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Gold & Silver Do Not Threaten to Default, Default or Shut Down

The trust therefore in the dollar is based on human action and perception, not intrinsic value.

As long as people are comfortable with the status and actions of the issuer of the currency, the issuer’s currency retains the perception of value.

If, however, an issuer of a currency abuses its ability to print..... and engages in dysfunctional monetary amd fiscal policies...or worse, defaults...


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Here's how the impasses in Washington ideally play out:

Default. Admit 17 + trillion dollars never will be repaid. Cancel the debt, disestablish the Fed, fire the IRS, print Treasury notes in place of Fed dollars, and never again pay any bank interest for printing the government's money as loans to be repaid by taxes. Sounds like fantasy, but how else is this government going to redeem itself, and return to a constitutional foundation. It's not time to throw in the towel and just give in. The herd mentality that is prevalent now in every branch of government and in the press, swaying any direction like what the doggies do home on the range - those days are getting fewer as time progresses, and new technologies lend awareness to public domains. Believe it, these unheard of changes are not far away, and the herd will soon break their bonds to blossom into real legislators and lawmakers. of for and by the citizens of the USA.

Fantasy indeed-that may be the only realisitic thing to do

but not going to happen-they will print and and trade to keep the game going

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Gold, Silver, US Dollar & 10 year note all UP!

On safe haven trade because of threat of US default?!

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Dollar index is down now

I don't think funds would be expected to flow into 10 year Treasury notes in a safe haven trade because of the threat of default. That seems counter-intuitive since a default would make Treasury notes worthless.

The gold and silver trade is likely driven by short covering as the speculators who made money on the down trend from Spring to the seasonal Summer low turn their positions around to take advantage of the likely seasonal uptrend through the Fall and Winter. The debt ceiling debate could well provide the spark that ignites the rally in Precious Metals on a safe haven bid.

As far as why the Treasury Notes being bid up today, I think that could be related to speculation about the Fed minutes that are set to be released on Wednesday. The market could be bracing itself for a further dampering of tapering expectations. If the market starts to expect the Fed to hold off on tapering further then that could cause an unwind of the tapering trade that has led to the recent spike in rates. I also think the market doesn't expect a default since the Treasury will obviously pay the interest on any debts first before paying for anything else so today's price action could also be reflective of that attitude.

As far as the US dollar I think that it is likely react negatively to the debacle in Congress, and the sell off in the dollar today is probably also reflective of a dampering in tapering expectations.

Thanks for the analysis-agree market is not expecting a default

or a taper

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Dollar Could Go Up

Since default on interest payments would halt the government's ability to borrow any more money and therefore the Fed's ability to print any more money, the remaining supply of dollars would become more valuable.

That is a perverse way of looking at it but..

I agree! In this blog post I argue that the printing press is the new gold standard-the dollar is backed by the willingness of the Fed to print and debase.

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Stocks are down even though they represent

Underlying intrinsic value- but whoses prices are supported by accomodative monetary policies

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