Why U.S. Dollar Will Remain Strong in the Near Term

There has been some confusion among those interested in the U.S. monetary policy and why the U.S. dollar has remained strong even as the Federal Reserve created enormous amounts of money out of thin air. Under normal conditions that would have put downward pressure on the value of the greenback.

Since economics are no longer operating under normal conditions, neither will the usual performance of the U.S. dollar; and it hasn't.

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Janet Yellen Speaks Out of Both Sides of Her Mouth

I'll have to say I wasn't disappointed in the talk given by Federal Reserve Chairwoman Janet Yellen, as my expectations were appropriately low, and I wasn't surprised by the lack of anything new and some of the weasel words used to provide cover in case economic conditions in the second half are such that the Fed doesn't raise interest rates as Yellen has been leaning towards and most others expect.

Here's the wording she used to cover her actions if they end up different than she has signaled to the market:

"But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step ..." she said, referring to the probability of raising interest rates.

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The Catalysts Driving Asian Forex Down and Boosting Outflows

There are a number of reason Asian currencies have been falling recently, with the most obvious being expectations the Federal Reserve will raise interest rates in the latter part of 2015.

Other factors attributed to weaker Asian currencies include pressure from local businesses, demand for electronics gadgets fell, MERS, funds pulling money from emerging markets, Japanese yen, and a potential Greek default. I'll break down how these are having an effect country-by-country in a moment.

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Fed Not Ready to Stop Spending

Let me say right from the start that one of the most important things for investors to know at this time is that the Federal Reserve is not likely to stop its stimulus program in the near future, as some reports are theorizing.

The only caveat to this reality is if an unforeseen event or calamity takes place that would change the policies of the American central bank. One of those events would be a huge change in the jobs numbers, whereby the unemployment rate plunged to levels approaching the stated goal of 6.5 percent. There is nothing to suggest that will happen any time soon. Another would be rising inflation, which would betray the inevitable effects of the loose money policies the Fed is engaged in. Either of those two scenarios would bring a rapid response from the Federal Reserve.

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Bernanke Confirms Fed Stimulus Concerns Hot Air

About a week ago I wrote that there was absolutely no doubt the quantitative easing of the Federal Reserve would continue. That was in response to the nonsensical idea that because of the minutes of the latest meeting a couple of officials expressed concern over continuing to stimulate the U.S. economy.

Anybody that understands a modicum of economics knew this was all smoke and mirrors, as since the last introduction of stimulus, the unemployment figures have gone nowhere; even going slightly higher.

Bernanke's defense before Congress of his continuing to print money and throw it into the economy ensures there is never going to be some type of premature and surprising exit from that plan.

Other than a little strength in housing, there's nothing to suggest Bernanke would even think of starting to wind down the process.

So as far as stimulus has an impact on commodities, that part of the puzzle will remain in play, and anyone making investing decisions based upon rumors to the contrary will be making a big mistake, unless they understand the temporary effects the news will bring for short-term moves.

No Doubt Fed Stimulus will Continue

The temporary negative response to the content of the Fed minutes from its last meeting has proven to be nonsensical, as there is no doubt, and hasn't been any doubt, the global and American economy have really never exited the recession, and that bodes well for those investing in commodities, and specifically gold and silver.

It's probable that the major reason for the Federal Reserve acting like it's in conflict and confusion is for the purpose of keeping the U.S. dollar shored up, as the dollar weakening from the trillions in stimulus caused other currencies to rise against it, affecting their exports. The greenback climbed to a 5-1/2 month high against a basket of currencies on Thursday.

With unemployment jumping 20,000 last week and the Philadelphia Fed's business activity index plummeting to minus 12.5 in February, it shows factory activity has really slowed down. A reading of zero points to contraction. Last month it has plunged by minus 5.8.

Europe is another major problems the mainstream media seems to only occasionally bring up to keep the recovery narrative going, but economic conditions there continue to worsen, and there is little positive in that region in the world to look forward to in the near or medium term.

