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XMFSinchiruna (27.47)

QE to Infinity

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March 17, 2011 – Comments (8)

The phrase belongs to gold guru Jim Sinclair, but I found this corroboration by Macr Faber of the concept of QE to infinity (as a consequence of the negative feedback loop that sinclair outlined in his "formula" back in 2006) extremely compelling. Time and time again, I have found that the right guys to be listening to during this period of protracted financial crisis are the likes of Faber, Sinclair, Jim Rogers, and others who recognize the extent to which Fed interventions don't solve crises, but rather merely disguise, prolong, and even exacerbate the scale of the crisis in the final tally.

8 Comments – Post Your Own

#1) On March 17, 2011 at 8:27 PM, embodiedheart (69.37) wrote:

to infinity and beyond!

 

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#2) On March 18, 2011 at 9:44 AM, XMFSinchiruna (27.47) wrote:

Gold Price Management 101

If you're a Japanese investor, your yen denominated gold holdings just took a punch to the guts. You can see that quite clearly in the chart below, courtesy of Bullionvault.

Obviously this is a reflection of the surge in yen against all currencies, including gold. In fact, this price action is a good time to remember gold doesn't move in price at all. It is the paper currency it is measured against that moves.

So let's get this straight. As the US dollar fell heavily against the yen, it was rallying in gold terms? Hmmm...

"the sell-off didn't take place during Asian trading. If you look to the left of the chart, you'll notice that the gold price was actually rising as the Nikkei was taking a bath."

Only during London trading, and as New York opened, did gold start to suffer heavy selling. Now you could argue that London is the largest market for gold trading and any major selling takes place there. But surely you would've expected to see weakness in gold during Asian trading too?

If you think the gold price is not ‘managed' by central banks then you're really not looking hard enough. The management scheme has certainly become very sophisticated via the use of massive amounts of derivatives, which is essentially paper gold.

From Wikipedia: ‘The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods System of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.

Gold is the only warning siren for the international monetary system. Forget the nonsense written about it going up because of ‘concerns about inflation'. In a fiat currency world, there will always be inflation. When the system that produces the inflation starts to wobble and break down, as it is now, gold will let you know.

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#3) On March 18, 2011 at 12:03 PM, Jbay76 (< 20) wrote:

Marc mentioned an interesting point about "all bets are off if a melt down occurs".. I wonder, if a meltdown occurs, what will happen to PM prices, especially shares of mining companies like RBY, GLP, SLW?

 

Great clip though, thanks Sinch!

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#4) On March 18, 2011 at 12:06 PM, jtnrt330 (< 20) wrote:

Chris,

It is interesting to me how the Bank of Japan got the cooperation of the G7 to knock down the Yen (just alittle market manipulation) - fast I might add - shows me that they are keeping the prices of Gold and Silver way below the levels they should be.  In this time with what is happening G and S should be shoaring - dollar down, Yen now down, Euro down, fear.

 Also, put in the fact that the supply of Silver is at a 2-3 month wait for the actual product - supply/demand price is not adding up. 

So, I agree with you 1000000% it is being "Managed" - nothing is adding up!!!!!

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#5) On March 18, 2011 at 12:45 PM, jesusfreakinco (28.92) wrote:

Apmex is about bone dry right now.  Interesting...

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#6) On March 18, 2011 at 1:34 PM, jtnrt330 (< 20) wrote:

jesusfreakinco,

Industrail use supply is 2-3 month out - why silver so low?????

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#7) On March 18, 2011 at 3:57 PM, silverminer (30.62) wrote:

The market will discover fair value eventually... time and truth are on our side.

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#8) On March 21, 2011 at 3:11 PM, jtnrt330 (< 20) wrote:

Chris, 

 Read Trader Dan's input into the deliveries of Silver, with the thought that the Shorts are going to get squeezed.......

http://traderdannorcini.blogspot.com/search?updated-min=2011-01-01T00%3A00%3A00-08%3A00&updated-max=2012-01-01T00%3A00%3A00-08%3A00&max-results=50

Interesting........

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