of intervention. But you can bet the Euro and currencies are firmly on the radar screen as a major issue.
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