November 05, 2010 – Get ready for rapidly escalating gold and silver prices. Just one day after the announcement of the new stimulus plan the dollar plunged, sending hordes of investors to the precious metals market. Gold shot to record levels and silver got a healthy boost.
The plan is pretty much what everybody expected it to be – the Fed will fire up the presses to give the government $600 billion to buy treasury bonds, dropping a load of fresh cash into the economy that they hope will get things moving. What could possibly go wrong with that?
For one thing, economies that are closely tied to the dollar – most notably Asian emerging market economies – are facing a very real threat of inflation and asset bubbles due to the dilution of the dollar. They are quite aware of the dangers inherent in our continued policy of trying to fill the ever deepening hole we have dug for ourselves by printing more and more money. Understandably, they are prepared to take whatever action is necessary to protect their economies.
In the absence of a profound reversal in fiscal responsibility the future is quite predictable: inflation looms as the dollar falls and hyperinflation becomes a very real possibility. Hard assets, especially gold and silver, provide the only safe haven against diminishing wealth, and investment in those metals is a direct reflection of the economic outlook.
Hard times lie ahead for the dollar, but we don’t have to go down with the ship. As investors take increasingly strong positions in precious metals the demand for gold and silver will continue to climb well into the future. While everything else is falling, the potential for good returns on gold and silver investments gets only better.
Senior Staff Writer – GoldSilver.org