Euro Fall and Dollar Rise Will Put Pressure On Gold and Silver Prices

Richard Russell of Dow Theory Letters fame repeats what I have been saying about the Euro, U.S. dollar and gold of late. I see the Euro fall and Dollar rise as a short term event that can put pressure on gold and silver prices moving forward. I still see $1,800 and $35 as a resistance point for gold and silver.

Russell has been writing Dow Theory Letters for over 40 years and is well respected in the industry. He is the reason I started selling gold and silver to begin with in helping people understand what’s really going on in the economy. I participated in his forum years ago (he subsequently closed it) and met some of the smartest traders around, many of whom I still converse with today about the markets.

Richard Russell’s remarks;

I first brought attention to what was going on in Europe in European Bank Stress Test Results Prediction back in July of 2010.

Excerpts;
7 0ut of 91 European banks were found to be short of the required 6% Tier 1 capital needed, or as Steve Liesman puts it, “we’ve made a mountain out of a mole hill.”

If one analyzes the banks balance sheets, not just in Europe, but in the U.S., these stress tests don’t reveal the bigger picture of the bad loans that banks everywhere are trying to unwind as I pointed out in my prediction below 2 days ago.

While CNBC mocks the results…their enjoyment won’t last. Any fall in the price of gold should be seen as an opportunity to dollar cost average into a position, not a reason to sell.

Steve Leisman is the Federal Reserve loving CNBC commentator that will always spin things to side with the bankers and Wall Street elite. I see right through his commentary. The only reason I watch CNBC is because I enjoy mocking them. If you haven’t seen my video mocking CNBC commentators and their understanding of gold, you can watch it here:

Even though the banking situation is a shambles here in the U.S., we are still perceived the world over as a bastion of safety. That’s why you see Treasuries so strong and the dollar, as of yet, not freefalling like it should. Inflationist and hyperinflationists have no answer for this, except that “it will come.” While I do agree it will come and our economy will eventually capitulate because Congress has no clue what to do (cut spending and eliminate departments, duh!), we can easily see over the short term the U.S. Dollar climb to past 80 and on to 85 while the Euro countries decide who to kick out or revert back to what was. “Perception” is the key right now and with the stock market trending a bit higher, the dollar still trending higher and Treasuries so strong, one can’t ignore these signs. That’s why I think a Euro fall and Dollar rise will put pressure on gold and silver prices.

That’s why I have been preaching dollar cost averaging into a position of gold and silver via my articles for over a year now. The March 2008 fall in gold and silver saw the dollar bounce above 80. If we see gold in the $1,525 range and silver hit its 50% retracement of around $25, this would signal a bottoming. While the price, via traders, can be manipulated below these amounts, I really don’t care. It will only be a short term move.

Of course there will be all out attempts by the IMF, ECB, France, Germany and even our own Fed to prop up the Euro. That’s what we’re seeing going on right now. But it can only last so long. Rioting in the streets of any of these countries isn’t going to solve the underlying issue that government spending has to be cut and current government programs eliminated. Say goodbye to the Euro as we know it. America, you’re time will come, and not one of these Republican candidates outside of Ron Paul or Gary Johnson will stick to what they say in the debates. You can bank on that! But just like CNBC never telling you what you need to hear, the media in general won’t allow Ron Paul or Gary Johnson to be heard. I saw it in 2008, and I see it today. All hail the Fed and the banks! Until they destroy themselves, which they will. It will all start with Europe. Stay tuned…

UPDATE:

Just heard CNBC say that Goldman Sachs is reiterating their call for gold through 2012. Personally, I don’t trust anything Goldman Sachs says. They are a holding bank and a puppet of the Federal Reserve. The same goes for J.P. Morgan. Why exactly are they both holding banks? Why have they involved themselves heavily into the gold and silver markets? Again…stay tuned… Reference spot price of gold right now $1,780.90 and silver $34.28 with the U.S. dollar index sitting at 77.53.


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About Doug Eberhardt

Doug Eberhardt is a 25 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here. Contact phone number for Buy Gold and Silver Safely is 888-604-6534