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 Replies: 15 / Views: 1,304 |
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Pillar of the Community
United States
642 Posts |
As should have been expected, with the increase of the debt ceiling, so rises Precious metals. Why?
Because if the total value of dollars in the US is to cover 14 Trillion in debt, that means you have to break dollar value up into 14 Trillion pieces. Increase that by 2.1 trillion, that's now 16+ trillion pieces of the same dollar amount. Hence each dollar goes down, PMs go up.
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Valued Member
United States
123 Posts |
Yep.
And just because the debt ceiling is raised, it doesn't mean that there is an automatic increase in the confidence in the dollar. People are a little more confident in the dollar now, but that doesn't mean they are confident.
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Pillar of the Community
United States
931 Posts |
It is widely believed that the US will now meet it's bond interest payments. It is also known for a fact that the weak dollars will be created through inflation thanks to the newer, under the counter QE3. Now we will witness stealth in the dilution of our savings. I may go up to 50% of my savings in precious metals. They are going to weaken the dollar to the point where our fuel costs may begin to more closely match what Europe pays through not only diluted dollars but more highway taxes on fuel and anything else that is required to survive in every day life.
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Pillar of the Community
 United States
642 Posts |
John Bonzo:
It's my opinion that the debt ceiling being raised is actually an automatic decrease in the confidence of the dollar. Anyone who knows what's going on realizes that it's just been signed into law for the dollar to become about 14 percent weaker almost overnight.
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Valued Member
United States
123 Posts |
rjkingston: I certainly agree with you (it has certainly decreased my confidence in the dollar), but I think that most people got roped into the media/politician-driven fear of what would happen if the debt ceiling wasn't raised. You know: no one would be getting their social security checks, US credit rating downgraded, interest rates increase, the US would default on its loans, we would all be forced to learn Chinese, etc etc etc.
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Pillar of the Community
United States
4008 Posts |
IMHO, rjkingston has it right. Devaluing a currency via government edict or via inflation from over printing will result in exactly the same thing. A weaker dollar that buys less and less real goods. In 1960, for example, gasoline cost about $0.20 a gallon. That was two 90% silver dimes. Today, you can get a gallon of gas for less than the equivalent of one silver dime... yes, about $3.90. Inflation? What inflation? The REAL price of gasoline has shrunk considerably in the past 50 years. Only in paper fiat currency is the price of gas "high". So... are all you people gonna save dollars for your future or are you gonna save something that doesn't evaporate with time?  |
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Valued Member
United States
123 Posts |
Well...actual value of the dollar and consumer confidence in the dollar are two different things. Confidence can go up even when it (in my opinion) shouldn't (and even when the actual value automatically goes down as discussed in the first post). The US dollar index went up today because of increased confidence in it vs. other things/currency. The other things obviously weren't PM's!
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Valued Member
United States
59 Posts |
dont know if this has been posted yet  |
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Pillar of the Community
United States
1450 Posts |
I am not sure I agree that the dollar went up because of confidence. I think what we saw today was the least of the evils rise. The Euro is in so much trouble that the dollar looks less dangerous,that may be a "form"of confidence ,but one that will not have staying power!
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Valued Member
United States
123 Posts |
Quote:
that may be a "form"of confidence ,but one that will not have staying power! Agreed. I've been talking short-term here, definitely not long term. Confidence has gone up short-term, even though the dollar is actually worth less since there are going to be more of them out there. That won't last. Would people have been converting Euros to dollars if the debt ceiling hadn't have been raised? |
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Valued Member
United States
397 Posts |
We continue to have low bond prices, no one wants to buy US bonds so that means QE3 is VERY likely.
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Valued Member
United States
187 Posts |
Ya I saw that chart on zero hedge 97guns and the edited one that showed $1950 as the gold price to match the new ceiling. I'm definitely bullish gold but we shall see.
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Pillar of the Community
United States
642 Posts |
Good points comparing the Euro. When two currencies (US Dollar, Euro) jump out of the plane and reach free fall we all perceive slight ups and downs relative to each other, but the ground will catch us both soon enough.
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Pillar of the Community
United States
1285 Posts |
Quote:
The Euro is in so much trouble  Be hedged....  |
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Pillar of the Community
United States
830 Posts |
Quote:
Be hedged... Yep...one of Dennis Gartman's big trades right now is shorting the EUR vs other currencies. A simple way to short the EUR vs the USD is to buy "EUO" |
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Pillar of the Community
United States
4008 Posts |
Quote:
I think what we saw today was the least of the evils rise. Right on, Hock. The least ugly girl at the dance still isn't pretty! |
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Replies: 15 / Views: 1,304 |
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Posted 08/02/2011 7:20 pm
