So with all the financial uncertainty in the world...isn't Gold and Silver supposed to be the place to be??? Instead the precious metals are "in the tank" with everything else! What gives ??..........Uncle Sam from Pa. wants to know !!!
What's Wrong With Gold & Silver ??
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The long and short of it is that Gold & Silver went way up on a speculative bubble exactly the same as lead, oil, copper.... Many "Investors" (read: Manipulators) were using commodities as a store of value to protect themselves against inflation.
A) Now that the liquidity, due to the credit crunch, among other factors, is out of these markets only legitimate users are putting money into them. This would seem as though there were in increase in demand, though there was no decrease in actual demand, only the "dollar demand" has decreased.
B) Also with this global recession, the dollar is actually getting stronger against other currencies, because international markets are actually deeper in the tank. You can look at it in a converse way in that gold is actually buying fewer dollars as opposed to the dollar is buying more gold. Track the price of gold against other currencies (i.e. euro, pound), the drop off in price won't seem quite as dramatic though still significant (refer to point A).
Even with "all the financial uncertainty in the world" the markets will still follow certain rules.
If anybody would like to add to or refute my assertions please feel free, as I am not an Economist or Financial Advisor. This is just my take on it.
James Allen
A) Now that the liquidity, due to the credit crunch, among other factors, is out of these markets only legitimate users are putting money into them. This would seem as though there were in increase in demand, though there was no decrease in actual demand, only the "dollar demand" has decreased.
B) Also with this global recession, the dollar is actually getting stronger against other currencies, because international markets are actually deeper in the tank. You can look at it in a converse way in that gold is actually buying fewer dollars as opposed to the dollar is buying more gold. Track the price of gold against other currencies (i.e. euro, pound), the drop off in price won't seem quite as dramatic though still significant (refer to point A).
Even with "all the financial uncertainty in the world" the markets will still follow certain rules.
If anybody would like to add to or refute my assertions please feel free, as I am not an Economist or Financial Advisor. This is just my take on it.
James Allen
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James, your analysis is pretty fair, but the reason for the strong dollar is not the mistakes of foreign investors.
Rather, what has happened has been a flight to quality wherein the market jitters have sent a few trainloads of money into Treasurys of all kinds.
Unfortunately the bloom will soon come off this rose as the printing of billions of bailout dollars thins out the soup by increasing M2 and M3.
Add to that the 600 billion dollar bailout China is working on as we speak, which is 90 percent sure of being financed by them cashing in their huge holdings of U. S. T-bonds. this will render the dollar helpless against a free fall, God knows how far.
Nothing wrong with gold, just don't expect instant results.
Bobble Head Bernanke and Prevaricating Paulson have been pretty much responsible for the rest of the world sharing in our misery by bailing out Shearson last summer, and continuing the madness into the present time.
Add to that a President-Elect who has stated his desire to create and spend more Federal Money and you have some mighty thin soup indeed.
Let's hope it doesn't get like post WW 1 Germany where it took a wheebarrow of Marks to buy a bag of groceries.
HM
Rather, what has happened has been a flight to quality wherein the market jitters have sent a few trainloads of money into Treasurys of all kinds.
Unfortunately the bloom will soon come off this rose as the printing of billions of bailout dollars thins out the soup by increasing M2 and M3.
Add to that the 600 billion dollar bailout China is working on as we speak, which is 90 percent sure of being financed by them cashing in their huge holdings of U. S. T-bonds. this will render the dollar helpless against a free fall, God knows how far.
Nothing wrong with gold, just don't expect instant results.
Bobble Head Bernanke and Prevaricating Paulson have been pretty much responsible for the rest of the world sharing in our misery by bailing out Shearson last summer, and continuing the madness into the present time.
Add to that a President-Elect who has stated his desire to create and spend more Federal Money and you have some mighty thin soup indeed.
Let's hope it doesn't get like post WW 1 Germany where it took a wheebarrow of Marks to buy a bag of groceries.
HM
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