As stated above What will happen if the US dollar recovers? (i.e. The US dollar is stronger than the Au dollar) Does the price of Silver and Gold go up? Daniel
The USD can recover against the AUD , EUR , GBP , YEN , CHF , CAD , etc - but it can NOT recover against itself - and is constantly weaker and weaker buy pms
IMO the price of silver and gold in USD could drop if people flock to it to pay down liabilities and seek its safe-haven status thereby bolstering it. I honestly think this is very likely, and when this happens cash will become king while credit evaporates. Is that an argument against holding PMs and for holding dollar-denominated cash equivalents? Only if you think you'll get shaken out (i.e. you'll have to cash in) during this deflationary spiral. If you can confidently put metal away for 5 or so years, it won't touch you at all. As stated above, stack away.
The question is, for Australians,what happens to the AUD if people flock to USD. The AUD goes down, i.e. our gold gains value or at least loses less than in USD. The important thing for us is what happens to gold and silver in AUD,not USD. And if the AUD falls greatly,and I suspect it would in the above case,Gold could really rise in AUD. That is , if a crisis causes a rush to USD If the USD rises due to everything becoming wonderful,AUD would rise;commodies (iron ore,etc) being in demand. Gold in AUD would probably fall badly.
If the USD and world currencies strengthen it would remove one of the reasons gold/silver have been attractive as a "safe haven" play. So would put downward pressure on pm's.
I'm with matthew, we stackers might value our stack forever but the market doesnt and if no one is willing to pay top dollar for our stack, we either die with it or lower price.
I have seen absolutely no reason why this would happen, based on the way those peanuts are running the show in the USA. I am not factoring that as an issue until I see a dramatic change of course, it's just a waste of good thinking time otherwise. Those guys are boned unless they stop the richest people on Earth stealing everything, from people's retirement funds, houses, businesses, public utilities, public open space and the list goes on. Their interest rates are almost zero, and if they crank them up, everyone will go broke, and they will have yet another housing crash, creating a massive feedback loop that would be uncontrollable, wiping out businesses from the biggest to the smallest. They are way more boned than we are.
I think there are quite clear reasons to expect a strong, if relatively brief, recovery of the US dollar. How/when exactly will this happen though?
What reasons? All I can see is a looming debt default, falling consumer spending, falling manufacturing, falling house prices, rising unemployment, expanding wars, bigoted homophobic morons like Michelle Bachman running for leadership of the Republiklans and a Government that will not prosecute the bankers even in light of rock solid evidence.
If the US$ strengthens, for what ever reason, the price of AG/AU in US$ will decrease. But it would be anticipated to be in the realm of circa 3-4% for AU and circa 10% for AG. The flip side is that the A$ may also correct to the downside, which may have a slight positive effect in A$ for AG/AU. All in all, there would not be much to be concerned about if this situation was seen in isolation. However, include China into the mix and our export driven economy, and the A$ may correct downwards more than the current status quo, resulting in AG/AU realising much greater gains in A$ terms.
I don't believe you will have to worry about the US economy rebounding any time soon. Some of the best economist are predicting 2020 before it comes back, that at least is what I'm hearing on talk radio
Just currency mechanics... not fundamental economic strength of course. A lot of USD denominated debt to be paid down and perceived relative safety of the world's resere currency.
Short-term next few weeks with a deal on the US debt ceiling being done you might see a spike in the USD but just an upward blip on a falling graph.
There are plenty of reasons to see a strengthening of the USD against other currencies and even PM's. While I completely disagree with the mentality, it remains a simple fact that when SHTF in financial circles investors flock to hold cash. As USD are what is predominately used in investment circles they want to (or have no real choice to) hold USD. If the PIIGS start heading down hill that will spike the USD. If China slows all of the money sitting in the AUD will leave as we are seen as a proxy bet on China = spike in the USD. Make no doubt about it though, these events while temporarily bullish for the USD will just be seen as MINOR recoveries of the USD as it takes it inevitable spiral towards it's death. A 10% rise in the value of the USD across all currencies tomorrow will not even register on a chart from 2000 - 2050. At the end of the day keep stacking as it is the best insurance for the destruction of FIAT. Remember all things sooner or later return to their intrinsic value and for paper that is just about zero. For me personally 20% of my personal wealth in precious metals is a good insurance level and 50% in super. If PM's gave a return on investment continually then I would have a lot higher % but they don't so they are my insurance policy.
Quite right. The reason that investors flock to the US dollar is that it still is the world's reserve currency. So when the Euro fails, as it will first, the US dollar will rise. Any drop in PMs will be temporary when everyone comes to their senses.
So gold and silver fell on news of possible resolution of Greece crisis? Expect it to do the same for resolution of Obama ceiling debt crisis. Of course ,I expect a fall only for a little while. However ,it is not impossible that the World economy will pick up again,and this would lead to a fall in gold.Nothing is sure. All in all,the better resolution. A world collapse is in nobodys interest.
Cannot see the problem if the USD increases its value against other world currencies. If on Monday you have $10,000 USD value of PMs. On Tuesday the USD appreciates by 10% so your stack is now worth only $9,000 but the value of the dollar has GONE UP so are you not back to parity ? Another way of looking at it - Monday USD 10,000 which is say 15,000 groats in some other currency Tuesday USD 9,000 which is still 15,000 groats. As long as the USA prints money the dollar will loose its purchasing power and PMs will continue to drift upwards / rise. The real increase or decrease in PMs intrinsic value will depend on market forces ( mainly the rich Asians ! ) or big institutions / governments adding or reducing their inventories.
