I wrote in a previous post that I was strugglling to see why the US dollar was acting as a safe haven when it seemed more logical to me that gold should be considered (no bias at all, whatsoever!)
The only rational argument I could see for USD > Gold was the lack of expansion of the Fed's balance sheet - keeping the dollar strong via relative (to other easing central banks) moentary control.
But today we have seen an aggressive QE3 programme that will expand the American balance sheet and, put simply, will see the Fed printing money, in unlimited amounts, with accelerating force, until more of the US population is back to work ... and that might take quite a while.
In the interim ... there will be far more dollars chasing a finite amount of precious metals and, I reckon, more investors seeking an asset which will not be eroded in value by inflation and a failing confidence in the fiat currency markets.
Thursday September 13, 2012 by