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Two Big Moves In Two Days For Precious Metals: Here Comes Dollar Devaluation

All of this is going up fast now. People are giving up on the stock market, and Treasuries and are buying PM. PM is in short supply and will be gone soon.

Gold $946.40 $947.40 up 32.30
Silver $13.69 $13.74 up 0.49
Platinum $1,065.00 $1,075.00 up 35.10
Palladium $215.25 $220.25 up 3.25

Updated:2/11/2009 9:42:53 AM CST
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More doom and gloom -

MONEYANDMARKETS
Gold and the Fear Trade
Wednesday, February 11, 2009
by Sean Brodrick

[Snip]

Historically, the yellow metal has moved with the euro and opposite to the U.S. dollar. This relationship has reversed in recent months. Now, gold is closely tracking the U.S. dollar.

This shows that when Europeans get scared about their currency, they run for the safety of the two other global currencies — the U.S. dollar and gold.

And it's not just Europe. In January gold rose significantly against all major world currencies. In most currencies except in the U.S. dollar and the Japanese yen — the other "safety currency" — gold actually made an all-time-high.

Why are European investors so scared? Their currency is in serious trouble.

That fear crystallized in comments by mega-investor George Soros at the recent meeting of the world's movers and shakers in Davos, Switzerland. In an interview with Austria's Der Standard newspaper, Soros said that the euro may not survive unless the European Union presses for an international agreement on dealing with soured assets.

Why Americans Should be
Scared About the U.S. Dollar ...

Let me give you four reasons:

1. The U.S. federal budget deficit will reach at least $1.2 trillion in 2009, almost triple its level last year. And America will probably be running trillion-dollar deficits for the foreseeable future.

2. The cost of the stimulus package is $838 billion. Some economists argue it must reach $1.3 trillion to have any significant impact on the U.S. economy's health. So, if this stimulus package doesn't work, there will probably be Stimulus Plan II.

3. The stimulus package will raise the government's commitment to solving the financial crisis to $9.7 trillion. According to Bloomberg News, that's enough to pay off more than 90% of the nation's home mortgages.

4. In January, the FOMC said in a statement: "The Committee is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets." The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed.

Willem Buiter of the London School of Economics knows something about debtor nations who can't pay their bills. He said that the U.S. and Great Britain are fast approaching banana republic status. Buiter believes a currency collapse, a scenario that most would dismiss as impossible for the U.S. dollar, is becoming more likely as Washington opens up the rip cord on spending.

And it's just the credit default risk on 10-year U.S. Treasuries that we're seeing now. Until August, the credit default swap spread stayed below 20. It has now soared to over 82 — a huge move in a short amount of time.

Remember: This is a $30 trillion market. Even if just half of it goes bad, game over for the greenback!

Now if you've liked the bullish move in gold so far this year, hold on to your hat ... because you haven't seen anything yet!

Forces That Could
Thrust Gold Higher ...

My near-term target on gold is now $1,060, up from $948 just a couple weeks ago. My next target: $1,185. It could be a rocky road getting there, but the potential this year is just enormous.

The increase in currency risk with the rising tide of investor fear is just one factor that makes gold look especially good over the next year, because gold is about wealth preservation — a refuge from fear.

What's more, there are at least three other forces that should drive gold a whole lot higher ...

Force #1 —
Average Joes and Janes are
buying gold coins and bars:

Unlike many other commodities, gold (along with silver) has acted as an actual currency throughout history. If things get really bad — like, say, a Panic of 1837 scenario, where the currency markets literally implode and banks across the country close their doors — you can buy things with gold and silver.

That's why, although gold jewelry sales are tumbling quickly (sales of gold jewelry in the United States fell 29% last year), gold coins are hard to find unless you want to pay exorbitant premiums.

Force #2 —
Investors are backing up the truck:

The inventory at the world's biggest gold ETF, the SPDR Gold Shares (GLD), is soaring and keeps making new highs, recently tipping the scales at 881.8 metric tonnes (28.4 million ounces).

WHO done it ?

Yea & this is probably where my 401 K monies went into...Some crook bought GOLD...you-no

you still have a 401k?...

you still have a 401k?... dude you are the one who lost that all on your own.. people who buy gold are not crooks.. you need to pull your head out of the sand!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

Here comes devaluation

of all paper currencies worldwide. Gold set new highs for Euro and British Pound. Let's hope the fabric of civilized society doesn't deteriorate along with the currencies.

gil.... gold has hit all

gil.... gold has hit all time highs in many currencies.. the pound, the euro, canadian dollar, australian dollar etc.. its all over the board.. interesting!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

SteveMT's picture

And strangely enough they are all fiat currencies.

They are all going the way of the dollar, but probably the dollar will be the last one to go....KaBoom. I hope we don't do the same thing.

Gold and Silver

are heading for a long run to the upside. There will be a shake out for weak
longs some where down the road with a correction, paper traders will sell off.
I chose to buy coins and will hold for the long haul. Good quality coins are getting very hard to secure for some time now.
Housing, stocks and banks all are in correction mode, next up the dollar.

Thank you Ron Paul, Jim Rodgers and Peter Schiff for steering me in the right direction.

SteveMT's picture

Amen to that. They saved me also. Hans Lysglimt also

helped to get out of the stock market.

notice how soveirgn skid

notice how soveirgn skid mark opps I mean maersk has been quiet lately!..

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

Grrrrr..If it could just

Grrrrr..If it could just wait until I get paid on Friday...I'll be able to afford plenty of silver..but the price of gold is getting a bit too rich for my blood...

lol logic! go read what

lol logic! go read what Ted butler said on tuesday.. I am not holding my breath that the gold and silver markets will break out to knew highs just yet.. the big 2 or 3 or possibly 1 US bank that has 78% of the short contracts on the gold and silver markets have just bought more shorts. this is even a more extreme position then when we had our last sell off.. It may be worth it for you to wait till next week sometime.. the manipulators are messing with it.. then again they could get over run!

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

ask and you shall

ask and you shall receive!
http://www.investmentrarities.com/weeklycommentary02-09-09.html

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

SteveMT's picture

Gold price increase trend continues.Hear you,price is bad high.

Gold $944.40 $945.40 up 30.20
Silver $13.59 $13.64 up 0.39
Platinum $1,074.00 $1,084.00 up 44.10
Palladium $215.05 $220.05 up 3.06

Updated:2/11/2009 1:30:01 PM CST
http://www.apmex.com/