Financial Sense Blog

The gold (GLD) and silver (SLV) meteor keeps soaring in the skies over Wall Street as the US dollar (UUP) is parachuting into new lows. The spot price of silver this week broke $34.40, zooming into a record high area unseen since 1980. On March 1, gold followed its poorer brother by breaking out at $1425.

As the story goes, someone asked an economist how his wife was doing, and the economist answered "compared to what?"

Everyone wants to know how the Central State can "help" small businesses so they will start hiring again. The answer is simple: fix the structural imbalances in the U.S. economy and start favoring real production over financial speculation.

As the US enters deflation, and gold rockets up, it’s time to ask what happens when the USD loses its haven status. The leading candidates to compete with the USD are supposedly the Euro and the Yuan.

With prices lately on the rise, unfounded worries about inflation are creeping back into the markets.

“Making the chicken run” is what Rhodesians used to say about neighbors who packed up and got out during the ‘60s and ‘70s, before the place became Zimbabwe. It was considered “unpatriotic” to leave Rhodesia. But it was genuinely idiotic not to.

In 2009 and 2010 we saw a 5-8% correction down to the key moving averages. I feel that we are in store for a similar pullback in 2011. After that we will most likely continue higher. The one issue I see going forward is that if the dollar breaks down it will most likely help boost oil prices which in turn puts downward pressure on stocks.

It's just a matter of time before the Fed finds itself unable to continue propping up the economy with QE pillars of paper-(dollar)-mache now replacing the crumbled columns of 15-year credit expansion.

The negative feedback loop goes like this: Debt monetization -> higher commodities -> reduced profit margins -> consumers spending flattens -> food riots erupt -> governments topple -> oil prices rise -> economy suffers more

Government statistics guru John Williams believes the most important economic indicators used by our political leaders in their decison-making - the Consumer Price Index, the unemployment rate, the Gross Domestic Product - are deeply flawed in how they're calculated.