We are in the midst of a dollar-caused rally in the market. This may be strange, considering the dollar is down about 10% against a basket of the top currencies over the last 3 months, but it is true. The weakening dollar is helping to sustain this rally by pumping up a lot of the energy and metals companies out there that will profit as our currency continues to weaken. Silver is up about 45% since the start of the year with much more room to grow. Oil is up about 30% over the last 100 days, and there is a lot more upside there as well.
Is a declining dollar good for the long term? Of course not. It is always the sign of inflation pressures, a weakened consumer, and global economic headwinds. What other country in the world could say that the day after their debt ceiling was raised to $12 trillion, their stock market actually went up?
With healthcare legislation on the immediate horizon, near 20% unofficial unemployment, and consumer savings rates at historic highs, we will be in for a very bumpy ride in the 4th Quarter.
But in the interim, we should take the short lived greenback rally while it lasts, and send a sarcastic thank you to our elected officials for their inadvertent meddling.
Disclosure: Long UDN, Long Silver
