In all the discussion and debate about the Fed’s targeting interest rates into 2013 at these very low levels, it was overlooked that Bernanke & Company might have given Wall Street what it wanted — QE3. By targeting rates, or better put by pegging rates, the Fed was sending a message: If the world’s markets intend to drive U.S. interest rates higher, the Fed stands ready to drive them back down. It then buttressed that position by stating it was ready to use whatever “tools” it has at its disposal to stave off a deeper recession.
The two components need to be viewed as part of the same policy; a double barreled approach the main feature of which, as time goes by, will likely be renewed, or continued, purchases of U.S. Treasuries across the maturity range. How else would the Fed presume to hold down interest rates over the next two years? And, if so, how is this approach different from the previous versions of quantitative easing?
Many hoped that the markets would get an announcement of QE3 at the most recent Fed meeting. I think they got it and it explains why gold prices jumped over the $1800 level and the stock market bounced back after the fiat$ looking like it was ready to go over the cliff.
CALVF GOLD chart TA Alert bull breakout strong :-)
CALVF chart TA alert bull breakout overdue :-)
September is one of the best seasonal month for gold - a short snippet below:
The Nixon Shock Heard ‘Round the World - Aug 15th, 2011 12:36 by News
By severing the dollar’s convertibility to gold in 1971, the president ushered in a decade of inflation and economic stagnation.
By LEWIS E. LEHRMAN August 15 (The Wall Street Journal) — On the afternoon of Friday, Aug. 13, 1971, high-ranking White House and Treasury Department officials gathered secretly in President Richard Nixon’s lodge at Camp David. Treasury Secretary John Connally, on the job for just seven months, was seated to Nixon’s right. During that momentous afternoon, however, newcomer Connally was front and center, put there by a solicitous president. Nixon, gossiped his staff, was smitten by the big, self-confident Texan whom the president had charged with bringing order into his administration’s bumbling economic policies.
…The most dramatic Connally initiative was to
“close the gold window,” whereby foreign nations
had been able to exchange U.S. dollars for U.S. gold—an
exchange guaranteed under the monetary system set up
under American leadership at Bretton Woods, N.H., in July 1944.
Recently the markets had panicked.
Great Britain had tried to redeem $3 billion for American gold.
So large were the official dollar debts in the hands of foreign
authorities that America’s gold stock would be insufficient
to meet the swelling official demand for American gold at
the convertibility price of $35 per ounce.
GOLD August a good month for the harvest and wedding festivals begin in September in India --- the world's largest consumer of gold.
Then come year-end holidays in the United States and finally Chinese New Year.
By late December, Gold demand can be up to the moon as a Safe Heaven in future foresight for the People with fiat$currencies in the Gold basket -
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