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As the dollar fades in the world view Americans would be well advised to seek shelter in gold and silver investments.

February 28, 2011 – As the dollar fades in the world view Americans would be well advised to seek shelter in gold and silver investments. The rapidly escalating unrest in the middle east and the surge in the price of oil that it has caused clearly illustrate the failure of our monetary policy and the advantage we have given the rest of the world.

The Fed is doggedly pursuing its fruitless policies despite the oil price spike, standing staunchly behind its gimmicked numbers that exclude energy and food from its inflation calculations. But unlike previous spikes, this one directly impacts the discretionary spending of the average American.

For most of us money is very tight. If it takes $10 more to fill the tank, we put off buying that shirt at Wal-Mart. If our heating bill rises $500 for the winter, we put off buying that LCD wide- screen TV. The effect ripples throughout the economy as manufacturing slows, hiring is reduced, and capital investments get put off indefinitely. The risk-on sentiment driving equities will surely become risk-off, bringing about the long overdue correction.

Excess liquidity has also eroded the dollar’s safe haven appeal, and investor are turning to other currencies for shelter. Currencies of oil exporters with stable economies, such as Canada and Norway, are naturally rising, but so are those of struggling economies, such as France, simply because of their central banks’ more sensible monetary policies.

Those banks base their rates on headline inflation, the real world cost to consumers. Accordingly, they are expected to raise rates to counter surging commodity prices, making them better investments. The Fed’s rates, based on core inflation, are highly unlikely to be raised in response to price increases for food and oil.

The dollar is no longer safe haven for investors, but gold and silver investments continue to keep pace with the global economy.

Shannon King

Senior Staff Writer – GoldSilver.org

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