Facebook Contest & The Effect of the U.S Dollar on Precious Metals

Yesterday, the Royal Canadian Mint announced that it too was having to ration its sales of its popular Silver Maple Leaf coins. If you remember, the U.S. Mint suspended selling the Silver Eagles for a short time. It is evident that demand is outpacing supply.

Historically when the US Dollar goes down, the precious metals thrive.

Here is Citibank’s condensed outtake on what will happen with the debt ceiling and in turn to the U.S. Dollar:

No Coin + Temporary End to Debt Ceiling + Sequester = US Dollar Negative (Metals Positive)

  • As expected, Congress decided to install a temporary end to the debt ceiling
  • It is very unlikely that the Treasury will not pay its bills
  • It will put more pressure on the Fed to keep pumping liquidity into the US economy

A debt ceiling + a full sequester would equal a weaker economy and more pumping.

The U.S. Dollar would be the big loser and the precious metals market would be the clear winner. Remember, last time the debt ceiling issue came up, gold and silver reached all-time highs.

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