First of all, it takes only a brief exposure to John Hathaway to understand that he is a thinker of the first magnitude. The depth of his knowledge involving markets and their functions is indeed impressive. I recommend you read the entire article entitled, Is Gold Still in a Bull Market?" But if you cannot, what follows are some highlights...

On September 16, 2008, The People’s Daily, which is the official newspaper of the Chinese Communist Party, commented: “The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.” There is similar commentary from other major foreign investors in U.S. treasuries.

Yet another ominous reference to a new world currency. Stay tuned!

We believe that gold mining shares, which have provided very disappointing returns over the past six months, are due for a significant revaluation once investors view the $1000/ounce threshold as a floor rather than a ceiling.

This is a key point, and very well put. The general public really doesn't believe in what is happening with gold yet. When the sentiment shifts, watch out!

Unwinding of the long euro-short $US began in earnest in mid July ’08 and reached panic proportions by early September. Related trades including commodities and especially oil were also collapsed. Covering dollar shorts created the illusion of a strong dollar. Given the tight correlation in recent years between the euro and gold, long gold positions held by hedge funds were dumped. The swings in Comex positions depicted by the Ned Davis chart are consistent with interpretation of a panic liquidation. The one month swing from July to August for gold was the fifth largest four week drop in net speculative positions over the last twenty-five years.

You need to read the entire beginning of the article to get a feel for what he's writing about here, but basically it confirms a suspicion I have had in these recent few week, i.e. that the strengthening of the dollar is nothing more than an illusion caused by fear. As people panic into the dollar because they are frightened, or purchase more dollars because they have to, nominally, and for a brief period of time, the value of the dollar must go up. It is simple supply and demand. More people want it, so the price must go up. But I propose that this "want" is temporary, a fad, so to speak, when people realize that they really don't want the dollar because it's purchasing power continues to drop, it will start falling again. Bull