Wednesday, September 2, 2009

US$ cannot seem to pull up

The US$ is bumping along the bottom... and precious metals are spiking today... no matter how you frame it, that just ain't good.

If you see the equity market AND the US$ heading south a the same time (especially if Gold is heading up), look out below.

Not that I think that that is the most likely outcome in the short term most, but I won't stand on ceremony. I was longer, and was waiting for a pullback to add to my position. I decided to add right now.

Someone (besides me) wants to own Gold more than US$'s.



Anonymous said...

You think gold and silver is going up as a fear trade??

Last year during the meltdown, gold and silver sucked so I don't believe it's a fear trade, but possibly inflation fears.

bureaucrat said...

Since we all love Mish, I'll mention he has noted that gold and silver have moved up and down in practically all economic phases. Gold and silver have moved up AND down during inflations AND deflations. What Mish instead suggested was gold and silver move up during times of credit stress, times such as we are in now. If so, it is impossible to know what moves gold and silver beyond its reaction to how bad the credit situation is. I bought lots of gold and silver expecting inflation to take off like a rocket. Inflation hasn't (deflation has), but the signs of credit being manipulated and destroyed are everywhere. And that is doing nice things for gold and silver.

Donal Lang said...

Seems to me that equities are following the trajectory of the 1929/30 crash, where there was a big rebound following by a second deeper crash. As you say, the rebound has been the forward spending by government bailout - there's been no positive change in the fundamentals.

But I don't see it as an 'either or' with the dollar. If the markets fall hard while the government is so 'out on a limb' with borrowing, the dollar will tank too. Or am I missing something?

Anonymous said...

Gold and Oil are diverging. Perhaps those who sought safety in oil are expecting a crash in oil prices.


Coal Guy