Food and energy has been rising in price, and even consumer prices outside of those soared by 0.3 percent, the largest gains since May 2011.

Some point to existing home sales as a positive, which rose 0.4 percent in January. The average price of a home has climbed 12.3 percent from a year ago.

The supposition is consumers will spend as a result, but I don't think that's really likely, other than a slight few who may do some refinancing.

A strong economy needs to be in place, or at least perceived to be in place in order for that to happen, and that bubble has burst for most consumers, and it's unlikely we'll see anything in homes that will make a significant impact on the U.S. economy.

In other words, the quantitative easing will continue from the central bank no matter what a couple of the directions may say.

Time to Get into Silver Wheaton (SLW)?

The manipulative actions of the Federal Reserve through the release of the minutes of the last meeting, where some strategically placed comments about the possibility of pulling back on the latest QE round whether or not they reach the asserted goal in relationship to unemployment, caused a ruckus in the markets yesterday, with almost all asset classes falling.

That has provided some terrific buying opportunities today, and as far as commodities go, Silver Wheaton (SLW) is one that should be taken a close look at. It jumped quick at the opening, but has pulled back pretty quickly.

With the economic outlook being fairly decent, and silver demand sure to continue on, these are pretty good levels to enter into Silver Wheaton, after it took a pounding yesterday, dropping $2.43, or 7.02 percent.

I've been in and out of Silver Wheaton for some time, and it's hard to pinpoint when the absolute best time to enter is, but that's true of all equities. I think the mid-$32 range is a pretty good bet for both short and long term investors, who should be rewarded at this price.

Shorting Yen Making Millions for Investors

Investors shorting the yen since November when the Bank of Japan was pressured to debase the currency, have made millions on the move, with currency expert George Soros generating a cool $1 billion from the play.

Other major players generating big gains from the debasing of the yer were David Einhorn's Greenlight Capital, Daniel Loeb's Third Point LLC and Kyle Bass's Hayman Capital Management LP.

Since the announcement in November of retaliation against the U.S. dollar by the Japanese for the ongoing policy of the Federal Reserve of endless quantitative easing, the yen has dropped 20 percent. Expectations are it still has room to fall.

U.S. Will Win Currency War, Rest of Us will Suffer

In a currency war that is escalating, over time there is no doubt the U.S. will eventually come out the winner, in the sense that it will lose more of its value than competing currencies, which will devastate the economy.

Peter Schiff, CEO of Euro Pacific Capital, said this:

"There is a currency war going on," Schiff said at the Inside ETFs conference. "The irony of a currency war which makes it different from other wars is the object is to kill itself. Unfortunately, I think the U.S. is going to win the currency war."

"We're broke. We owe trillions. Look at our budget deficit, look at the debt to GDP (ratio), the unfunded liabilities," Schiff added. "If we were in the euro zone they would kick us out."

Since the Federal Reserve is artificially propping up the U.S. economy, it's only a matter of time before the negative consequences kick in, led by the ongoing debasement of the U.S. dollar.

Schiff also rightly notes the consumer price index isn't made to measure inflation, but rather to hide it through manipulation. He calls the CPI a "total fraud." Schiff says other similar indexes are just as fraudulent as the CPI.

Recommendations from Schiff are to continue to hedge inflation and global uncertainty and unrest with precious metals, especially gold.

Marc Faber: Invest Where Fed Has Least Impact

Now that the Federal Reserve has painted itself into a counter it will have difficulty getting out of, it's uncertain how long it will continue to stimulate and keep interest rates at artificial lows.

Also part of the larger problem is the decision for other major economies to print money as well, with ECB, Bank of Japan and China all using their central banks as an attempted means to boost their economies. None of it is working, and so the question now is where should investors place their money in a world of economic stimulus.

