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The US dollar closed yesterday at 82.62 on the US Dollar Index extending its rally from around the 71 levels. It will be interesting to see just how it behaves when the dust of this week’s turmoil starts to settle. Our opinion, for what its worth is that it will head south again when investors realise that they are sitting on an eroding asset. However it is a parking place for now allowing investors time for intelligence gathering and time to think about what’s best for them. The worlds equity markets are a disaster and this saddens us enormously because people lose their jobs, see their pensions schemes shrink, some get evicted from their homes, the strain put upon relationships and family life can be unbearable. All markets need to go through a final capitulation in order to complete the cleansing process so that they too can once again start over. This mega money rescue package will be soaked up in no time at all and it is still akin to putting out a fire with gasoline. Liquidity is not the answer to insolvency as we have said repeatedly.
Over in the precious metals corner we saw gold, silver and their associated producers sold off during the scramble by investors to get their cash to the sidelines. One analyst said that good quality stocks were being sold off because no one wanted to buy the poor quality stocks, he may have point there!
The finance chief’s from the world’s most powerful nations are now putting their heads together in an effort to resolve this melt down and we wish them every success. However, we will remain in the gold and silver sector, as we believe they offer us some protection from the carnage even though they have to take a few knocks now and again.
Try and enjoy the weekend.
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