Former Head of U.S. Mint Goes for Gold
You know the American dollar is in trouble when…
There is plenty of discussion about the fate of the U.S. greenback these days, what with multi-trillion dollar rescues still flowing through the financial system. But dollar bulls might feel just a little trepidation to see Jay Johnson, former head of the U.S. mint — the folks that print the stuff — become a spokesperson for gold. Johnson actually passed away last month, but he can still be seen on TV infomercials, singing gold’s praises.
Gold this week rallied to a new record high above $1100 an ounce, even as the dollar sank to a 15-month low against a basket of major currencies.
Dallas Fed President Richard Fisher said this week he was mindful of the possibility that the central bank’s pledge to keep interest rates at rock-bottom lows for an “extended period” might be fueling the carry trade. That’s when investors use a “cheap” low-yielding currency to fund trades on riskier assets with loftier returns.
He added that the dollar’s decline had not been disorderly so far, but that he would expect the FOMC (the Fed’s policy-setting committee) and other authorities to craft an appropriate remedy if that were to happen.