Gold and QEIV.

Recent events in the Gold Market reflect a number of financial trends that are converging: 1. the inability of QE to lift us out of economic problems; 2. the inherent contradictions of the FED's policies; 3. the deteriorating condition of finances in the world; 4. the loss of confidence in fiat money and 5. the lawless actions of fiscal authorities.

 

1. Contrary to the rosy reports of the Press, the US economy in the aggregate is not getting much better. The employment figures show that. We have the lowest labor participation rates in over 40 or 50 years. While, the Press is breathlessly reporting that 200,000 jobs were added last month, they fail to report that 100,000 people dropped from the labor force just in the black community. It takes about 300,000 new hires every month just to stay even, so a 215,000 figure is nothing to be jubilant about.

 

2. The FED has ended the QE program, or so they say. But, in order to keep interest rates low, they have to buy more bonds of one sort or another. As the FED continues to add more money, it also creates the money to finance the deficit. The FED is trying to fight deflation, yet it forces the banks to maintain excess reserves and to channel the new money into equities.

 

3. Europe continues to stagnates and even Germany is slowing down. In Japan, the government and the JCP are determined to destroy their currency. The conflagration in the Middle East (a result of Obama's capitulation to Islamic forces) is forcing money into the US Dollar, which makes it harder for American companies to export. In addition, the Saudis are determined to put American oil companies out of business by overproducing oil in order to drop the prices to a level where American companies have to stop producing. The break even price for our companies is about $90/barrel.

 

4. Loss of confidence in the Euro and the Japanese Yen is causing a loss of confidence in these currencies.

 

5. The FED continues illegal manipulation of gold prices. A graph of it is shown below.

 

 

The graph shows the latest smash of the gold price that began Oct 21. One hundred tons of paper gold was dropped into the Market within a few minutes. Since, a ton of gold costs $40,000,000, a hundred tons is not chump change if money is actually deposited.

 

Notice something else though. After the smash, gold bounced back on large volume. Is this the beginning of a turn around? Hard to tell. The turn around was larger than in June. But, the FED is capable of dumping in more confetti (or work through the BIS). Larry Edelson forecasts gold to go to $900+ in January before it turns around. Will the new Congress demand an audit of the FED? Will the true figures stop the illegal price fixing? Some people anticipate a new formal QE and an end to gold price suppression.