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Should investors now consider a move to exchange their dollars for gold?

*Dow Theory Letters, Richard Russell, September 19, 2008

“Suddenly, everyone wants dollars.  This is in sharp contrast to a year ago, when we were told that above all, we must get out of dollars and into any other currency.  The chart below shows the sudden recent surge in the Dollar Index, and it’s interesting that over the last few days investors are swapping their treasured dollars for gold.  What’s the meaning of this — are their doubts about the stability of the dollar?  Currently, dollars are flooding the world, and this suggests that there are just too many of these Federal Reserve Notes being produced.  When the dollar’s seriously in trouble, I think we’ll see it in an important decline in the Treasury bonds.  Sophisticated bond holders are not going to hold billions in US bonds which are denominated in suspicious currency.  Keep your eye on the Treasuries.  Foreign central banks are holding a huge hoard of US Treasuries, and if suspicion grows about the sustainability of the dollar, they’ll be selling their dollars.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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