Commodities are getting crushed giving more reason to buy
A short term gain in the dollar which amounts to just a few percentage points has completely taken the floor under the commodity markets. Its ridiculous to think as the fundamentals that drove commodities higher exist at even greater levels. Gold and silver have fallen sharply which should add to the many reasons why investors should still favor these levels.
Ever since the Federal Reserve stopped showing M3 money supply, the supply of money has grown by ridiculous sums. Consider the deficit spending of Congress, the Federal Reserve’s task of adding liquidity to the markets and a huge trade deficit that continues to export US inflation for foreign made goods. Add all of those up and you have a recipe for inflation disaster.
The rapid drop in the spot metal markets should not worry long term investors hedging themselves against inflation. Since Silver dropped from its highs of $21 per ounce to $12, the money supply remains unchanged and if anything is higher than when it was priced at $21 per ounce. The money supply has not dropped 45%, silver has and this represents a giant disparity that will be corrected through either a 45% rise in the value of the dollar or subsequent drop in money supply.
The world is finding that no currency is absolutely safe absent the few partially metal backed currencies around the world. The Eurozone was a great hideout for investors and now they’re finding that the same banking woes are happening overseas. All of this should result in a flee from currencies and again back into hard assets. Building a position in metals would be a very wise thing to do, especially at these prices.