Thursday, January 18th, 2018 MST

Dollar down, gold up; deficit spending the catalyst

The dollar sank 11.7% over the last twelve months, and gold climbed 10%.

The dollar is measured against a basket of non-redeemable paper currencies, the euro (57.6%), the yen (13.6%), pound sterling (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and the Swiss franc (3.6%).

Only a few decades ago currencies were measured against gold.  For people to see how well their domestic currency was doing, all they had to do was to look at the price of gold.  That is still true today, but is not generally recognized by the public.  When the dollar is in trouble, gold rises.  When the dollar is strong, gold prices decline.

What to buy?

Recently a client wrote: “In 2004, I started buying gold and silver because of increasing US debt, thinking that inflation would come about and the dollar would suffer.  Now David Stockman (former Budget Director under Ronald Reagan) forecasts imminent doom for the stock and the bond markets.  And, I agree that it will most likely

Big names bullish on gold

Marc Faber, famed investment advisor, fund manager and publisher of The Gloom, Boom & Doom Report, noted in his October 2017 issue that the Fed’s announcement about implementing quantitative tightening has depressed precious metals and mining stocks.  He then added, “I shall use the current weakness to increase my position in physical precious metals.”