Markets Rise as the Dollar Falls

You may well be asking yourself, why are the current stock markets rising? Could they really be experiencing their best showing since 1997?

Generally, markets are tightly correlated with the economy and global growth, however, this upward movement is due to neither. This low volume rally is a result mostly from money printing by all of the central banks, particularly from Europe and the USA. Please don’t be deceived by these rounds of “real rallies”, they are merely a short-term boost to make mainstream America think we’re recovering from this bleak condition our economy is in.

The fact is currency debasement obscures the true underlying economics. Consumer spending and production did not meet expectations this month and in December of 2011, housing prices fell nationwide by 3.7% as new house construction dropped by 3.5%. Our economy remains stagnant and struggling staying afloat.

The FED will very likely introduce a third round of Quantitative Easing during the during the coming months. It will inundate the system with money in an attempt to keep the bull market going. However, this will do nothing to foster sustainable economic growth, or increase jobs. It only contributes trillions in debt, which aids in devaluing our currency. It’s merely a matter of time before investors realize that quantitative easing does not promote sustainable growth, and circumstances may not be as appealing as they seem at the moment. Banks will surely continue to fail, the massive derivatives market will cave in, and the printing presses will prevail, as it’s the only thing our government has remaining.

My recommendation to anyone who is looking to hold onto their wealth is to purchase gold and silver as a hedge in these inflationary times. A tiny one to two percent of institutions are currently holding a position in gold, which means gold prices have a long way to move.

To learn more information regarding investing in silver, check out Silver Liberties, a blog discussing investment strategies.