The buck may be turning into a bull. (no, this is not The Onion)

[Dover]

Dollar is brighter after a long decline
Stronger values make crude oil, imports cheaper
By EMILY FLYNN VENCAT Associated Press
Aug. 16, 2008, 2:00AM

LONDON — The buck may be turning into a bull. (yep, bull indeed!).

The U.S. dollar extended its recent rally against major currencies Friday as commodities fell and European and Japanese economies faltered. After sliding for years, the dollar may finally be on the way back up, some analysts argue.

The currency rose against the pound for the 11th straight day Friday, to $1.85 — its longest winning streak in 37 years. As recently as July, one pound would buy two dollars. At the same time, the dollar climbed to its strongest level in almost six months against the euro, which fell to $1.47, and to near a seven-month high versus the yen.

So far, the trend has helped push oil prices lower. Long term, a stronger dollar has a range of consequences. It makes imports cheaper for Americans, and makes it more expensive for foreign companies to buy U.S. assets such as Anheuser-Busch Cos., which is being sold to Belgian-based brewer InBev for $52 billion.

A stronger dollar would probably come as a relief to many European businesses, too, since it makes their exports to the key U.S. market more price-competitive.

The dollar reached an all-time low on July 15 of $1.60 to the euro, down from a peak of 82 cents to the euro in 2000. The dollar's decline is blamed on the large U.S. trade and budget deficits, investment flows out of the United States, and lately by interest rate cuts by the Federal Reserve.

Some think it's only up from here. The dollar is now benefiting from the widespread sense that prices for commodities such as oil and gold are on the brink of a massive fall, as traders gamble that a slowing global economy could lead to diminished demand.

"There's a fear that the whole commodity boom is going to end, that the bubble is going to burst," said James Hughes, market analyst at financial traders CMC Markets. "That's giving the dollar a bit of cheer."...cont'd

http://www.chron.com/disp/story.mpl/business/5947270.html

[sharesunited]

1. I would call this a dollar bubble. The fundamentals of our currency do not say strength.

[Dover]

3. But our economists are looking Through The Looking Glass.

Don't believe me? Go ask Alice.

[sendero]

2. This will last..

... a few months at best. The fundamentals for the dollar, debt, debt, and more debt, are not going away.

[Dover]

4. Gold has quickly lost its luster

Gold has quickly lost its luster


NEW YORK — Gold, which scorched into the record books earlier this year, has suddenly gone cold.

Prices for the precious metal, which touched $1,000 an ounce for the first time in March, have plunged in recent weeks, and on Friday tumbled below $800 for the first time since late last year. It has been a sharp reversal for a bellwether of the commodities boom that only months ago seemed poised to soar to uncharted heights.

"All of the sudden, it seems like the bottom fell out," said David Beahm, a vice president at New Orleans-based gold dealer Blanchard and Co., who nonetheless believes the metal's decline is overblown and that prices will go up again later this year.

The dramatic sell-off — gold has slashed more than $100 off its prices since Aug. 1 — comes amid a host of bearish factors that have dented the metal's safe-haven appeal: The once-limping dollar is strengthening against its rivals, crude oil is easing from record levels and signs suggest the worst may be over for the flagging U.S. economy.

"It's very difficult to make a bullish argument for gold," said Rob Kurzatkowski, a futures analyst with OptionsXpress in Chicago.

Gold's drop Friday came as the dollar surged again, responding this time to the Federal Reserve's report of higher-than-expected industrial output for July. The greenback's rally comes as a slowdown among European economies weighs down the 15-nation euro, which bought $1.4672 in trading Friday, down from $1.4811.

The healthier dollar led traders to unload gold contracts Friday...>

http://www.chron.com/disp/story.mpl/business/5947271.html

[Extend a Hand]

9. I dunno about that

gold closed today up 27.48% from a year ago. How many stocks have had that kind of return this year?

[A HERETIC I AM]

11. Do you really want to know?

At LEAST 200 issues based on http://screen.morningstar.com/StockSelector.html">a simple search on Morningstar.com.

Leave all fields either blank or "any" with one exception. In the section "Stock Performance" note the line for "1 Year total return". Hit the drop down and highlite ">=40%". There is no choice for "30%" nor is there a customizable choice.

Scroll all the way down and click "Show Results".

It gives 200 results (which I would think is the max the program will return, thus my use of the term "at least")

Click on any company name listed you like. When the page opens, look to the right where the Stock Chart is. Click on "1 Year".

You will see a chart of the share price over the last 12 months.

The result of this exercise is proof that a SHITLOAD of stocks outperformed gold over the last 12 months.

If you would like, I can call a friend in the business who has other resources at his disposal and can run a screen for every issue on the 3 main exchanges. But we'll have to wait for Monday afternoon for the results.

[Speck Tater]

5. Volatility is a symptom of chaos.

Eternal optimists will see every chaotic wiggle on the price chart as "turning the corner". The reality they fail to admit is that when any dynamical system is on the verge of collapse it begins to fluctuate wildly.

Imagine speeding down the highway when the front wheels of your car suddenly start wobbling like crazy. First they wobble to the left, and you start to panic. Then they wobble back to center and you breathe a sigh of relief. Things are back under control, you tell yourself. But just wait a second. The wheels are still loose and the wobbling hasn't really stopped. If you keep your foot on the accelerator the wobbling will just get worse and worse until the wheels fly off.

But if you are deeply committed to a world view of business as usual, then each time a more violent wobble returns the wheels to front and center you will declare the emergency over, and keep right on stomping on the gas pedal.

Whether you believe it or not, this increasingly unstable wobbling means only that the wheels are indeed about to fly off, even if they do happen to be pointing front an center at this particular moment.

[Dover]

6. Thanks. Well, sounds like investing in wheels might provide some stability.

:P

[Yavin4]

7. The Dollar's Fate Depends On This Election

Obama wins. We'll return to a stronger dollar.

McCain wins. More wars mean more inflation. Dollar is sunk for generations to come.

[On the Road]

10. That I Can Heartily Agree With

[Warpy]

8. Well, that bull didn't charge for long.

It's taking a dive today.

[A HERETIC I AM]

12. One day does not a trend make.

US$ VS EUR 5 Day



US$ VS EUR 3 Month.



US$ VS EUR 1Yr.




The Dollar had a bad day Thursday. It rallied right back today.

Kind of looks like it found a bottom to me. It tested it twice.

It might test it again, no doubt. But one day is not a trend.