Perhaps saying gold is “down” is a bit strong, maybe “downish” might be a better description as gold prices adjust to gains by the dollar. There’s also been an odd spike up in early trading this morning, though it’s too early to say if that will hold.
Gold was down yesterday morning $0.27 to $1,571.49 and silver was off $0.07 to $26.99, raising the silver/gold ratio to 58.2.
The strength in the dollar is directly related to weakness in Europe, which has taken on an aura of continuous crisis. Germany’s leadership announced the obvious when they suggested there is no quick fix for the problems the EU is facing. The latest round of talks between European finance ministers has dissolved into still more finger pointing.
For the U.S. the seemingly endless Euro-crisis has been largely good news. The gains in the dollar have not spurred a rise in interest rates. The Federal Reserve can continue loose monetary policies and the government can continue deficit spending without paying much of a penalty.
Another interesting trend coming into play is that we are losing touch with cash. Currently bills and coins make up just 7 percent of the money in circulation and, according to a recent Rasmussen poll, 43 percent of Americans have gone a week or more without paying for anything with cash or coins. Our cash has become nothing but numbers in a computer, not worth the paper it’s printed on because there isn’t even any paper.