Alex’s Notes: So what does this mean for Gold? Just more reasons for continued strength. As foreign governments shed dollars they will put that capital into other things, energy, oil, gold. This will of course only increase the already huge pressure on the Gold market. Once a strong bull market forces the shorts to cover, its going to be a ridiculous ride upwards.

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So, it’s clear that the falling dollar is causing ripples throughout the global economy, as countries are questioning if the greenback should continue on as the reserve currency. Our friends, Addison and Ian, over at The 5 Min. Forecast report:

“Yesterday we mentioned briefly that currency speculators in the Middle East have been predicting a revaluation of local, dollar-pegged currencies. ‘Frenzied traders bid up the UAE dirham and the Saudi riyal to near record highs as a result,’ reports Joel Bowman from Dubai. ‘Saudi British Bank did their best to calm the waters by saying, ahem, they would only dump the buck, “if the dollar weakens at an alarming rate”.’

“Now it’s OPEC’s turn: ‘International banks and analysts have hinted at the possibility of the OPEC changing the price of oil to a currency basket, rather than the dollar,’ says Joel. With Iran all but there…and Venezuela not far behind, we’re not surprised.

“‘If the dollar were to lose its luster as a reserve currency,’ reads a note of concern released by Merrill Lynch, ‘this could prove disruptive to the global financial system.’”

Daily Reckoning

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