Marc Faber believes he has the answer, as he says the stimulus party is now over because asset prices will drop if stimulus efforts are stopped, and if the central banks continue stimulating, which they will for some time, the economies of the countries or regions will remain weak.

The problem is these countries refuse to allow the economy to heal itself; attempting to prop them up wit funny money while their respective currencies continue to plunge in value because of the resultant debasement. It's no different than the giant banks being allowed to fail when the opportunity arose for them to do so.

Faber recommends investors to look for areas where the Federal Reserve especially has minimum effect. Interestingly, one suggestion is telecom companies in Europe, and companies residing in places like Vietnam.

One the fallout comes from the stimulus measures, Faber sees nowhere to go for profits except places where there is lower impact from the actions of the central banks.

U.S. Started Currency War, Will it Continue it?

Everyone is pointing to Japan as the culprit in the currency wars, but the truth is the U.S. has escalated the war by refusing to rein in spending and continuing to print money at a rate that continues to push the value of the U.S. dollar down, which pressures exports in other countries.

Consequently, other nations, if they don't want their exports and own economies crushed, must respond with their own money-printing scheme in order to keep their currencies from rising too high against the U.S. dollar.

The silly and nonsensical statement coming out of the G7 nations caused even more problems, as it said the monetary policies promoted wouldn't be focused on the debasing of currencies. That's an outright lie, as printing money by definition is the debasing of currencies. Period.

Unless the nations agree to stop printing money and start to really cut back on government spending, the currency wars will continue on, and currencies will continue to fall in value, as the U.S. dollar has to the tune of over 95 percent since the inception of the Federal Reserve 100 years ago.

Counting on most people - including financial and economic writers - to not understand currencies, the G7 made the laughable assertion it was committed to exchange rates driven by market forces. Again, if that was the case, they would stop printing money and shrink the size of government.

Anyone who thinks this is being done allows themselves to be lied to because exchange rates have been manipulated by central banking policies for decades. It's the ramping up of printing to gigantic levels that has forced the issue out into the open; not the decision by Japan to print more yen.

The ECB has been attempting to shrink its balance sheet, with banks paying back cheap money printed by the central bank in 2012. If the U.S. and Japan continue to expand their money supply, the euro will undoubtedly rise against the two currencies, which will result in the region having to respond with an effort to weaken the euro.

It's improbable Japan will stop its strategy (although it may publicly assert it does), so a full-blown currency war involving numerous nations could expand. The question is when will the U.S. stop its part in the wars and cut back on its outrageous printing of money. Until that happens, we'll see this continue to be an issue; one that will worsen before it gets better.

Dow 14,000 Irrelevant Says Bogle

In an interview with CNBC, Vanguard Group founder John C. "Jack" Bogle, said the Dow hitting 14,000 "doesn't mean very much." He added that it's something "I can contain my enthusiasm about....”

The Dow closed Friday at $14,009.79, jumping 149.21 points. That brings the Dow to only about 155 points from the highest closing it has ever had of 14,164.53.

While retail investors have started to return to the market slowly, the fact that they haven't poured into the market is probably a good sign. Bogle said, “When mutual fund investors pile into equities, it's usually a very negative sign for the market.”

For the first three weeks of January, only $6.8 billion in net inflow came into mutual funds based in the U.S.

Concerning the failed Federal Reserve policy, Bogle said he opposes the idea of the Fed attempting to raise the price of stocks, as even if there is some success in that regard, it actually distorts the discovery of what the market is really saying.

“I don't know if anybody down there knows whether they are low or high at any time. I think the Fed should try to stay out of trying to influence the stock market. I think let the market decide.”

This also could be a reason a lot of businesses continue to hold back on expansion, as when forces like the central banks interfere in the market, it makes it more difficult to make decisions because it's harder to project the future probabilities because of the price distortions.

Bogle sees the U.S. economy growing at from 2 to 2.5 percent in 2013.

