Who keeps pumping the helium into the US$ balloon?
U.S. dollar index is over 83. Isn't that a new 12 month high? The rise must be due to Bernanke endorsing congress to float out an additional "significant" fiscal boost which is sure to cost a couple hundred billion...that the country does not have...to spare!
New world mindset: If you print U.S. dollars like crazy, they will only go up in value.
Long term interest rates are going up. This is going to cause further damage to the mortgage industry as loan interest rates increase. When credit continues to collapse and interest rates increase, everything, including commodities and precious metals, gets slammed. So I hate to say it, but the safest place to be right now may be the dollar, and I think that is what the market is saying. (The Euro I believe is under heavy inflationary pressure.)
I think we are seeing a brief rally today, but I also think we will get hit hard again soon. After that (maybe a half a year), the inflation theories should drive up the price of gold. Right now, I think we are in for another stomach wrenching drop. I haven't decided yet if I will continue to hold or sell and buy back in.
That is just my two cents. I am just as confused as many other people.
When I said the dollar is considered more safe, I meant cash. I don't know how to trade currencies.
Deflation is the name of the game right now. I have heard too many arguments for or against gold during deflation to have made up my mind on a credible path. However, I think I might tend to preserve cash.