sedek

Black Gold or Yellow Gold?

" Meanwhile, the value of the US dollar has dropped by 50% in that time period."

Interesting piece, and I do like your realization that politics and the economy, especially in an election year, are linked.

My quibble is with your above. The Dollar has dropped over 70% to gold from it's highs in the late '90's, those glorious days of $24 oil and $250 gold and $2.00 wheat. Deficits, debt, low interest rates, and hyperactive printing presses are the culprits and we are trapped by unfunded liabilities into keeping the Dollar low to repay debt with Monopoly money. We'll have a brief outbreak of stronger Dollar before the election to throw a lifeline to the incumbents, then the Dollar falls again with no predictable bottom.

U.S. Dollar Paradigm Shift Underway

"Call me the optimist, even a contrarian, but selling the US short is a foolish thing to do after the proverbial toilet has already been flushed."

The flushing is ongoing, the recent Deficit Stimulus Act, liquidity injections, BSC guarantees, and last week's rate cuts still washing over us, with more rate cuts, more bailouts, and congress tripping over themselves to come up with more ways to buy our votes with the grandkids' money.

Gold is useful as a standard, a way to recognize that the Dollar has lost 3/4's of its value in under eight years whil the Euro has only lost a half. Without the commodities, we would have no reference for the incompetence of our leaders and bankers.

Burst Bubble? Commodities' Long-Term Story Remains Intact

Good piece and I agree with your analysis of the fundamentals. What I'm seeing the last couple of days is profit taking turning into a lemming rush over the cliff. Just a guess without charting, but Dollar $1.45 and gold $800 should be solid bottoms, about 20% off the tops.

In an election year with congress and the candidates bidding for votes with borrowed money, this is temporary and I see it as an opportunity.

Gold/Dollar Ratio Goes Parabolic

Not seeing useful information in the article, as the Euro, and other "majors," is also devaluing due to Trichet printing money like paper is free. The commodities have pretty much all quadrupled, so I read that as the Dollar losing 75% of its value due to FR manipulation and US government deficit and debt. Until Ben Bernanke finally runs out of bp's to cut and as long as the government spends more than it generates in revenue, the Dollar will continue to devalue.

Unfortunately, the three remaining presidential candidates all offer more tax deferments and more spending targeted to their constituencies, so gold or wheat or anything of intrinsic value will continue to rise in falling currencies. For those who dream of gold falling, lock Ben Bernanke in a closet so he can do nothing this week. The Dollar will raise and commodities fall because the markets have already priced in a 50 bp cut.