Sunday, February 27, 2011

Gold Safe Haven, Not Dollar

In previous crisis people have rushed into dollars and the dollar became stronger.  This time the dollar is not getting stronger but gold is.  Some point, well before hyperinflation, I expect gold to be more of a safe haven than the dollar.   I think we have reached that point.  It may also be that the trouble in OPEC countries risks weakening the support the dollar gets from oil being priced in dollars.  And clearly it can also be both.

We are starting to get clear signs of price inflation and I expect we will get more.  As signs of inflation go up interest rates will go up too.  Rising interest rates are bad for bonds, stocks, and real estate.   Commodities, gold, and silver may be the only safe havens.


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