Precious Metals Portend Dollar Trouble

Gold may well have set another record by the time you read this. The spot price as we write is $1,441 – just $3 off the high set earlier this month. Silver, at $36.81, could burst through $37 by day’s end.

“The precious metals are giving a clear message,” says GoldMoney’s James Turk, “namely, that the dollar is in trouble. Gold and silver are near their recent highs, and this shows both markets – the dollar and the metals – confirming the trend.”

Dollar Still Below its November Lows

The US dollar index, despite a minor bounce today, remains beneath a low set last November.

The greenback can’t even catch a break from the PIIGS countries. The yield on 10-year Irish government bonds pushed over 10% today, and 10-year Portuguese debt now yields over 7.5%.

The European Union, meanwhile, has put off deciding whether to increase the size of its bailout fund, currently around $624 billion.

Result: The euro is up against the dollar, trading right now for $1.414.

“The fundamentals behind the dollar are atrocious,” James Turk continues. “With Europe on the verge of raising interest rates and the Federal Reserve set in its ways keeping interest rates low as far as the eye can see, people around the world are going to increasingly dump the dollar.

“At some point, there is going to be a panic as the flight from the dollar moves from the relatively orderly retreat we are currently witnessing to a stampede. The charts are telling me that panic is about to begin.”

Prepare thyself accordingly.

Addison Wiggin
for The Daily Reckoning

The Daily Reckoning