Currently, the dollar is trading at 79.66. And it was not that long ago that the dollar was above 88. Imagine a foreign country that holds dollars as a substantial portion of it's own surplus reserves only to see the value of those holding decline over 10%. (1/3 of China's central bank reserves are denominated in dollars and a 1% decline represents over $10 billion of losses) If this burn rate continues, especially if we see 1% declines as a day's trading event, then how much longer will foreigners continue to hold onto their dollar based reserves? I'd dare to guess that 3 or 4 more days like today would trigger an exodus out of treasury holdings by foreigners. Bad for U.S. inflation....but "golden" for precious metal investors.
The Congress and our president have done absolutely nothing in their budget planning (or lack thereof) to protect the integrity of our currency. They just keep shooting holes in the bottom of our boat!
P.S. News! Are you making money in your FX trades? You predicted big declines in the dollar!
" But a lot has changed in the past few weeks, with some analysts questioning the dollar's status as the world's top reserve currency in the wake of the crisis in Washington.
Ray Attrill, co-head of foreign exchange strategy at National Australia Bank , said that if the dollar index breaks below 79.50 it could head down to around 78 - implying a fall of around 2 percent from current levels."
From Yahoo Finance article: "Taper talk could worsen the dollar rout"
"While most are now celebrating the end of government gridlock (however ephemeral it may be), the truth is few understand the consequences of our addictions. The real problems of government largess, money printing, artificial interest rates, asset bubbles and debt have not been addressed at all. Rather, Washington has merely agreed to perpetually extend its lines of credit and to have the central bank purchase most of that new debt.
Instead of placating the fears of our foreign creditors we have cemented into their minds that the U.S. dollar and the bond market cannot be safe repositories of their savings. The eventual and inevitable loss of that confidence will ensure nothing less than surging prices and a complete collapse of our economy."
Hi Quail: Today, I sold half of the EXK shares that I bought yesterday and some that I had purchased the day before. I just had too many shares. I doing well with FX stuff. I could care less about the money, but sometimes (tinnitus) I can't sleep nights and early morning hours (Pacific time), so I trade the FX. All my profits go to saving the life's of stray dogs and cats. I don't have children or any close relatives. One of our cats died a couple of days ago and I'm taking it harder than my wife. It was partly my fault.
After reading this post of yours, you be a natural at trading currencies. You said that it's out of my league, I don't think so buddy. LOL. Actually, you may find that it's easy compared to trading miners these days.