WEAKEN DOLLAR CAUSES GOLD HITS $1,000 FOR FIRST TIME

The Federal Reserve is going to cut and inflate as a way out of the US credit mess and the implications are going to be higher and sustained inflation. The measure remains as a serious question of solving the problem of a possible US recession.

The serious question arises: Will it affect our Malaysian economy?

Ironically, the aggressive US interest rate cuts to stimulate consumer spending, will weaken the dollar further and accelerate inflation pushed higher the price of gold reached a record, trading at $1,000 an ounce for the first time.

Since the beginning of the year the value of gold has increased by about 20%, after it rose 32% in 2007.

Despite aggressive interest rate cuts and White House measures to stimulate consumer spending, it is expected that US rates - currently at 3% - will have to come down further.

That's been signaled by not just gold but by virtually every commodity and the dollar. More and more details emerge of the losses suffered by banks and hedge funds due to investments centered on the troubled US housing market.