Barrack gold announce today they are buying gold back to bring their leverage down as has another major gold miner.
By Daniel at 9 September, 2009, 12:20 am
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China is buying, nations are taking their gold back from the U.S. storage, central banks have stopped selling and the dollar may head for 72 since it broke this support level today.
Will all that be bullish for gold? Maybe. Oil today was more popular as the place to go when fleeing the dollar. If the dollar falls to 72 then, instead for $145 like the last time the dollar was there, the abundance of supply may limit oil to $100 or so.
What we do know is that more and more demands to end the dollar reign are rising and more nations are moving out of the dollar as fast as they can without collapsing it. China is even buying real estate here in the Phoenix area to spend dollars for real assets.
The growing calls for SDR’s to compete with the dollar and the buying of IMF bonds is another indicator that the dollar is in trouble. All summer, I read article after article saying the dollar would rally this summer and yet, it didn’t significantly. Each move up was followed by a down move to support and now that support has broken down.
The FED would have to make some kind of move that showed the world they weren’t going to allow the dollar to fall. That would almost certainly include a rise in interest rates and hurt the economy even more and that, in turn, in the long run, would hurt the dollar too. The worse the economy is, the more obvious to foreign lenders, they won’t be paid back with dollars of real value.
No matter what the FED or Congress does, it will hurt the economy one way or the other.
I am not a “bull” on gold as much as a “bear” on the dollar due to the lack of support our government is showing for it. There are other things than gold to use to protect against a falling dollar but, watch for swings.
As one thing rises too far, it will correct and people will move to something else and then when it rises too far, it will correct and something else will go up. This is not a buy and hold environment.
JanPaul
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