Capital moves from country to country like a loaded loose cannon on a ship’s deck in a rough sea firing away in an unpredictable fashion. Once the Euro begins its collapse, capital will flee to the U.S. Dollar causing its value to temporarily increase. In turn, this may put pressure on gold & silver prices denominated in $USD. $1,400 gold and $25 silver would not be out of the question. Volatility could impact prices either side of those numbers. I expect this to be temporary until that same capital perceives the next sovereign crisis to be in the U.S. At that time, the gold & silver prices are set to shoot up to epic levels.
If the Far East decides to keep support levels higher by buying on the price dips at $1,600 and $29, then we may not see the earlier mentioned numbers. Ben Bernanke began Operation Twist and Wall Street voted with a down day in the market. The Fed will be unable to move the economy forward because the housing market collapse will probably take 20+ years to recover. In the meantime consumers don’t feel as wealthy with the loss of home equity value. They will not soon forget the losses in home equity and 401K’s. The only group unaffected by high unemployment was the retired worker population. With 0% interest on their investments, they will curb their spending as well. It seems that the politicians have alienated nearly every group who could spend money to stimulate the economy. This does not bode well for those in office.
As fear continues to grip the various groups affected by monetary policies, consumer sentiment surveys have plunged. This translates to weak demand in non-essential purchases.
We are now at risk of another systemic collapse and the Fed will do whatever possible to keep this from happening and they will throw you and I under the bus. Hyper-inflation is around the corner and there is risk of legislation to restrict gold purchases by the common man. I suspect that they will not try to control silver purchases do to its dual role as an industrial metal.
Retaining purchasing power is the name of the game. A portion of our current income is set aside for the future and each of us wants our savings to retain value well into the future. Our retirement is based on that assumption. However, the economic policy makers don’t share our priorities. They live and die by today’s performance and will do whatever is necessary to carry out their policies. We can no longer rely on them to protect our interests and must think for ourselves. Most of all we must move closer to Our Heavenly Father who will guide us through these times of volatility.