More Room for the Dollar to Fall

The US Dollar Index has once again broken below 84, which has been an important level in the past. Take a close look at the following chart.

Notwithstanding all the huffing and puffing by central banks - not to mention their ongoing intervention - the dollar continues to trend lower. The Dollar Index again breaking 84 will I expect prove to be significant. In short, by any objective view, the above chart looks horrible.

The dollar's near-term outlook of course has implications for other markets. More dollar weakness will probably boost the stock market. One is better off owning blue-chip energy and commodity producers than having that money sit in dollar-denominated bank accounts or other forms of dollar-denominated interest bearing paper.

A weak dollar will also be positive for gold and silver, whose prices can be expected to rise as the dollar falls from here. But gold and silver can be expected to rise even if the dollar doesn't fall from here because of inflation and other dollar debasement that is eroding the dollar's purchasing power.

The above charts show that gold and silver remain in uptrends, and long-term bull markets. So when viewing all of the above charts, which would you rather own? Gold and silver? Or the US dollar?

Published by GoldMoney
Copyright © 2007. All rights reserved.
Edited by James Turk, alert@goldmoney.com

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