Will China Purposely Crush the U.S. Dollar with Nuclear Force?

China has all of the power when it comes to pricing the U.S. Dollar lower. Accordingly, they have now issued a "nuclear warning" to the United States regarding the value of the U.S. Dollar and how it relates to the value of the Chines Yuan.

It is clear that China has the power to decimate the value of the U.S. Dollar and in the process of selling off U.S. Treasuries, send U.S. interest rates much higher. This would quite possibly have a huge impact on the already fragile U.S. Real Estate market as well as the credit markets, derivatives, etc...

I'm Scared

Dollar Falls to 26-Year Low Against Sterling

TOKYO, July 18 (Reuters) - The dollar slid to a 26-year low against sterling on Wednesday due to worries about the U.S. subprime mortgage sector and after British inflation data boosted expectations for higher interest rates there.
Sterling rose as high as $2.0492 , getting a boost after data on Tuesday showed that the annual core consumer price index in Britain rose to a decade-high 2.0 percent in June.

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Dollar hitting new lows against the Sterling is just one more notch in the dollar decline. Are we due for a short term rally soon? I don't know, but long term dollar fundamentals stink and I expect the dollar will trade much lower than it is now.

New Lows for the $USD?

The U.S. Dollar is testing new lows right now. If it is not able to hold above this critical support level, expect the precious metals to head much higher from here.

Will Higher Rates Sink Gold and Silver?

Check out this Bloomberg article below. The headline speaks for itself. If you have ever read the work of Jim Sinclair, then you already know better :)

Gold, Silver Fall as Higher Interest Rates May Pare Demand
By Choy Leng Yeong

June 12 (Bloomberg) -- Gold fell, resuming its decline to a 12-week low in New York, on concern higher global interest rates will reduce demand for the precious metal as an alternative investment. Silver also dropped.

Gold tumbled 3.9 percent last week, the biggest weekly decline in three months, after the European Central Bank and the Reserve Bank of New Zealand raised rates. Holding gold becomes less attractive when rates rise because the metal has no fixed returns. U.S. Treasury yields rose today after China said prices increased at the fastest pace in two years, renewing speculation rising global inflation will prompt central banks to raise rates. (Read the rest of this article HERE)

Kuwait Drops Peg to U.S. Dollar

Another prop for the dollar has just dropped....... Click here for the article

Why is the dollar losing value?

The dollar is losing value because of the federal reserve, the treasury department and our irresponsible government that keeps growing and growing and growing. Kind of like the energizer bunny. It just keeps on growing and spending.

That is why it is always funny to hear the likes of big Ben Bernanke saying that they are vigilant in the fight against inflation. They are the ones responsible for inflation and in fact, without our governments reckless spending which promotes inflation, our government wouldn't even need the Federal Reserve to print up all that money for them to borrow.

Read Ron Paul's article below because he sums it up nicely. In fact, Ron Paul is one of the only responsible individuals left in our government today. He speaks the truth but few care to listen.


December 4, 2006

Author: Ron Paul

The financial press reported last week that the value of the U.S. dollar plummeted to a 14-year low against the British pound, and weakened against the Euro and Yen. Many financial analysts predict continued rough times for the dollar in 2007, given reduced expectations for economic growth at home and less enthusiasm among foreign central banks for holding U.S. debt.

This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply. Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic-- which means the value of every existing dollar goes down. (Read the rest of the story here)

Can You Say Flip-Flop ?

Editor: Isn't this the same guy that just told us gold is going down because the economy is cooling? This is some great reporting isn't it?


Gold, Little Changed, May Gain as Investors Bet Against Dollar
By Pham-Duy Nguyen
Nov. 29 (Bloomberg) -- Gold, little changed in New York, may gain after a report showed sales of new homes in the U.S. fell in October, reducing chances the Federal Reserve will raise rates anytime soon.
Higher interest rates make holding gold less attractive. The Fed has held rates at 5.25 percent since June, helping to send the dollar 9.4 percent lower against the euro this year. Gold is still up 24 percent. (read the rest of the story here....)

The U.S. Dollar Tanks

What time is it?

Well, since today is November 15th, 2006, that means it might be time to load up on gold, silver and precious metals shares.

After consolidating for quite a while and then breaking out of a downward wedge, it seems that gold and silver may be setting up for a run quite a bit higher.

It also might be time to look at the pitiful condition of the U.S. Dollar fundamentals and make sure you are prepared for what is heading our way over the next several years.