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For the Love of Money Is the Root of All Evil
In fact, gold, platinum and silver prices today are more a function of the economy and liquidity, and we know both are declining in real terms.
Most people do not believe government can do much that lasts to cure 10 to 22% real unemployment.
Government does not produce. It only borrows and takes. Thus, we have a continuing contracting economy, slowing money supplies as a recipe for deflation. Deflation makes cash physical dollars scarcer as demand to pay bills continues while incomes decrease.
Many of us learned increasing demand for scarcer supply drives up the value of a market like the dollar.
It is only because most of us in these living generations have not survived a lasting deflation that we doubt this. We somehow believe a Fed that missed the tops in 2000 and 2007 may somehow magically prevent more default deflation collapses by pushing on strings inflating electronic money supply and credit that few can afford. Why buy or spend when prices may be lower tomorrow?
Does the decline in Detroit home prices from $150,000 to $15,000 mean anything for the rest of US? You betcha.
Big4 still say the higher king dollar is the primary trend. Every real stress test since March of 2008 led to a higher dollar. We do not rule out a surprise dollar head fake down to 63, so trailing stop losses offer healthy long-term money management discipline.
Once the dollar gets above 90, the long-term trend may be clearer to doubting Thomas’s still putting their full faith and credit into copper, gold, platinum and silver they cannot eat or use. Ouch.
http://stockcharts.com/charts/gallery.html?s=%24usd
We noted in our New Year’s Day discussion that in previous recent economic collapses, not only were government and corporate pensioners cut off in Argentina, Russia and Zimbabwe, but ATMs and Internet Banking were turned off, creating bank runs with a rush for paper currency. (American pensions took a hit from which they have not yet recovered.)
In all instances of currency destruction, the American Dollar became the black market currency of choice. The Euro has even more liabilities than the Dollar, with external debts to GDP of 408% in the United Kingdom, 422% in Switzerland and 1267% in Ireland.
http://www.cnbc.com/id/30308959
