Currency markets have been favoring the dollar as there has been an exodus from the Euro lately.   The most liquid place for money to go fleeing the euro is the US dollar of course.

What is not being discussed much is that the dollar has perhaps more counter party entropy than even Europe if we use technical insolvency and aggregate debt obligations among current Federal Debt, projected Federal Deficits and State, County and Municipal and other Debt such as hospital bonds and the like and the long term unfunded mandates.

Looking at the intermediate and long view I am seeing the following:

1. Current US total debt is not repayable at current purchasing power levels of the US $

2. Gold and Silver remain the only real hard cash, unencumbered by insolvent counter party debtors.

3. Gold and Silver remain heavily suppressed by US and UK central bank and treasury shadow policy operations.

4. This makes this form of hard cash, and true long term safe store of wealth a particularly good deal at these prices if you can take possession of the physical metal and store it in your sovereign vaults, where it isn't merely a questionable ledger entry but a physically verifiable asset.

5.  All debt based, un-backed, fiat currencies will be systematically devalued to "pay" the debt down and the time in which they can continue to jaw bone the "strong dollar" policy will come to an end.

6.  There is no practical way the Fed can exit its Quantitative Easing program without causing another major drop off in real estate prices and sending the economy and the financial system into a crisis far deeper than the one from which we may possibly be just now slowly and tentatively exiting.  At a most delicate time like this, even talk of ending QE could push the system towards a tipping point.

7.  Greater public awareness of the manipulative operations by self serving quasi-governmental interests in the precious metals markets will bring increasing awareness of how to use the manipulators own strategy to obtain more physical metal at lower prices among the larger hedges, sovereign interests and even among the smaller savvy long term investors.

Bottom line:  The short term blip up in the dollar relative the a basket of other highly leveraged and indebted currencies is not actually very relevant to the fact that gold and silver remain very far below their inflation adjusted highs (gold at 1/2), (silver at less than 1/6th), and that it seems very likely that as this paradigm becomes more broadly understood, that gold and silver should easily travel well beyond on their inflation adjusted highs.    It would not take too much change in perception to see this happen very quickly in the silver market and just somewhat less  quickly in gold in my opinion.

Just a few weeks ago we read what Jamie Dimon of JP Morgan said comparing Greece and California in an article from Barron's:

JP Morgan's CEO, Dimon's statement that California is more of a risk than Greece

"…JP Morgan Chase (JPM) CEO Jamie Dimon this afternoon told investors at the company’s annual meeting that he’s more worried about California fiscal solvency than about Greece.

“Greece itself would not be an issue for this company, nor would any other country,” Dimon said, according to Dow Jones’s Matthias Rieker. “We don’t really foresee the European Union coming apart.”

However, given California’s size, “there could be contagion” if the state were to have problems servicing its debts, Dimon warned. …"

We have further evidence that the CDS Market believes this as well in this article in the Wall Street Journal Online:

U.S. Is Riskier Than Euro Zone; So Says CDS Market

"…

As U.S. CDS spreads expanded to their widest levels in two years, that cross-region gap blew out to 5.7 basis points last Friday before narrowing to 4.7 Tuesday.

Wider CDS spreads indicate that sellers of insurance against a particular issuer's default are charging more for it. In effect, the positive U.S.-versus-euro zone spread means investors think the risk of a U.S. default–however remote–is greater than that on euro-denominated sovereign debt…."

And finally we have this supporting article from cnbc.com:

State Debt Woes Grow Too Big to Camouflage

"…California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay…."

"…“If we ran into a situation where one state got into trouble, they’d be bailed out six ways from Tuesday,” said Kenneth S. Rogoff, an economics professor at Harvard and a former research director of the International Monetary Fund. “But if we have a situation where there’s slow growth, and a bunch of cities and states are on the edge, like in Europe, we will have trouble.”

California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation…."

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