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September 27, 2011 / Jeb

Why Did Gold and Silver Selloff?

The boards have been awash in a sea of red for precious metal investors.  After Operation Twist many forget the underlying reasons why the U.S. dollar (UUP) is rallying.  A few weeks ago we highlighted that Japan(FXY) and Switzerland(FXF) fired a shot heard around the world in an attempt to remain competitive in the global marketplace.  The rapid rise of the yen, a traditional safe haven currency, threatens Japan’s economic survival in an increasingly competitive world arena.  This holds true for the Swiss as well.

The franc and the yen were seen as safe havens compared to the U.S. Dollar.  This interventional action into the foreign exchange markets is the third time this year that Japan has had to resort to drastic measures of buying U.S. dollars in order to devalue the yen.  The Swiss, Japanese and U.S. surprise has sent the dollar soaring.  There appears to be a coordinated effort to boost up the dollar.  This is good for the struggling European problems as the indebted PIIGS can pay off their soaring debts with cheap Euros (FXE).  Finally, a dollar counter-trend rally has occurred.

Read the full article  discussing the recent correction in precious metals by clicking here…

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