With the US in such a precarious debt situation, why is the dollar strong and gold weak?
No one can predict when the seemingly inevitable decline in the US currency and US bonds will unfold. Yes, the dollar fundamentals are negative and the politically most convenient way to deal with the sharply growing US debt is to eventually pay it back in devalued dollars. For bonds, the longer term outlook may be even more troubling, as protracted military stresses and a deteriorating demographic profile adds to the fiscal imbalances already in place. That’s why a potent hedge against your dollar and bond holdings, such as gold, should be a cardinal point in your investment strategy. Be careful, however, not to time a dollar and bond decline. The world in which we live is complex and analysts have already demonstrated how wrong they can be in predicting an end to the massive foreign capital inflows that have kept the dollar and bonds solid. But the correction will come: while Japan, China and oil producing nations keep sending surplus money to the US, an ever higher portion of the ow
