Monday, September 28, 2009

THE DOLLAR THE STEP SON


The US dollar and the gold are having the relation of a Dog and a cat fighting against each other to prove the strength of Both
Gold have surged to anything in the past few months skyrocketing like anything breaking all previous records. At the same time Dollar have be been bitten like a step son. The US dollar have faced such tremors due to the high borrowings. A total of $112 billion borrowings is needed with immediate effect to fund Washington’s precedent-shattering $1.6 trillion budget deficit. So far this year, US has borrowed a mind-boggling $1.41 TRILLION to fund Washington’s debt addiction — nearly THREE TIMES MORE than the Treasury had borrowed at this time last year.
And still, this is only the beginning: The Congressional Budget Office (CBO) has warned that Obama’s budget will add nearly $10 trillion in new government debt over the next ten years. If it goes as per the calculation the by 2019 the US will have national debt that will soar to well over $21 trillion. So its well clear the dollar valuations will be a downward journey.
At the same time the US FED is also planning to with the bond dealers about selling them $1 trillion of so-called reverse repos that would remove $1 trillion of cash from the financial system. This means that the Fed is seeing signs of inflation as a result of an economy that it believes are emerging from a recession. The Fed is preparing the groundwork for cutting back on the money supply .So it seems like a mixed journey for Gold and Dollar .But the rising Fiscal Deficit of US is a matter of high alert concern. Still among all of these the gold will still shine like anything. Inflation will not be controlled by the practice that’s being decided to applied by the US FED since US have limited resources to tame inflation. Gold will be still used to hedge and fight against Inflation across the world.

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