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So... a new post after years of being quiet... but I can't let this go without warning some of you who are really aware of things going on around you. If you have heard the adds espousing gold and silver as the hedge to the collapsing dollar... saying when the stock market starts falling... everything will go into chaos.
An econ 101 lesson. Investors put their money where it brings the best return. So lets look at this from that logic and see what we come up with about this whole issue.
Currently the FED is holding off on raising interest because the economy is not rolling at a fast enough rate to sustain an expanding economy. When I look at the numbers coming in, it reminds me of an old John Deere spitting and sputtering. It acts like it wants to go, but fails and crashes every once in a while. Sometimes catching it's breath and actually giving numbers that show improvement, makes one wonder if those numbers are real because the next thing you know, it is failing again.
What happens if the FED raises interest rates? The doomsayers would have you believe they have to eventually and the markets will crash at that time. If they are going to actually pay interest on money, people will take their money out of the risk markets and put it in less risky investments paying interest. Stock market investors will be sellers looking to take their money and run... yes that will cause it to come crashing down.
Think about this... in the world market, the dollar is the safest currency and if they are actually paying a reasonable interest rate, world money will come running... creating a demand for dollars. What you say? Creating a demand... won't that make the dollar go up? Of course it will. The Dollar will appreciate over other currencies.
How do these two things effect metal and commodity prices? Commodities are priced in dollars, meaning if the metal price is not in demand, stable prices, they will start depreciating because the dollar buys more of them because it is appreciating. If commodities are depreciating, money will run from them instead of to them, and the supply demand will shift to greater supply than demand and depreciation will accelerate.
I am not on the computer that has my photo editing program on it, or I would post some monthly charts showing how dollar value effects metal prices over many years. I will add those as soon as I get to that machine.
This is not investment advise nor should it be construed as such. It is a warning only to look at what is happening from all angles. If something is happening that you don't understand, it may be because there are other things you have not considered influencing the market. Do not listen to adds on the radio or TV for investment advice. If something is in demand and going to appreciate in value... do you think they would be wanting to sell it? NO! Something is happening they are not telling you about and they don't want it on inventory.
