Gold, commodities strong as dollar weakens

myp · Nov 17, 2009

Gold, platinum, copper, and commodities in general have seen a surge recently as the dollar continues to weaken and investors start to look towards commodities (commonly gold) as a hedge. Secretary Treasury Geithner has said that he believes we need to strengthen the dollar and of course the holders of American debt would like that, but policy-wise that still doesn't seem to be happening.

USD holders are starting to get worried- India's recent purchase of 200 tons of gold from the IMF being proof of that.

Thoughts?

deanhills · Nov 17, 2009

myp said:
Gold, platinum, copper, and commodities in general have seen a surge recently as the dollar continues to weaken and investors start to look towards commodities (commonly gold) as a hedge. Secretary Treasury Geithner has said that he believes we need to strengthen the dollar and of course the holders of American debt would like that, but policy-wise that still doesn't seem to be happening.

USD holders are starting to get worried- India's recent purchase of 200 tons of gold from the IMF being proof of that.

Thoughts?

I guess when the US gets worried, China must be double-worried. Anything that affects the dollar has to affect the debt that is owed to China. Wonder whether Obama's visit to China would have discussed this issue.

myp · Nov 18, 2009

deanhills said:
I guess when the US gets worried, China must be double-worried. Anything that affects the dollar has to affect the debt that is owed to China. Wonder whether Obama's visit to China would have discussed this issue.

Ironically the politicians here don't seem nearly as worried as China does, especially when you look at policy. Of course China is worried- they have suggested it many times including during this trip- they want the US to stop weakening the dollar.

DodgeFB · Nov 18, 2009

( Gold, platinum, copper, and commodities) Sad to say own none of these.

I kind of wish China would cut off the credit until cooler heads can take over.

myp · Nov 18, 2009

DodgeFB said:
( Gold, platinum, copper, and commodities) Sad to say own none of these. I kind of wish China would cut off the credit until cooler heads can take over.

They certainly are getting wary. The problem though, is that since this administration and Fed leadership is so keen on spending, the central bank is likely to simply buy its own debt as it did earlier this year (which was the first time that ever happened.)

Dirk · Nov 18, 2009

I don't see why anyone's surprised. All of the major currencies at the moment are being devalued.

China, of course, artificially keeps its currency at low value anyway to keep exports up. That the USD is declining in value is crucial to China's own economy since firstly, the US is China's largest export market, secondly, China has a good-sized share in the dollar, and finally, you all are already aware that China now has a considerable chunk of the US's national debt.

deanhills · Nov 20, 2009

Dirk said:
I don't see why anyone's surprised. All of the major currencies at the moment are being devalued.

China, of course, artificially keeps its currency at low value anyway to keep exports up. That the USD is declining in value is crucial to China's own economy since firstly, the US is China's largest export market, secondly, China has a good-sized share in the dollar, and finally, you all are already aware that China now has a considerable chunk of the US's national debt.

I don't see China's currency being that low. It is pretty much on the level with the US dollar, and probably for the same reason you mentioned. Quite a number of the world countries peg their currencies to the US dollar. I also don't see the US dollar really that weak either. Considering what has been happening to the economy in the United States it has been holding up very well.