Thursday, August 17, 2006

Speaking of the dollar...

Talking about the strength of the dollar in the last post, I'm reminded of frequent comments made by Richard Russell (of the Dow Theory Letters) regarding the strength of the US economy and our currency.

Russell is an old hand in the markets, but has been around long enough to know that his ideas about what might happen are no match for the signaling power of the markets themselves.

With that in mind, here is a recent article on Russell's view of the economy, courtesy of Reuters. I stumbled across this piece while looking at Reuters' report on the dollar today. Staying with that subject, I'll include a short section from the article here:

the United States faces huge deficits in its budget and current account, which will put pressure on the dollar. So far this year, the greenback's nominal value against a basket of certain major currencies is down 7 percent.

"No country can keep running up debts and deficits the way we are doing and still be a strong reserve currency," said Russell. For that reason, "we are going to have a panic for gold as the dollar runs into major trouble. This country is not addressing the deficits and debt situation at all."

Be sure to read the full article!