Don't say you weren't warned...

Gold And Silver Are Thriving While The U.S. Dollar Is Dying

Have you heard the news? Gold hit another new record high on Thursday. It reached $1447.40 before settling back a bit. Most people responded to that news with a yawn. Why? Well, because it is happening so frequently these days. It seems like the price of gold is constantly setting a new record. Silver likewise is thriving. The price of an ounce of silver briefly hit $38.13 on Thursday. That was the highest price for silver in 31 years. But most people also responded to that news with a yawn. Why? Well, because the price of silver always seems to be going higher these days. Meanwhile, the U.S. dollar is struggling. The ICE Dollar Index fell to 75.340 earlier this week. That was the lowest it has been since December 2009. Even at a time when the sovereign debt crisis in Europe is flaring up again and there is tremendous instability all over the world the U.S. dollar still can't find much traction. In fact, many are convinced that the U.S. dollar is on the verge of another major fall. So what in the world is causing all of this?

Well, as is always the case, there are many factors. But one of the biggest factors is that the world is simply starting to lose faith in the U.S. dollar.

You see, the rest of the world is not stupid. They know that the U.S. cannot run trillion dollar deficits indefinitely. They know that at some point the mountain of debt that the U.S. government has accumulated is going to come crashing down.

In addition, the rest of the world was really put off by this most recent round of quantitative easing. Most analysts around the world saw that move by the Fed as something that would really cause the U.S. dollar to lose value.

Even some top Fed officials are now admitting that QE2 may have been a mistake.

Richard Fisher, the head of the Federal Reserve Bank of Dallas recently gave a speech in Frankfurt during which he admitted that the Fed had done "a bit too much" quantitative easing and that "there's lots of liquidity sloshing around the US financial system. We are seeing signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital."

Ya think?

The truth is that all of this money printing may give the economy a short-term "rush" right now, but in the long-run it is just going to cause even more pain. Peter Schiff recently described it this way....

To me, it's like watching someone walk into the same sliding glass door again and again. Wall Street must know by now that large infusions of liquidity from the Fed spur present consumption at the expense of investment for the future. We are an indebted family going out for an expensive meal to celebrate getting approved for a new credit card. It might feel good (at the time), but we're still simply delaying the inevitable.

Whenever more dollars are introduced into the financial system, the value of all existing dollars goes down. As the U.S. dollar continues to lose value, we will continue to see oil, agricultural commodities and precious metals go up.

In the long run, many believe that the U.S. dollar is going to completely collapse...

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