The Bell Tolls For The Dollar In '07

[Lakemonster]

I never have understood why the shiney gold metal should dictate the economy.... you cant eat or drink it. You cant defend yourselves with it... and you cant make fire with it...... so whats this strange driving force for GOLD to be king.

One thing I have watched was how much Gold has risen in value over the last few years...... oh wait..... maybe it hasnt risen in value.... the Dollar has just dropped in value all this time. With more and more oil bearing countries dropping or considering dropping the dollar........ the Dollar gets put further in jeopardy.

http://www.worldnetdaily.com/news/a...RTICLE_ID=53587

2007 economic forecast: Dollar decline, recession
Analysts cite increasing foreign aversion to U.S. currency, see continue gold rise


By Jerome R. Corsi




Economists anticipate that the fall of the U.S. dollar in world currency markets that began in 2006 will accelerate in 2007.

"The dollar could lose as much as 30 percent of its value in 2007," econometrician John Williams, who publishes the website Shadow Government Statistics, told WND. "In 2007, we are likely to see the economic downturn of 2006 develop into a structural recession and yet we have international trade and federal budged deficits careening out of control."

Williams explained, "U.S. interest rates are still relatively low, compared to Europe. This will make it increasingly attractive for central bankers to consider moving foreign exchange reserves out of the dollar."

The dollar, which began January 2006 at 88.86 on the FOREX international currency index ended the year at 83.67, a drop of approximately 6 percent. For the year, the dollar fell approximately 11.5 percent versus the euro, 13.6 percent versus the British pound, and by 7.3 percent versus the Swiss franc.

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Bob Chapman, publisher of the economic newsletter The International Forecaster, told WND, "Central bankers in 2007 will begin to move away from the dollar in their foreign reserve holdings."

Chapman's Dec. 30 newsletter documented that the international move away from the dollar has already begun:


China, the second largest holder of U.S. debt, reduced purchases of U.S. bonds 1.7 percent in the first 10 months of the year. Central bankers in Venezuela, Indonesia and the UAE have said they will invest less of their reserves in dollar assets. Iran's switch to euros is the greatest threat yet to dollar supremacy. The usage of the euro is now universal in Iran and it will spread to other Islamic oil-producing countries as well. The share of dollars as a percentage of OPEC foreign reserves has fallen from 67 percent to 65 percent in the first half of 2007.
Iran's decision to hold only Euros may prompt a U.S. decision to launch a pre-emptive attack, Chapman speculated, with the public argument being Iran's pursuit of nuclear weapons in defiance of the U.N. Security Council.

"Saddam Hussein signed his death warrant," Chapman argued, "when he got the U.N. to agree that he could hold his oil-for-food reserves in euros. Ahmadinejad appears determined to go down the same path."

Yet, the Federal Reserve finds itself in a dilemma, Chapman added. "The Fed will make an attempt sometime in 2007 to tighten rates in an effort to make yields more attractive and stem the tide of central banks fleeing the dollar," he told WND, "but that will only expedite the fall of the housing market and quicken the U.S. recession which I believe began nearly 11 months ago, in February 2006."

Williams agrees. "We are going to see a much lower dollar in 2007, especially against the euro, the British pound and the Swiss franc," he said. "[Because of] the underlying fundamentals, such as U.S. economic activity versus European economic activity, the U.S. is struggling. The recession will be increasingly obvious as we proceed through 2007. Even worse, we have an inflationary problem with the higher oil prices over the last two years which are still working themselves into the system."

In contrast, gold surged 23 percent in value last year, climbing to a 26-year high of $732 an ounce on May 12.

Chapman expects the Chinese to take advantage of a strong commodities market in 2007, investing an increasing percentage of their foreign exchange reserves in gold.

"Remember," Chapman said, "all you hear about is the Dow being up 16 percent this year, but you do not hear that gold is up 23 percent. As the dollar continues to decline in 2007, we expect gold to continue increasing in value. Gold in 2007 could easily exceed $780 an ounce."

[Scalliwag]

Well, at least we are not on the gold standard anymore and the value of the dollar is determined by gross domestic product. I never took or really understood the fine details on how it all works though.
But you are right, gold makes no sense to me whatsoever. On a related note I don't understand diamonds either. I only wear my wedding ring because I cannot find an appreciation for jewelry. That and tatoos have never really appealed to me. I love a lot of gems in their natural form, amethysts are probably my favorite. Gold, copper, and silver nuggets are beautiful to me. I have some pretty cool stuff along that line. Fossils and a few neat arrowheads as well.

[moosepotatoes]

Did you hear about the Penny? The copper it is made out of out values it's face value. People have been melting them down. Which is illegal by the way. I'm tired.

[Lakemonster]

Yeah.... they stopped making the copper pennies in 1981 ( I think... or a closeby year) mostly Zinc now.

[Buford]

The funny part is that I think even the zinc ones are also worth more than one cent now.

[Lakemonster]

From what I hve learned over the last few years that the Dollar may be BASED on the GNP..... the actual value is set in demand of the amount of available dollars to the foreign market.

Why would a foreign nation even consider having a US Dollar? Answer: Opec treaties.

To buy an OPEC nations oil, you must pay for it in US dollars. You cat walk up to the Saudi's and pay for oil in Deutche Marks (german currency). You have to pay for the oil in US dollars. So, if you are German firm, you have to pay trade your Marks for FRN's (Federal Reserve Notes...aka "the dollar") so that you will have dollars to trade for oil..... consider it like buying tokens with your quarters to play at the arcade.... the trouble is... there is so many tokens in the change machine available.... so there is competition between the nations wanting to buy OPEC oil that there is a DEMAND. Now your token costs .35 cents instead of a quarter. Demand drives the value up.

Our GNP is in the hurt.... and has been. OPEC treaties are the only thing that makes the Dollar worth what it is.... paper for oil.