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

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.