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The markets appear to be anticipating a banking crisis.
If confidence is lost in the commercial banking system, the following is a reasonable outcome:
- There will be a rush to invest “cash” money (previously held in banks into treasury bonds backed by the government as opposed to the FDIC
- The gold price will explode upwards
- The US Dollar will not move inversely to the gold price. More likely, it will also rise, albeit less violently as the “safest” and “most liquid” treasury markets are denominated in US$.
When read together, the long term charts of all three investment categories are in fact pointing to the increasing probability that confidence in the integrity of the commercial banking system has been eroding.