Dan Norcini on the dollar and gold

The reason the Dollar continues to drop even though it is technically “oversold” is because the Fed has made it perfectly clear that there is essentially no limit to the amount of liquidity that they are willing to inject into the economy in order to stave off a stall in the economic “recovery”. A trillion here, a trillion there, a trillion everywhere and pretty soon the host currency is rendered valueless for all practical purposes.

Compound that with the fact that we now seem to have entered an era in which there is a race to devalue currencies by the respective central banks and monetary authorities around the globe and you have the reason why gold is continuing its ascent. Quite simply, it is acting as a currency and it will continue to attract buying on dips in price as long as there is fear, uncertainty and doubt about the “health” of the current monetary system and a lack of confidence in the willingness of the global monetary authorities to change their tactics of systematically undermining the value of their own domestic currencies.

Gold is insurance against the depradations of the central banking class and the parasitical monetary authorities.

Keep your eye on the long term consequences of the Fed’s actions and their signaling to all who can see that they intend to sacrifice the Dollar to achieve their goals. That is set in stone and it will take a huge about face on their part (scrapping QE2 completely) to cause anything more than a bounce in the Dollar. Besides, the US has now past the point at which it is mathematically possible to ever repay all of its outstanding debt. Either it defaults which is unthinkable as it would send the entire global economic system into absolute chaos or it effectively defaults by devaluing the Dollar. Which path do you think it will choose to follow? I don’t think this is a secret to anyone on the planet at this point which is why we are seeing Central Banks all over the planet attempting to stem the rise of their own currencies against the Dollar. Everyone knows that the Fed is killing the Dollar by design.

The rising economic powerhouses of Asia are too powerful of a force to contend with in the gold market and they have made it quite clear that they intend to hold gold as part of their official reserves. Price capping efforts by the West only serve to provide a discounted gold price to buyers from the East who must no doubt in private scratch their heads and marvel at such short-sighted madness on display by their debt-plagued counterparts on the other side of the globe. I have said it once and will say it again – the war for gold is the war for economic supremacy in the 21rst century.