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Politics : Welcome to Slider's Dugout
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From: Roebear6/12/2005 10:45:06 PM
   of 50414
 
THE PRIVATEER - "So, why does the US Dollar continue to go up? We think that the major reason is repatriation of capital by US financial entities (of all descriptions) in anticipation of an abrupt economic slowdown. This anticipation has been exacerbated in recent weeks with the seemingly inexorable flattening of the US yield curve. This has now reached such a level that Mr Greenspan himself has seen fit to come out with a "this time it's different" statement regarding the effects of a possible inversion of the US yield curve.

Three weeks ago, in the Late May issue (#527) of The Privateer, we referred to a report in the Financial Times which stated that US hedge funds were speeding up their repatriation of capital to prepare for an expected surge in redemption demands. With hedge funds, such redemptions can only be made quarterly, and the next due date is in LATE JUNE.

If this US Dollar surge is, in large part, the result of a repatriation of capital, then the consequences when such repatriation ebbs are going to be dire. Don't forget, the OECD recently forecast a $US 900 Billion current account deficit for 2006. The current deficit is presently running at about a $US 680 Billion annual pace.

Simply put, more and more people all over the world are becoming increasingly uneasy about the future prospects for the global economy, and for the world's paper currencies. That phenomenon has a long record in history, and the end result is ALWAYS a flight of larger or smaller proportions out of the paper currency or currencies in question and into the precious metals in general and Gold in particular."
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