Stocks were hammered Wednesday as the debt ceiling debate in Washington goes down to the wire. Adding to the concerns were fresh credit downgrades in Europe and a lousy report on durable goods here at home.

But here’s the surprising thing: Precious metals, which have been doing so well this month — and had been the focus of my previous posts — fell under intense selling pressure, too. The reason is that, with all the fears about a U.S. debt default and downgrade, the U.S. dollar is catching a big bid on safe haven flows. As people sell risky assets, they need to raise cash.

So the ironic thing is that while gold and silver moved higher during the past few weeks on anticipation of a panic sell-off, now that it’s actually arrived, precious metals are being sold. Hard.

This has happened before.

A great example of this can be seen in the way silver imploded back in May when the U.S. dollar spiked after Seal Team Six killed Osama bin Laden. Suddenly, it felt like America had gotten its mojo back. Global financial markets responded by sending the dollar higher, ending a long, four-month downtrend.

For most of us, it was all good. Bin Laden was dead. We felt a surge of pride and patriotism. Gas prices dropped. And inflationary pressures cooled thanks to a stronger dollar.

But because the dollar has a close relationship with risky assets, Wall Street panicked. Silver and gold fell first. Crude oil and a long list of other commodities followed, including industrial metals and copper. Then foreign stocks. U.S. equities came under pressure in June. And finally, corporate bonds suffered a dramatic sell-off June 16 that marked the end of the drop.

Clearly, more than anything, the dollar is calling the shots here — and right now, the greenback is saying that gold and silver are due for a pullback. You can see the relationship outlined in the chart above — with the red arrows showing silver pullbacks connected to dollar rebounds in blue.

To take advantage, I’ve recommended my newsletter subscribers look at the two primary short metal ETF plays in the space: The ProShares UltraShort Gold (NYSE:GLL) and the ProShares UltraShort Silver (NYSE:ZSL). The ZSL tends to be the more sensitive of the two.

Disclosure: Anthony has recommended GLL and ZSL to his newsletter subscribers.

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The author can be contacted at anthony@edgeletter.com. Feel free to comment below.