Thursday, May 21, 2009
Time for Uncle Buck to rise from the dead
and astound its critics once again. This will only compound the downward pressure on general U.S. stock averages as their nominal value automatically declines due to a re-pricing upward of the paper/electronic fiat tickets (i.e. U.S. Dollars) in which the general stock averages are denominated.
Following is an 18 month daily candlestick chart of the Dollar ($USD):
I think a run toward 90 on the U.S. Dollar Index in the cards. This doesn't mean that Gold will do poorly, as all fiat currencies are sinking relative to Gold right now. Why? First, trust in politicians to fix things they cannot possibly fix (i.e. the economy and insolvency of the banking system) erodes confidence in the pieces of paper they push onto people to use for their daily transactions. Second, government insistence on increasing public debt while the private sector attempts to decrease debt devalues those paper tickets. Because the U.S. Dollar Index merely compares the Dollar to other fiat paper tickets, the illusion of strength is only revealed by a Gold price making new highs.
Remember that Gold is a currency, not a commodity. It is the strongest currency in existence right now and will benefit from the chaos as people search for something reliable to preserve what they have left. As the credit contraction grinds on, Gold will become the go to asset for all those in the know. Won't you join us by purchasing physical Gold to be held outside the system? And please avoid the GLD ETF, which defeats the purpose of owning Gold and allows paper games to control the Gold price to continue longer than necessary.