In the recent past, economic dislocation led to a flight to quality and Euro/Yen/Foreign problems led to dollar rallies. The recent Greek crisis, however, has led to a huge gold rally. The dollar is anemic. And why? Well, (a) the federal reserve is secretly and not so secretly helping out Europe to prevent a domino effect and (b) America shares all the same structural defects that have hurt Greece: overly generous social programs, too much debt, a decline in productivity and manufacturing, and lower skills and work ethic across the board. So, as a consequence, while the Euro has dropped to about $1.26, Gold has skyrocketed to $1240 this week.
Gold is the last refuge of wealth as paper wealth disappears. The fact that so much smart money is headed that way is the most worrisome development of recent times.