Currency Wars the New Normal

Even though some people such as International Monetary Fund chief economist Olivier Blanchard have attempted to downplay the stimulus released into economies by central banks around the world, which has resulting in currency wars, the reality is that more countries will respond to the aggressive actions of the Federal Reserve, which has been the institution that fired the first, gigantic salvo, which has instigated the wars.

Bizarrely, Douglas McWilliams, who is over the Centre for Economics and Business Research, based in London, blames the Bank of Japan as the entity that launched the currency wars, even though the United States has aggressively debased the U.S. dollar for several years.

Most other developed nations are looking closely at the value of their currencies versus the U.S. dollar, especially China, Germany, and the European Union, as they will respond in kind if it looks like exports, and thus growth, will be seriously hampered by the easy-money policies of America and the Federal Reserve.

It's unlikely these practices will end any time soon, as the Federal Reserve is committed to creating money out of thin air in order to attempt to grow the U.S. economy, even though the practice continues to fail to reach that goal, even while the debt continues to pile up.

Currency Wars Heating Up

With domestic economic health at stake of a number of countries at stake because of the Federal Reserve's continual debasing of the U.S. dollar by printing an almost endless stream of money, a currency war has quietly broken out as nations attempt to devalue their own currencies in order to keep exports competitive on the world market.

Of course the currency war has been going on since the Federal Reserve implemented QE2 in August 2010, but it's ramping up because of the continual plunge in value of the U.S. dollar against a number of currencies, which in turn makes exports from other countries more expensive.

Japan is the latest player in the stimulus fiasco to boost their part in the money wars, with new Prime Minister Shinzo Abe committing to printing billions in yen to lower the value of the currency.

This will put pressure on other Asian players, who will be sure to respond in kind.

Other central banks printing money recently, along with the Federal Reserve and the Bank of Japan, have been the Swiss National Bank, the Bank of England, and the ECB.

To give an idea of how the Federal Reserve has attacked the U.S. dollar, it has plummeted by approximately 11 percent in value since the first round of quantitative easing in 2009.

Expectations are many other countries will debase their currencies through central bank stimulus in order to protect their exports.

This should be very positive for commodities, and investors need to take a close look at this, especially in regard to how Asian nations outside of Japan respond to the unfolding circumstances.

Over the long term this will be a disaster as the central banks attempt to unwind their positions.

Gold's Safe Haven Status Back in Play

In the short term the market knew that if Mitt Romney had been elected president the price of gold and silver would probably have went through a temporary drop, based on the actions of what a President Romney would have done.

On the other hand, the market also factored in a win by Barack Obama would be good for gold and silver, with expectations being Obama would continue to implement the same failed policies he did the first four years of his Presidency.

That has born out well so far, as the price of gold continues to rise immediately after the election, although there are other factors coming in to play.

The most significant is the safe haven play, which has grown as the presidential race played out.

No matter what is done going forward, there is little desire in Washington for politicians to take the needed steps to deal with the economic disaster and the policies that have been behind the cause of it, including an unfettered Federal Reserve that sees only printing more money as the answer to economic weakness.

This is happening in light of a stronger U.S. dollar, which suggests investors understand it's a faux strength, and not one that is inherent to the currency. The only reason it still is perceived by some as a safe place to park their money is that other major economies also have had their central banks throw money at the problem as well, resulting in the currencies moving down in value together, giving the impression of things going on as usual.

But the move in gold price confirms that a growing number of investors know that this is the case, and gold will continue to rise in response to that reality over time.

Continually in the background is also the ongoing sovereign debt crisis and Europe and the march of the region into recession; which is ensured now.

All of this would be enough to push gold and silver prices up, but we haven't even seen significant, official inflation yet, and once that kicks in, all bets are off as to how high the price of gold and silver will go. It's only a matter of when, not if that happens.

