As the dollar weakens, consumers will pay a higher dollar price for their metals in the knowledge that the price in their local currency has not changed. So what effect is the brave Hank Paulson’s TARP –Troubled Asset Relief Program – going to have on the metals markets, if any? I say brave because as he is acutely aware, history will judge if this will be viewed as a successful market support in the face of potentially a 30’s style depression or a colossal act of socialist style intervention at the alter of western capitalism.

The fact remains it has and will continue to have an impact on the US dollar.Opinions vary, some think it will undermine the US financial system, raise public debt and hence weaken the currency. As we have seen, that could lend support to metals prices and either halt the slide in metal prices or even cause a reversal in direction. We err more on the side of the usually thoughtful Financial Times which analyzed the similarities to a smaller undertaking the

So although there will be currency volatility in the short term as a result of TARP, the probability is in the medium term it will contribute toward a return to banking and currency stability. This in turn will contribute to stability in metals prices – at least as far as speculative plays are concerned.