With gold and silver hitting new highs and the dollar breaking to new recent lows, today King World News interviewed James Turk out of London. When asked about the US dollar decline Turk stated, “Here we are right at the lows and in fact we are actually now probing the November 2009 lows on the dollar index. The interesting thing is that the low in 2009 on the dollar index that is when the Greek crisis started to unravel and people went into the dollar as a safe haven.”
“And here we are right at those lows again, the Greek crisis is reemerging because apparently they are going to have to restructure those debts and there are going to be some losses taken, and no one is going to the dollar as a safe haven. To me that suggests that we are very close to this waterfall decline in the dollar that we have been talking about.”
When asked what will precipitate the waterfall decline in the dollar Turk replied, “Ultimately it’s going to be the loss of confidence in paper currency and the promises from Bernanke that he’s going to fight inflation when it occurs, and everybody knows that there’s a lot of inflation that they are not fighting.
The politicians unwillingness to cut spending or have any kind of discipline forced on them, the S&P credit rating, putting the US government’s AAA rating on negative credit watch, cumulatively all of these things like one stone at a time or one straw on the camel’s back, eventually the camel’s back is going to break.
That’s why when I talk about a waterfall decline, I think we are really at that stage where this is going to go all at one time. The Scottish historian Niall Ferguson has a very good description he says, ‘We live on the edge of chaos’, and what he means is that if you keep putting bits of sand on top of a pile, one grain of sand at a time it looks really pretty until you have one grain of sand too much and the pile collapses.
It’s the same thing here with the dollar, the news is just continually bad. There is nothing being done to put the dollar on the right course and we are going to have one little news item whether it’s Greece, Portugal, budget deficits in the US, who knows what? Chinese unwilling to buy US debt securities, can’t really forecast what that one little news item is going to be but that will break the confidence and then you are going to see that waterfall decline.”
When asked about silver specifically Turk replied, “I don’t see the shorts panicking yet. I think we are getting to the stage though where people are afraid to add new shorts into the markets simply because of what’s been happening with the price. So I’m still looking for my $50 target and when we were speaking on Monday I said it could happen in a couple of weeks but we’ve gone up a couple of bucks in just the last couple of days.
So yeah, you are going to get that short covering and you are going to get the panic and it’s going to take things higher.”
Turk covers tremendous ground in this interview, it is available now and you can listen to it by CLICKING HERE.
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