Everyone iswondering why in spite of the US economy being hammered, the Dollar is appreciating. Firstly, the investors are shifting to GETFs and Bullion which in turn is kicking the demand for Dollar as gold is measured in terms of dollars. Secondly, countries that are intertwined to the US economy know that their relationship with that of the US economy is of a symbiont nature. Hence they are maintaining dollar reserves and buying dollars, thus maintaining a steady demand for it. Thirdly, a depreciating dollar will hit oil revenues for OPEC nations. Hence they are channeling petro dollar purchases to keep the dollar valuations alive. This is to put in in a simplistic manner.The bottom line is that if dollar depreciates too much, along with the US economies, several other economies will crumple including China since it has one of the largest reserves of dollar and also has mammoth holding is US government bonds. So its a "save your skin approach". Lets see how long this lasts......
2 comments:
We are also witnessing a recent fall in the gold prices.One of the reasons stated for this were the losses investors are making in the stock exchanges is meet offset by the sale of gold. This has resulted in short selling of gold thus driving down the prices.. however, there isn't any reason to crib with the festive season just around the corner...
We are also witnessing a recent fall in the gold prices.One of the reasons stated for this was the losses investors are making in the stock exchanges is being offset by the sale of gold. This has resulted in short selling of gold thus driving down the prices.. however, there isn't any reason to crib with the festive season just around the corner...
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