In mid-October, I wrote on our sister site, Growth Stock Wire
, about a coming rally in the U.S. dollar
Bearish bets against the currency were near record levels... and Ben
Bernanke was telling the world he was ready to print money to prop up
the economy. When a trade gets extremely popular, it's like a boat's
passengers crowding themselves on one side of the ship. It's natural for
the ship to tip over and throw them all into the water, then lurch in
the opposite direction.
As you can see from the chart below, that rally has come... and the dollar is screaming higher...
Nowadays, stocks, precious metals, and commodities all tend to
trade inversely with the U.S. dollar. When the dollar sinks, those three
typically soar. When the dollar rises, those three typically decline.
That's exactly what has happened with stocks and commodities lately...
This is what makes the recent action in silver all the more
impressive. You see, while silver was "supposed" to decline like stocks
and commodities did, it actually soared to its highest price all year.
There's something important we need to take away from this situation...
When an asset doesn't decline when it is "supposed to" – if a
company jumps 5% after it releases terrible earnings... or if a
commodity shoots 10% higher after a major consumer says it won't use
much of it in the coming year – it's a big bullish signal for that
It tells you what you hear in the press or see at first glance
isn't the whole picture. It tells you the fundamentals driving the asset
This is what just happened in the silver market.
More people are waking up to the fact that governments around the
world have wrecked their finances... and that they plan to print money
in order to pay for bailouts, entitlements, and welfare programs.
Now that folks are watching whole countries go bankrupt on the
nightly news and reading how U.S. government spending is exploding, they
are waking up to the idea of owning gold and silver as a "real money"
way to protect themselves from these disasters.
Indians, Chinese, Europeans, Americans... you name it. They're
buying gold and silver. They're buying these metals in such volume, you
get situations in silver like we're seeing... It won't decline even when
it is "supposed to."
This isn't to say that silver can't suffer a correction. Silver is a
volatile asset. It's in its nature to go through booms and busts. But
the long-term outlook is solid. I don't see any political will to stop
the big spending and bailouts you hear about every day.
So if you haven't bought silver, go ahead and buy. Sure, it's
climbed a lot in the past few months. But as we've seen in the past few
weeks, there are incredible forces driving the metal up. As more people
flock to "real money," silver is going to go higher.
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