March 05, 2011 – Although one expects gold and silver to perform roughly the same over time, something strange is holding back the price of gold while silver continues marching upward.
Wall Street is quick to trumpet that gold has hit the ceiling. It is equally quick to point to every rebound in equities as a sure sign that the market is bull, while the Fed seizes the same flimsy data to declare victory in reviving the economy.
Whether Bernanke and Company actually believe in what they are saying is immaterial. They are either being duped by external forces or they are complicit in them, but what matters to the individual investor is only that the game is afoot.
Other than Wall Street and the Fed, who would stand to gain from artificially holding down the price of gold while inflating that of equities? The rest of the world, that’s who.
In its glory days the dollar stood alone as the world’s safe haven. Our economy was deemed to be an unstoppable juggernaut and central banks eagerly invested in US sovereign debt securities, which at the time were the investment of choice for businesses and governments alike. But now they see the handwriting on the wall.
Every day investments in US debt become more toxic. The country is literally bankrupt, its net worth some negative $44 trillion according to Business Week. But with so much of the world’s sovereign wealth tied up in those instruments, dumping them would be disastrous. The only sane course for foreign interests to follow is to gradually wean themselves off US debt while hedging their own currencies with gold and silver.
I see no mystery in the resilience of the dollar, the resurgence of equities, or the holdback in gold. It’s just the world taking care of itself, which we can do as well by investing in gold and silver.
Senior Staff Writer – GoldSilver.org