Sometimes we wonder whether currency movements do indeed have any logic to them. Take the current situation for instance. There's a talk that the US dollar is weakening against the Yen because the US Fed plans of cutting back its quantitative easing. Now, isn't that illogical? Quantitative easing simply means printing more money. And if there's a slowdown in the rate of printing, the underlying currency should strengthen and not weaken, isn't it? However, there are no signs yet of the dollar becoming stronger. Or maybe the Yen has been hammered so badly that it is now coming back to favour. And as a result of the same, dollar is weakening and not strengthening as it should be.

So while we expect dollar to strengthen, it really does not mean that it has got the best fundamentals out there. In fact, it is as much in trouble as other currencies and hence, over the long term, should see its value erode considerably. If not against other currencies, then certainly against gold we believe. And this the reason why we keep harping about the virtues of gold and the importance of having some part of one's investments in the yellow metal.