2011, we have seen several arab countries fall, and unrest increase in oil producers such as Iran and Saudi Arabia. Japan has been severely injured, calling into question their future GDP as a percent of global GDP, changing the economic landscape.
Japan has significant US Treasury holdings, and I am concerned as part of the rebuild in the years to come, they will accelerate their US Bond selling.
Today, the USD is at a crossroads, if it breaks down further, there is no chart resistance (historical level of valuation) except at the all time low set a couple years back at 74.
Once we break through 74, in my mind, the USD is NOT a good storage of wealth. I do have hope that the USD will break 74 and make a huge comeback. But as a friend once told me, best not put yourself in an investment position "hoping for a comeback".
Recently all commodity prices have come down. Gold did, but just barely, it is already firming up chart wise.
Here is the chart of USD valuation against a basket of other fiat currencies.
Notice, a breakdown from here will likely accelerate down to 74 quite quickly (chart wise). If we reach there, thats when I'll be panicking about USD, and holding tight my resource positions.
|From WebSufinMurfs FinancialBlog2|