this is peter spina on why gold can rally even against a strong dollar. it's just a matter of the other currencies being weaker. silver hasn't participated yet in the flight to safety, but i thik that's only a matter of time.

Peter Spina, of Goldforecaster.com, summarizes: "Gold is pushing against the $900 technical resistance area as the financial crisis ensues and elevates. Yes, the US Dollar Index is doing well, but remember that it is just a relative measurement against other paper currencies. The true measure is against gold and today we are witnessing gold rise against a strong US dollar meaning it is rising even more in € gold terms and other foreign currencies.

“When you have a slowdown of credit creation you have a liquidity crisis and as the situation accelerates to new levels, more desperate actions are being taken. Today the Federal Reserve announced new measures to keep the system from collapsing. By increasing short-term loans (84-day loans) to $225 billion from $75 billion and another $75 billion of 28 day loans, doubling short-term loans to $300 billion.”

Even without the big bailout, these are impressive numbers. Has the dollar, as Spina puts it, “been sentenced to death?” It could remain strong against the euro or sterling, but at least vs. gold, that looks to be the way to bet.

http://caseyresearch.com/displayDrp....