“Marauding horde” of dollar bears turns up the heat on gold bullion.
March 10, 2011 - RBC Capital Markets analyst David Watt says “dollar bears have become a marauding horde,” reports Peter Garnham in Market Watch, a strong signal to buy gold bullion now while the price is right.
“The value of bets against the dollar on the CME rose … to $39bn, $3bn more than the previous record … in 2007,” says Garnham, while “short dollar positions surged from 200,564 contracts to 281,088.”
While investors are betting against the dollar, they are having a change of heart regarding the euro in anticipation of the ECB raising interest rates in April. Accordingly “the euro last week rose to a four-month high of $1.3997 against the dollar.” Kit Juckes, head of FX strategy at Société Générale, sees recent losses in the dollar as “a turn in the longer-term outlook for the dollar – for the worse.”
It would seem that currency speculators are finally peering behind the veil of the government’s doctored statistics. A case in point: the stunning addition of 250,000 jobs in February and dramatic drop in unemployment to below the stubborn 9% threshold.
All very impressive, but when you add in everyone who has thrown in the towel after trying unsuccessfully for more than a year to find a job - the Labor Department’s U-6, or labor underutilization rate – the real figure is 15.9%, says Phil Izzo in the Wall Street Journal.
Nearly one third of the unemployed have been so for more than a year, a considerably higher percentage than at any other time. Because many have given up, the ‘labor force participation rate’ is now at its lowest level since 1984. Adding jobs will encourage many to start looking for work again, swelling the available labor pool and raising the unemployment rate.
As the world wakes up to the fact that the Fed is fighting a losing battle the dollar will fall – and gold bullion prices will rise.