Finally, China and other Asian countries appear to be buying up a lot of gold, offering price support to the precious metal, and over time, if China is bolstering its gold supply for the purposes of acquiring other commodities in the future, this will add even more strength to gold, driving up the price even further.

The VIX, which measures the fear factor, has also been rising recently, confirming there is more fear in the market than there has been, providing more incentive to place capital in gold.

Unemployment in Spain Surpasses 25 Percent - ECB Awaits

The economic news for Spain continues to worsen, as the National Statistics Institute said in Madrid that the unemployment rates has soared past 25 percent, to stand at 25.02 percent. That's up from 24.6 percent in the last quarter.

Projections are the economy of Spain will continue to sputter, with unemployment probably reaching 27 percent in 2014.

Painting a much rosier picture is the Prime Minister Mariano Rajoy, who sees the employment picture improving in 2013, and the Spanish government saying the economy will drop by only 0.5 percent. Economists watching the situation see it contracting by almost 1.5 percent.

This puts even more pressure on Rajoy to apply for the loan aid offered by the ECB, although he asserts he feels no pressure to do so at this time.

According to an analyst with Madrid-based consultant firm Analistas Financieros Internacionales, Sara Balina, she told Bloomberg that the third-quarter wasn't nearly as good as the data suggest, as "they were distorted by a temporary increase in demand before a value- added tax increase and by exports that may suffer from weakening growth in the euro zone.”

Although positioning for time, it's clearly approaching when Spain will have to apply for financial aid, which it is delaying in having to do because of the austerity measures included in the package.

The only question is how far and how long will the politicians in Spain go and wait until they finally do what everyone knows they'll have to do: apply for the aid.

This will result in the price of commodities, especially gold and silver, rising significantly, which along with QE3 from the Federal Reserve in America, will push the price of the precious metals up.

Silver, Gold Await Printing Presses

While there is no doubt the Federal Reserve and other central banks around the world will continue to ramp up the money printing presses, we remain somewhat in a holding pattern, at least in the United States, after Ben Bernanke announced the Fed will buy $40 billion in mortgage-backed securities on a monthly basis indefinitely, with indefinitely measured by the health of the job market, with hints the Fed and Bernanke want to see it at about 5.5 percent.

Even though some business and economic writers and investors have attempted to paint gold and silver has having reached a plateau at this time, with the probability they will fall in price, there is not doubt nothing will stop central banks from feeding the out of control spending habits of governments around the world, and the price of gold and silver will continue to rise over the next 10 years, with gold and silver miners, which currently, for the most part, are enjoying low valuations, will bring investors solid returns, especially for silver investors, where the gold-silver ratio continues to be far higher than historical levels, standing far beyond the usual 16 times ounces of silver it takes to buy an ounce of gold, to weigh in at a hefty 54 times the usual amount it takes to buy an ounce of gold with silver.

That alone will dramatically push up the price of silver, as its historical ratio to gold should have it stand at over $100 an ounce as of this writing.

So in the short term, in spite of the announcements by the Federal Reserve and the ECB to stimulate the respective economies of the United States and the euro zone, they still haven't launched their buying programs, which has temporarily kept the price of silver and gold in holding patterns.

It's apparent in the case of Bernanke that he's waiting to implement QE3 when it is seen as not an attempt to influence the upcoming presidential election. With that soon to end, it won't be much long afterwards when it'll begin, and then silver and gold will jump, and it could even before that as investors begin to price in the effect of the stimulus on precious metals, and the resultant fall in value of the U.S. dollar.

For the European Union, what is causing the holdup there is the temporary decision by Spain to attempt to make it appear they have a chance of not needing the money to bailout its economy. That's a fallacy, and largely based upon the need to make it look like they're fighting to keep their people from having to face forced austerity in order to secure the loans.

But like Germany, it will cave on the borrowing end, just like the German leaders do on the lending end. Spain will accept the loans, and when they do, that will also cause silver and gold to rise in price.

