How does a stronger dollar and higher interest rate affect gold prices and why?

In theory, a stronger dollar with higher interest rates should keep gold prices down.

(It’s worth noting that “higher interest” rates are a completely false idea. Yes, we have higher interest rates than last year… but the difference is so small that the average investor would never know the difference between the two.)

But that is now what is happening. The dollar is strengthening and gold prices are going up.

So what the heck is happening?

Even though the US has some serious financial problems, the rest of the world is in even worse condition. So, this is making the US look like the best option.

The US is:

• The cleanest shirt in the dirty clothes pile.
• The nicest looking horse in the glue factory.
• The least crashed car at the junk yard.

So the dollar is strengthening… and gold is going up…

This is because even though the dollar is gaining support, savvy investors realize why this is occurring and they are purchasing gold at the same time.

Smart investor sell when things are high and buy when things are low… these investors are seeing that the dollar is high and gold is low.

That means investors are buying gold with dollars.