and the australian dollar is falling?, i just thought our economy was in better state then theirs. if our australian dollar to us dollar was higher say 1.05 we would be able to buy more gold and silver at a even greater discount.
AUD, NZD etc are high risk speculative currencies, they rely on the commodities boom. Commodities are copping a hammering so the smart money moves to the safe haven USD. Probably the Yen too. The USD is the place to park your cash reserves because they're the only economy that is safe. Ummm, it's an indication the world is frakked.
Basically.... Its because you can't swap shares for gold. Everybody is trying to get away from risky paper assets. But the catch is that the process of converting them to real things involves the conversion to cash (usually usd) first. This creates a huge artificial demand for USD in the short term, although nobody actually wants it. Pretty soon all that cash will start looking for a home again, and it will be seeking value in true assets. Gold first, and silver second.
I think if you look to the historical alternative the euro there is no choice. Even the swiss franc is pegged to the euro now. The yen is pegged to the dollar and so on. What we have is a reserve currency that everything is priced from. Until there is a gold standard the USD will be the fallback currency.
So true - the US$ is a medium of exchange - that is all - move move out will be twice as violet as the move in
Because those with real power wish it to be so , until they can create another global reserve currency , They just need a bit more time to cover their butt's before it happens and engineer the swap while at the same time maintaining a profit margin.
To add to Shiney, CK and Hiho's posts. Every big game trader worth his salt knows the world economy is going down the toilet. While that should spell much lower prices across all assets, Quantitative Easing (money printing) by the Fed Reserve over the past few years has seen a flood of money into all assets (except property outside of Australia). While the taps are on prices keep rising. Now that the Fed has allowed prices to deflate and instead of what has failed in the past continuing, they are buying longer term Fed Bonds instead of short term. Everything gets sold into USD because thats what 90% of assets world wide are priced in = demand for USD=higher exchange rate.
Just imagine the stampede out of the most crowded trade in history(Treasuries), where will this cash go? This is the only thing left to work out.
That will be the most ironically pleasurable spectacle to watch. As millions get burned and trillions of dollars wiped out. Most of us can watch from the sidelines and say "we told you so, now I'll but that mansion of yours with my 500 ounces of Silver".
The big money is heading to treasuries, not as an investment, but rather as a safe place to temporarily park big sums of money. After all, you can't very well put $50,000,000 in your sock drawer
"Relativity" my dear Watson ... if something appears to be rising it is conceivable that it is not rising at all but the other thing indeed is falling. Signed Sherlock Holmes Private Dick
You obviously haven't seen my sock drawer LOL Seriously, I agree. People aren't looking to treasuries for a long term investment.
No. For institutions with billions, treasuries is the only asset liquid enough they can move to. Treasuries are still relatively safe - the question is not whether USA can pay their debts, its what they are doing to the fiat itself. When they take it back it inflation might have killed 10% of it, but it's better than having it sit in the markets and killing 50% of it. Gold and silver is still an extremely volatile play, silver particularly. No institution will be stupid enough to go all in on it. Losing 20% in a day is a lot and GFC 2 has barely even started yet.
Treasuries are not bonds. Well maybe they cover bonds as well but I think his post was talking about short term liquid treasuries as opposed to 30 year bonds. ie. T bills, not T bonds.