One uncertainty in regard to currencies is the major competitors are all debasing their currencies through stimulus programs of one type or another, so it's unclear whether there will be much in the way of the impact of the fall in the U.S. dollar on gold and silver. In that regard inflation and safety will be the impetus behind the rise in the two precious metals; much more so probably than the weakening of the U.S. dollar. Again, it depends on how the market reacts to and views the impact of QE3 in the U.S., and if it deems it as more dramatically weakening the U.S. dollar against major competing currencies, we could see it push up the price of silver and gold even quicker and further than most think.

Another short-term consideration is the selling off of assets by those making decisions based upon tax strategies. That could push down silver and gold some as investors sell off at foolishly low prices. But there is no doubt the duo will continue to rise, even in the short term, as you simply can't bet against the practices of the Federal Reserve and other central banks, which have placed a floor under the precious metals, and which will soar up from there for years to come.

It's a matter of how to invest in silver and gold, not whether you should.

Finally, it is believed that QE3 could even expand beyond the $40 billion spent monthly as Operation Twist comes to an end. The thought is Bernanke will probably start to buy treasuries again in an attempt to jump start the economy, even though that has repeatedly failed to achieve results.

Gold and silver miners, because of ridiculously low valuations will soar in price as an asset class, with some doing far better than others of course. But the rising price of silver and gold, and the relatively new focus on dividends will be a powerful attractant to investors, who will be able to cash in on both fronts if they invest in the right companies.

Another element to watch is mergers and acquisitions among miners, which will make a lot of money for those that can anticipate where those moves are likely to be.

Of course in the end, gold and silver are first a place of safety and hedge against inflation, so that is the number one priority for those putting money in the precious metals. But with little in the way of growth in equities, they will increasingly be looked at by general investors as places they can also make money over time. That will also push up the price of miners, which will benefit everyone holding positions in them.

The silly talk of a gold or silver bubble is off the table at this time, as the everyday investor has yet to really enter the market in a significant way, and until that happens en masse, there is little we need to be concerned about concerning a bubble.

We will need to watch it closely, but we have yet to see the outrageous bidding up of gold and silver prices, and even when that does happen, which shouldn't be for a while, it can sometimes take several years before the prices stop climbing.

For now, investors way for the printing presses to start up, and when they do, there is nothing in the way to keep the price of gold and silver from jumping in the short- and long-term.

Currencies and Central Banking

A lot of clueless or dishonest economic writers in the West at times attempt to make a big deal out of how China is "manipulating" their currency by pegging it at a certain level against the U.S. dollar. But the truth is Western nations are doing the same, except they're doing in a stealth mode that the general population doesn't understand.

The best example of that is the United States, Great Britain and the Euro zone, all of whom, via the U.S. Federal Reserve, the Bank of England and the European Central Bank (ECB), employ strategies to manipulate their respective currencies against one another and other currencies to keep the competition from being overly volatile, to the detriment of one currency against another.

That is done simply through inflating the currency, or in other words, through the printing of paper money, or the creating of digital money out of thin air. If one country does it, such as the the United States when the Federal Reserve announced its most recent round of quantitative easing by buying up $40 billion in mortgage-backed securities indefinitely, other countries will do it as well to ensure their currency doesn't become too strong against the U.S. dollar, which would be detrimental to exports in the country or region.

So if one currency gets weaker, the strategic response is to weaken the competing currency in order to order to keep a predictable balance between the currencies.

This is what maddens these dishonest countries concerning China, which is actually much more honest in its currency policy, announcing it right out in the open and pegging it to the up and down movements of the U.S. dollar.

The Japanese, British and nations of the Euro zone do the same thing, only through the mechanism of printing more money, rather than pegging their currencies to the U.S. dollar; the results are the same, but just hidden behind the smokescreen of money creation.

As those in power continue to strive for a one-world government and economic zone, these are the tools used to hide their practical agenda, as few people understand what's really going on and why.

