Wednesday, May 11, 2011

Expert Says Gold, Silver NOT Best Hedges Against US Dollar Fall

Don't get carried away with buying a lot of gold or silver, says foreign exchange expert Adam Kritzer (photo) of Forex Blog. Despite the barage of ads we've all heard that urge us to buy gold or silver before the US Dollar and the sky both fall, gold and silver are overrated in Kritzer's opinion. "Many gold investors insist they are buying gold as a proxy for shorting the dollar," Kritzer wrote on May 10. "Commentary on gold prices is full of apocalyptic warnings about the current financial system and criticism of fiat currencies, which are backed by nothing except for good faith. They argue that buying gold is the best (or even the only) hedge against the eventual collapse of the dollar." [Emphasis added] Kritzer isn't buying into any of the metals hype. "Unfortunately, I don’t think this argument holds up to close scrutiny," he says, and present some fascinating graphs of gold and silver price histories. Kritzer says gold and silver prices "have risen much faster over the last year (and decade, for that matter) than even the strongest currencies." See his graphs. More intriguingly, he shows that the price of gold has been going up "faster than the dollar is falling." That is, one must admit, disturbing. Kritzer is clearly unsettled by all of this seemingly out-of-whack activity by gold and silver investors. In summary, Kritzer says that - in his opinion - the relationship of gold and silver to the state of the US Dollar is out of sync with other currencies. That's my paraphrasing, by the way. To quote him directly: "My only wish is that investors will stop pretending that it has anything to do with the dollar." More About Adam Kritzer: Interview With Forex Blogger Adam Kritzer - Counting Pips.com DailyForex Blog Reviews: Forex Blog - DailyForex.com
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