DOLLAR PLUNGE RATTLES BONDS AND STOCKS -- BUT BOOSTS GOLD AND GOLD SHARES

DOLLAR PLUNGES TO 3-YEAR LOW AGAINST YEN... As we discussed last week, the weekend G7 meeting called for flexible exchange rates and less intervention by central bankers to keep their currencies from rising. The most dramatic result is being seen in the Japanese yen, which has jumped to the highest level against the dollar in three years. The result is a weaker dollar against all major foreign currencies. The Euro is also jumping against the dollar. The sharp jump in the Euro and the yen has caused sizable selloffs in their respective markets, especially foreign stocks dependent on exports. That's because a stronger Euro and yen hurt European and Japanese exporters. The Japanese stock market fell 4%. France and Germany fell 3%. The U.S. market is opening down as well, but by a lesser margin. The price of 10-year T-notes is dropping as well. That's tied to the yen. The Japanese have been big buyers of US T-notes. Since they'll be buying fewer dollars to keep the yen from rising, they'll also be reducing their purchases of US bonds and notes. The one beneficiary of all these moves is gold. Gold is up $3.80 in morning trading. Gold stocks are also rising. Within the U.S. markets, the two hardest hit groups are technology and financials. MORE LATER.

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