Moves like this continue to strike a dagger into the heart of free markets, as currencies should be allowed to float freely against one another without government and central banking interference. That's where the markets will determine the outcome and response to it, not central planners who believe they can control the economic world.

The point is we must be vigilant and aware of what is happening and why concerning currencies, as they play a major part in any investment decision across a wide spectrum of equities and commodities.

Because central planners always will fail, eventually this will change as one important country or another decides to go their own way in order to protect their own interests. When that happens some of this currency scenario could quickly change. But for now, it appears there are some deals being made behind closed doors to keep some of the volatility out of the currency market.

Silver Will Outperform Gold Going Forward

Gold and silver will continue to be a safety hedge in regard to inflation and a place of safety, as out-of-control governments continue spending and central banks continue to feed their addiction.

Contrary to any political leader today, with the exception of Ron Paul, there is no will to deal out the medicine that would be needed to halt American and other nations from going off the fiscal cliff.

There are some emerging in the Tea Party movement, but I think there it'll take some years before they are trained enough in economics (assuming they understand the need) to be able to make the right decisions for America over the long term.

They have the instincts right concerning slashing government spending and reducing the size of government, but there still a need for them to learn that the Federal Reserve must be abolished or there will never be an end to the hellish practices that are economically destroying the nation.

The Federal Reserve is the rich uncle enabling the irresponsible child to continue on in their ways. Only cutting him off will do the job, but the rich uncle has basically destroyed the child be making him dependent upon his for sustenance. That's the case today with America and other countries that have given out government promises of economic security and protection, with central banks financing them as the main economic growth engine of these countries.

All of that is falling apart, as evidenced by Europe, and it will spread everywhere that those unsustainable practices are employed.

Now as far as all this relates to gold and silver, gold is primarily the hedge that is used by knowledgeable investors to protect their assets against this government and central bank folly, with silver its weak cousin throughout a lot of history.

While gold will continue to rise up over time, as there will be no real steps taken to stem the tide of government promises. As already has been shown, people will rise up - most times violently - in response to what they have been socialized and trained into believing is their right, when it is no longer available to them, silver will rise up even more.

I say this because historically, the ratio between gold and silver has been at about 16. In other words, it would take sixteen ounces of silver to buy one ounce of gold.

So where gold prices stand today, at about $1,725 an ounce, the price of silver should be at somewhere about $108 an ounce. But it has been hovering around $32 an ounce instead. That makes the gold-silver-ratio about 54 today.

The fact that silver has more than doubled from $15 an ounce three years ago to over $31 an ounce today, points to the fact that investors are seeing the unfolding currency crisis, which only hard assets like gold and silver can protect against.

Historically, the price movement of silver usually soars when a currency crisis emerges, and it will outperform the price of gold. At least that's the usual practice. And while silver hasn't outperformed gold over the last decade, the hefty price movement of gold will keep it from moving up in the way it has over the last ten years, as measured by percentages. Silver, on the other hand, is poised to soar, which will bring it back closer to the historical ratio it has usually enjoyed.

This has happened several times since World War I, and will surely do the same over the next several years, and maybe out as far as a decade. A number of commodity and silver experts see silver as being among the best asset classes to own over the next ten years.

There is no certainty as to when gold will breach the $2,000 an ounce mark, but when it does, and as silver moves towards its historic ratio of 16, we could see silver at $125 an ounce. And as gold prices move higher, silver will ultimately adjust and go upwards with it.

All of this of course assumes the current practices of the central banks and governments continue. There is nothing in the near term that would suggest it will change in any way for years to come. Hi-Ho Silver!

How Far Can Gold Prices Rise? $5,000? More?

We are living in extraordinary times in relationship to the price of gold and its correlation to the quantitative easing programs put into play by major economic global players around the world.

So while the idea of gold soaring to price of $5,000, and possibly even to $10,000, while seemingly outrageous for the uninitiated, could in fact become a reality, dependent upon how economies respond to previously failed stimulus measures, and how those nations deal with the growing amount of debt incurred as a result of creating money out of thin air.

