Oil is falling and so is the entire commodities block; equities are
falling too and and so are the other currencies- everything other than
the mighty Dollar.
Eurozone is the culprit or is China to be blamed? Or is it the stance
taken by Germany and other"safer" European nations against blind usage
of public money that has taken gas out of the easy money bubble.
Is the fall down indicating towards a renewal of crisis? Well fall in
Gold doesn't indicate so.
If we put the recent crisis in a timeline then we can divide it into
two broad parts. The first part- when Dollar became the safe haven and
rose high and the second part- when Gold became the only hope and
climbed up blindly.
Till the time crisis was considered moderate to dangerous the world
showed its faith on Dollar and bought it. Then a point came when
crisis started to look all devastating and all annihilating and looked
like taking the world to an ultimate collapse. That was the time the
world lost its faith on the dollar and sold it. Gold was the asset of
last resort and infinite lifeline.
What I am trying to drive at is that things might be turning for good
here. With renewed efforts having been made to arrest the crisis (read
QEs and the many rescue funds) things might be turning for the less
dooms dayish scenario where in the world starts showing faith on
Dollar once again. This will be one step down on severity scale where
in trust on Gold is counted as most severe and trust on dollar the
less severe.
falling too and and so are the other currencies- everything other than
the mighty Dollar.
Eurozone is the culprit or is China to be blamed? Or is it the stance
taken by Germany and other"safer" European nations against blind usage
of public money that has taken gas out of the easy money bubble.
Is the fall down indicating towards a renewal of crisis? Well fall in
Gold doesn't indicate so.
If we put the recent crisis in a timeline then we can divide it into
two broad parts. The first part- when Dollar became the safe haven and
rose high and the second part- when Gold became the only hope and
climbed up blindly.
Till the time crisis was considered moderate to dangerous the world
showed its faith on Dollar and bought it. Then a point came when
crisis started to look all devastating and all annihilating and looked
like taking the world to an ultimate collapse. That was the time the
world lost its faith on the dollar and sold it. Gold was the asset of
last resort and infinite lifeline.
What I am trying to drive at is that things might be turning for good
here. With renewed efforts having been made to arrest the crisis (read
QEs and the many rescue funds) things might be turning for the less
dooms dayish scenario where in the world starts showing faith on
Dollar once again. This will be one step down on severity scale where
in trust on Gold is counted as most severe and trust on dollar the
less severe.
Another point that I raised little earlier and which can be a driver
for this current setup is the German stance on "easy public money" in
the future. What Germany and other contributing nations are saying
about investors taking the pain is totally logical. Sooner or later
entire world is going to wake up to the fact that public money cant be
used endlessly to safeguard the risk takers. This might be taking the
risk out of the table. This can be the reason for a fall in the asset
classes.
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