Every Saturday, I've been summarizing what has gone on in the financial markets, primarily with the health of the US dollar and its correlations to other markets. Well, it has been happening just as I have laid out in my Sat. report cards. This will be the last report card for 2007, so it will be the benchmark for 2008.
Last week I mentioned that the moves of the Federal Reserve and 5 other world central banks took extraordinary steps to prop up the strength of the US dollar. But I also wondered how long the affects would last. It looks like it is not going to last too long. This week (even a short week at that due to the holidays), the US dollar index fell from 77.62 down to 76.10, a significant drop. This means that the value of the dollar fell when compared to the other major world currencies. Consequently, gold and silver both shot up in value to $839.50 per ounce and $14.81 per ounce respectively. The increase for gold was 3.4% and for silver was 3.2% in a short trading week.
In January, I expect this trend to continue and even pick up speed. Since putting 114 billion available to banks in loans has not encouraged spending, the value of the dollar will continue to plummet. This will spur on inflation. Double digit inflation for 2008 will almost be assured. The Fed will continue to reduce interest rates, but it will likely slow things down just temporarily as it has since Sept. Gold and silver and other precious metals will continue to climb in value as I mentioned on my Dec. 1st post. The target price I set for gold is $1250 and silver is $24.50 per ounce within 6 months. Those even may be low considering the perfect economic storm that is developing.
The wildcard that remains is what will happen to the price of oil. If oil continues to go up significantly in early 2008, that will accelerate things considerably. If oil inches up, it will be more gradual. The other major developments that can strengthen the economic storm will be events like the US invasion of Iran and the replacement of the US dollar with the Amero. However, I do not expect these events to happen until 2009.
Time will tell. Be prepared.
These things happened to them as examples and were written down as warnings for us, on whom the fulfillment of the ages has come. So, if you think you are standing firm, be careful that you don't fall! No temptation has seized you except what is common to man. And God is faithful; he will not let you be tempted beyond what you can bear. But when you are tempted, he will also provide a way out so that you can stand up under it. I Corinthians 10:11-13 (NIV)
In the coming weeks, I will focus on setting goals and how your credit score affects you. Stay tuned ...
If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com
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