Something is changing. . .
Russell Comment --November 30, 2006 -- I'm writing this two hours before the opening of today's market. The Dollar Index is down about .17 points and gold has been climbing. As I write, Dec. gold is up 9.20 to 650.90 and Dec. silver is up 26 to 14.03. I have the sense that something is going on, something is changing, in the FOREX market and in the precious metals market. My guess is that it has to do with China and the Asian nations and their holdings of declining US dollar denominated securities.
Chinese monetary reserves have now climbed over the one trillion dollar mark, 70 percent of which are in dollar securities. The Chinese are watching the dollar decline, and they are watching the bearish background for the dollar -- deficits. A major decline in the dollar would represent a disaster for China, and various Chinese spokesmen have recently "suggested" that China speed up is diversification program.
Index is the mirror image of the dollar's main competition, the
euro. There's been an initial break, followed by a compact little
cluster. If the Dollar Index falls out of this cluster, we can
expect another sharp decline. As I said, "something is changing."
Up to now, the dollar has been declining "lightly and politely."
And I'm wondering if a further less polite decline in the dollar
is on the way.
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