Back pedaling from yesterday’s remarks, but just getting the fish hook in deeper.

Gold is a non financial asset,not an ‘alternative monetary asset’

Starting to look like the QE fairy dust is wearing off.
The dollar selling was the focus of the ‘risk on’ hysteria, and it looks like the dollar may have stopped going down.

From what I see, the risk positions mostly look like short dollar bets, including long gold, commodities, and commodity currencies, etc. And long equity trades have had support from weak dollar assumptions as well.

I’ve yet to see any fundamental reason for the dollar weakness apart from misunderstanding QE. In fact, the firming US economy continues to lower the US budget deficit modestly, which tightens things up a bit, and also attracts foreign direct investment and financial investment. (I recall in the late 90’s reading that US FDI was the highest in the world, and it sure wasn’t due to cheap labor.)

So I’m watching for what’s potentially a dramatic dollar reversal here and all the other reversals that will come with it.

Zoellick Sees ‘Elephant,’ Not Endorsing Gold Standard

By Robin Knight

November 10 (Bloomberg) — Gold is the “elephant in the room” that must be addressed by policymakers, as it’s being used as an alternative monetary asset because of unease about the strength of developed economies, Robert Zoellick, president of the World Bank, told CNBC Wednesday.

What “the price of gold has been telling people is that there is a lack of confidence in some of the fundamentals growth policies,” Zoellick said.

“The golden elephant in the room, whether people recognize it or not, is being used as an alternative monetary asset,” he said.