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The advancing concern about the United States dollar’s merit has become too much to miss. Gold has risen exceeding $1,000 an ounce; investors desperate for energy exposure have kept natural gas in steep contango all year; and every other day we seem to get a call or an e-mail asking about foreign currency funds such as PowerShares DB US Dollar Bearish (UDN).


We grasp the fretting. Various emergency measures over the past year pumped very large quantities of dollars into the financial system Cheap College Football Jerseys , and they’re more likely to cause inflation now that we no longer have panicked investors general clamoring for the safe harbor of the dollar. Chinese central bank officials dropped hints for much of the past year that they would like to diversify away from Treasury bonds, and recent big investments in commodities and mines show they might be far-reaching this time. Even the new Japanese Minister of Finance made comments that implied Japan may no longer suppress its currency against the dollar to support exporters. Without the artificial support of the major East Asian currencies, we couldn’t say how greatly the dollar might fall.


This news looks worrying, but we are not giving up on the currency yet. The Federal Reserve has commanded to shrink overall money supply through most of 2009 by withdrawing some of the economic supports and pulling back freshly minted dollars that merely sat in banks’ vaults to ward off panic. No matter what Chinese officials say Cheap Throwback College Jerseys , with $2 trillion and counting in reserves, they simply have to keep buying Treasury bonds. There’s no other market big enough to meet their incredible investment needs without severely distorting prices. Chinese imports of copper and other industrial commodities have already fallen as prices soared in the past few months. As for the Japanese Minister, he has already tried to take back his comments, saying instead that he was merely content with current exchange rates.


We expect that the dollar will likely drop over the next decade relative to other currencies Cheap Custom College Jerseys , as the euro and major emerging currencies displace some of the massive Treasury bond reserves held by central banks worldwide. However, we feel that the devaluation is likely to be fairly subdued and could take years to finalize. Investing in the fall of the dollar could easily be a volatile bet that pays off too little, too late. In fact, after its recent tear downward Cheap Authentic College Jerseys , we would not be surprised if the buck bounces back slightly in the near term as stock markets cool down their remarkable rise.


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