A couple of major factors are the debasement of currencies and how high inflation will rise.

Gold prices will largely move on those two factors, especially when the U.S. dollar and other currencies fall in value and are no longer perceived to be places to safely park one's capital.

The major problem with predicting the price of any asset is usually those who understand where things really are, tend to get overly excitable and project prices reaching certain levels dates which are too short in duration. Afterwards, most investors don't believe the probable numbers because of the many failed short-term predictions. But that doesn't mean the underlying assumptions are false, just that the people making the predictions usually are doing so to garner attention to themselves.

That aside, gold will continue to be in a bull market for some time to come, and bubble status hasn't come close to reaching proportions which could actually be identified as such in any meaningful way. The price of gold,, in other words, isn't close to reaching the top yet, and nowhere near enough casual investors have entered into the gold fray yet to allow speculative investing to push the gold prices up. As a matter of fact, we're not even close to that to use the term "bubble" in relationship to gold prices. It will happen someday of course, but is likely to be years away, as well as a much higher price away.

Even those with a much more conservative bent see gold climbing to $2,000 over the next 12 months or so, and possibly as soon as a few months from now, which could be around the early part of 2013.

With the direct connection between the price of gold and creation of money out of thin air, the current practices of open-ended stimulus by the Federal Reserve - the central bank of America - and the lack of effect on helping the economy, all that's really happening is a growing debt load and rising inflation, with nothing positive in return. That is a extraordinarily positive environment for gold, and as well for silver, and both will benefit over the next decade or so, and possibly much longer, depending on the actions of governments and central banks during that time.

The only reason the U.S. dollar hasn't appeared to totally collapse, is other major economic players and their central banks have taken the same actions, which masks the fall in value of the U.S. dollar, because their currencies are also falling. It's more accurate to measure any currency and its value against gold than other currencies, as they're generally simply moving in lock-step with one another because of similar actions taken by central banks, which negates the fall in value of the U.S. dollar.

All of this is to say there is no political desire or will to stop the creation of funny money, and until and if that happens, or is forced to happen, there is absolutely nothing to keep the price of gold to continue on to new heights.

In the end, we're in totally uncharted territory as far as the amount of money being printed, national debt, and amazingly high unfunded liabilities. In the United States alone unfunded liabilities are over $220 trillion (that's not a typo).

But even with these unprecedented numbers, the underlying elements that push the price of gold up are still in place, and because they're increasing in number, as far as money creation goes, and it's only a matter of time before inflation of major proportions set in, gold prices will continue on their upward trajectory, and while it's impossible to know how high it'll go and how long it will take, we're going to continue to see an amazing story unfold concerning gold, and those riding the trend will continue to see their wealth grow with it.

At this time there is no reason to fear a gold bubble, as it's unlikely we're even in the early stages of one. But there will be a time when it arrives, yet even then history has proven the price of gold can soar for some time before it settles back down to earth. We're not close to being there yet, although there will continue to be corrections, which for now must be considered buying opportunities.

So will gold reach $5,000 or even $10,000. It's totally possible, although there is no way to put a time frame on it. All of this will be determined by central bank actions and government policies. Look to Europe to note that governments have little will to implement austerity policies, even though they must if they are to survive. Each government continues to attempt to kick the can down the road and hope it doesn't stop on their watch. One day it will, and gold and those investing in it will wildly benefit from it; even more so than they have in the past in all likelihood.

We are in uncharted territory will central bank money printing and government debt and obligations around the world, that means the price of gold is also in uncharted territory, and all we can do is follow the actions and trust what we know to be the consequences of the practices of these two entities. Nothing will change gold price movements as they relate to the actions of governments and central banks, and how it has responded in the past will continue to be the same in the future until there is in fact a real gold bubble. We're not there yet.