Why Is The US Dollar Getting So Strong?
I have not understood at all how the US dollar has gotten so strong when everything they've done in fact means you should be dumping the currency, but with so many places doing the same things, then stay the course relative to each other.
Yves has a post that makes a lot of sense to me as to why the US dollar is rallying. The unwinding is causing the need for US dollars to pay those margin calls and the likes as leverage unwinds.
The other thing is the currency crisis that is emerging yet I haven't seen much written on it. The post is truly worth a read. Apparently the US and Japan sat out the emerging market credit boom, which has reversed with the Japan carry trade reversing and some of these countries have seen already crushing debt rise by 40%. This is going to hurt Europe big time.
I don't like gold stocks. Everytime I look them I find nothing but a disaster in them, but gold bullion is quite different. The flight to US dollars has created a buying opportunity for gold. At some point there has to be a much stronger consideration of the amount of debt the US has, and the staggering rate of growth of debt in the past few weeks. I think that has to cause a currency reversal of sorts and gold is a good hedge against that.