Gold And Silver Are Thriving While The U.S. Dollar Is Dying
Have you heard the news? Gold hit another new record high on Thursday. It reached $1447.40 before settling back a bit. Most people responded to that news with a yawn. Why? Well, because it is happening so frequently these days. It seems like the price of gold is constantly setting a new record. Silver likewise is thriving. The price of an ounce of silver briefly hit $38.13 on Thursday. That was the highest price for silver in 31 years. But most people also responded to that news with a yawn. Why? Well, because the price of silver always seems to be going higher these days. Meanwhile, the U.S. dollar is struggling. The ICE Dollar Index fell to 75.340 earlier this week. That was the lowest it has been since December 2009. Even at a time when the sovereign debt crisis in Europe is flaring up again and there is tremendous instability all over the world the U.S. dollar still can’t find much traction. In fact, many are convinced that the U.S. dollar is on the verge of another major fall. So what in the world is causing all of this?
Well, as is always the case, there are many factors. But one of the biggest factors is that the world is simply starting to lose faith in the U.S. dollar.
You see, the rest of the world is not stupid. They know that the U.S. cannot run trillion dollar deficits indefinitely. They know that at some point the mountain of debt that the U.S. government has accumulated is going to come crashing down.
In addition, the rest of the world was really put off by this most recent round of quantitative easing. Most analysts around the world saw that move by the Fed as something that would really cause the U.S. dollar to lose value.
Even some top Fed officials are now admitting that QE2 may have been a mistake.
Richard Fisher, the head of the Federal Reserve Bank of Dallas recently gave a speech in Frankfurt during which he admitted that the Fed had done “a bit too much” quantitative easing and that “there’s lots of liquidity sloshing around the US financial system. We are seeing signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital.”