Barron's has an interview with James Turk, the founder of Goldmoney.com who correctly predicted the rise in the price of gold. As Finance Trends Matter points out, if you cannot buy, steal or borrow a copy of the latest issue, you can read it online here.
Lots of good stuff. But this exchange was particularly interesting.
Let's talk about the pressures on the dollar.
They are taking on a bit more urgency. One of the things I picked up on a recent trip outside the States was a much greater level of concern about the prospects for the dollar than had previously been the case.
Concerns among whom?
Among sophisticated investors -- wealthy individuals as well as some money managers. That's been linked to two specific events. First, Chinese National Offshore Oil Co., or Cnooc, was not permitted to purchase Unocal. Most people at the time shrugged it off as just a one-off event. But when the Dubai Ports deal was blocked, that really changed people's perceptions, because it made clear holders of dollars outside the United States are not going to be permitted to exchange those dollars for things of tangible value. There's an increasing desire to convert dollars into, say, commodities, which dollars can still buy. The boom in commodities to a large extent is the result of people exiting dollars. People are looking for alternatives to the U.S. dollar, and the dollar's role as the world's reserve currency is being questioned seriously now. The Russian finance minister raised the issue in the recent G-7 meetings. This questioning is a critical development. Financing the growing federal budget deficit and trade deficit requires that a large amount of dollars be created. These dollars are being created as demand for the dollar is declining.
As it turns out, those foreign people who have loaded up on dollars over the years expected to be able buy stuff with them. Silly foreigners.
Interview with James Turk, Founder, Goldmoney.com [Barron's in the Stockhouse Forums via Finance Trends Matter]