Dollar Still Rising and US Treasuries Still Strong While Gold Falters

The US Dollar made it up over the 79 mark today and moving closer and closer to breaking 80 on its way to the 85 range. Thank you Europe!

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This rise in the dollar can put pressure still on gold and silver prices despite all the problems going on in Europe. It’s a thought process I shared just last week when gold was at $1,780.90 and silver $34.28 with the U.S. dollar index sitting at 77.53. Today we have gold under $1,690 and silver at $31.77.

Mass psychology has seen an increased demand for the dollar as other currencies/countries experience their own internal issues. But we have also seen US Treasuries as a temporary safe haven the last few years. Take a look at the chart of the ProShares UltraShort 20+ Year Treasury (TBT) which broke under 18 today for a 52 week low.

TBT Ultra Short 20 Year Treasury

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Why would anyone have faith in U.S. 20 year treasuries? Answer: Perception of safety. Of course, if anyone has taken a look at the Fed’s balance sheet, they might believe otherwise.

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The Facts

The Super Committee isn’t going to solve anything because they are debating cutting deficits when they need to be debating cutting actual fat from the government. Cutting a trillion or so in spending over the next 10 years means nothing. The economy is unsustainable and anyone who follows Congress closely enough knows they will do nothing but drive the nail in deeper to secure an economic collapse. Anyone who stands up in Congress and speaks the truth, like Ron Paul or Gary Johnson, has typically been mocked or ignored by the media. It is a dangerous game we are playing here, one that our children and grandchildren will feel the effects of. I guess we ignore them too. Cuts need to happen and happen NOW!

But since we know Congress is inept and a change in 2012 is irrelevant to the big picture, in addition to the problems the banking system faces, now is the perfect time to dollar cost average into a position in gold and silver. While the dollar does move higher, the opportunity is approaching where we should see a bottoming out in prices. My gut tells me the manipulators will try and wash out buyers one more time before this fall is over. Patience I believe will be rewarded.



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About Doug Eberhardt

Doug Eberhardt is a 28 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


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