Gold Pushes Through $1,000 An Ounce

Gold and silver are both higher today, and the US dollar is weaker. One of the reasons currency traders are giving for dollar weakness is that gold is higher … but I thought gold was higher because the dollar is weaker … hmm. Maybe it’s a “chicken-or-egg” kind of thing.

In any case, a weaker dollar helps other asset classes (gold, stocks, etc) inflate, because they are priced in dollars.

DailyFX.com tells us …

The dollar has dropped to fresh 2009 lows against many of the major currencies, with the USD Index also posting a new yearly low as a result. It seems as though a renewed confidence in the global financial markets and a broad based negative attitude towards the greenback have helped to fuel the relentless declines. While the much better than expected industrial production numbers out from the UK have helped to force additional gains in Sterling, the same can not be said about data in the Eurozone, after German industrial output was considerably weaker. The rally in gold prices above $1000 have also been a big story today, with the gains in the commodity above the critical psychological barrier helping to fuel USD weakness as well.

So why is the dollar going lower? There is a tremendous amount of supply out there — as much as $9 trillion added to the money supply since the financial crisis started, according to some sources. True, much of this money “got eated” as bad loans were written off. But there’s still plenty sloshing around, and it works to devalue the US dollar and increase the value of hard assets priced in dollars.

There are other potential reasons why the dollar is crumbling and gold is soaring, but frankly, they scare the crap out of me. Let’s hope they’re not true (at least not yet).

Now, let’s look at some charts …

weeklygold Gold Pushes Through $1,000 An Ounce