oh well, in hindsight, i was actually wrong, since the dollar strengthened right after i wrote that little missive, and regained the broken trendline. but i agree that it has to end, as policy makers will increasingly fret about imported deflation.
regarding China, note also that China's central bank has quietly, without much fanfare, increased its gold reserve, which now stands at 500 tons (read: lots of room for it to grow). China, which the West sometimes treats deferentially as an emerging economic force that is important to our commercial interests, and then again sometimes as an emerging enemy, whom we will have to 'deal with' sooner or later in a confrontational manner is on its way to becoming an economic giant that will eventually replace Japan as Asia's most important economic area.
the confrontation aspect could one day become important to the gold market:
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