Important Development about US Dollar: Gulf States may stop Using Dollar

The Indepedent (which was subsequently carried by Bloomberg and Others) reported that the Gulf states may stop denominating their oil exports in the US Dollar. Interestingly, one of the unstated reasons for the US invasion of Iraq by George Bush was supposed intention and attempt by Iraq (under Saddam Hussein) to start using the Euro as the denomination for its oil exports. Rest apart, if the development actually does materialise then we may be about to see a paradigm shift which would structurally alter the global economy for the rest of our lives. It could also start the inauguration of the gradual decline of the US dominance in every sphere of our lives. In other words, it could mean the end of the US Empire.

But on a pure contrarain basis, it could also (only in hindsight can we actually be sure) be the medium term bottom. Look at it this way, people are selling USD as if there will be no tomorrow.

And, remember, major turning points occur at such turbulent times. So, we could just be near, at least a short-term bottom simply because I believe that it cannot get worse than this in the immediate future.

More on this later.