WASHINGTON, Feb. 23 (Xinhua) -- U.S. President Barack Obama vowed on Monday that he will cut his country's budget deficit by 2013.
"Today, I am pledging to cut the deficit we inherited by half by the end of my first term in office," Obama declared, as he opened a "Fiscal Responsibility Summit" at the White House.
Apparently, Obama administration knows how important it is for US to keep its dollar as the reserve currency of the world and they mean to keep it that way. Indeed, I start to think that, US might just sacrifice its growth to save the status of reserve currency for the dollar. After all, it comes so handy and so secure to own the printing machine of the world’s money.
That news weighed on Gold.
Attached is the weekly chart of GLD.
The strong upward rally of GLD was abruptly checked and reversed. Now GLD is heading down. From the surface, this looks like a regular short term correction with a hard support at the level of $88. However, deep in MJ’s mind, there is this doublet: Is the 10 year old bull market in GOLD finally over?
I think NOT.
Obama’s plan is to cut the deficit by raising tax , not by cutting spending.
In other words, the economy will stay at the expanded stage.
How about the billions of dollars on the “balance” of the federal reserve? Those might stay there forever. In other words, the printed money would move around in the world. Those would never be returned. Why? It is easier that way.
In short, it is much less resistance to inflate out of debt.
My conclusion: The bull market in GOLD is still well and alive.
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