at 1564.70, establishing new record highs (currently 1587.58
Gains in the yellow metal have been driven by safe-haven demand
stemming from the worsening of the eurozone sovereign debt
crisis and the failure of US policymakers to make any
substantive progress toward a debt ceiling compromise.
However, it was recent hints about the possibility of another
round of quantitative easing that really sent gold flying
and the dollar reeling.
The initial hint at QE3 came yesterday, buried in the minutes
of the June 21-22 FOMC meeting.
Then today, in Humphrey Hawkins testimony, Fed chairman Bernanke
said, "recent economic weakness may prove more persistent than
expected and that deflationary risks might reemerge, implying
a need for additional policy support."
As we already know, the Fed and Bernanke specifically, view
deflation as a far greater evil than inflation, and will
therefore take whatever action is necessary to prevent
the former.
QE3 is just the most obvious and easily implemented option
the Fed has, even though it has proven to be largely
ineffective in boosting the languishing US economy.
One could argue however that it has prevented deflation from
occurring, so it would be no surprise if the Fed began new
Treasury purchases if they see those deflation risks
rearing their ugly heads once again.
Heightened expectations of more debt monetization by the Fed
weighed heavily on the dollar over the past two sessions,
providing additional impetus to an already strong rally in gold.
Clearly the stock market loves the notion of more Fed
asset purchases too.
Global stocks were already on pretty firm footing when Bernanke
spoke, thanks to some robust economic data out of China.
These data mitigated concerns of a hard landing in China,
but also simultaneously increased the likelihood that the PBoC
would remain focused on inflation fighting.
The State Information Center, a leading government think tank,
suggested in a research report that, "The central bank should
raise the interest rates by one to two percentage points
further to ensure residents' wealth won't depreciate."
Based on today's Humphrey Hawkins testimony, it would seem that
the Fed chairman doesn't have similar concerns about
the wealth of American residents.
Investors are therefore prudently seeking protection
from currency dilution by buying gold.
by P. Grant
“The rule of law has basically been thrown out the window.
Money printing is the order of the day.
And when politicians take control of central banks, which they
have done in the United States and they are also doing in
Europe, that basically destroys the currency.
It puts the currency on the road to what I call
the Fiat Currency Graveyard, so I expect there are going to be
massive currency problems as we go forward.
The financial crisis that we have been dealing with for
the last several years has not been solved.”
So cautions James Turk, widely-respected precious metals expert
and founder/chairman of GoldMoney.
In this detailed interview (recorded in June), Chris and James
explore the probable outcome of the current US debt-ceiling
operatics, the likelihood of future Fed money printing, and
strategies for preserving wealth.
In short, James believes we are witnessing the decline of
the world’s major fiat currencies, and expects gold to be
remonetized in the aftermath.
By C. Martenson
GPL chart TA Alert Breakout Bull Start
ST strong bull start - filled the st. gap -
better sooner than later
LT TI Fib. new trend often to be 162% bull
of the previous lucifer ws bolsheviks bear corrections.
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