For now please consider the following:
From David Rosenberg:
It’s all good. Equities are rallying, led by the emerging market space with a hefty
1.7% advance today. China is now up four days in a row — the longest winning streak
in two months. U.S. equity futures are bid (maybe also responding to some recent
GOP gubernatorial successes — Virginia and New Jersey yesterday).
Bonds are selling off. Credit default swaps improved 20bps. The U.S. dollar is
softening again as it struggles near its 50-day moving average and the reason being
cited is that the Fed press statement today will acknowledge the recovery but stop
short of discussing any ‘exit strategy’ or removal of “extended period” when it
comes to discussing how long the funds rate can be expected to scale the zero line.
With the dollar soft, commodities are firming with oil breaking above $80/bbl and on
its way for a third winning session in a row; the metals are following suit. Gold
has broken out yet again and is up another 1% so far today as it begins to challenge
the $1,100/oz mark (according to unofficial IMF estimates, the Reserve Bank of India bought gold at $1,045/oz.
With the size of the purchase (8% of annual mined production) and at that price it certainly helps establish a floor!
The fact that the yellow metal is accomplishing this with ongoing deflationary developments — Euroland PPI came out for September and showed a 0.4% MoM decline and a -7.7% YoY trend — suggests that other factors are driving bullion to new bullish heights. It’s called scarcity of supply relative to fiat currency.
I am continually reminded lately about the instability that is still building in the global monetary system thanks to extreme leverage and currency debauchment. The reader can see more on this topic on the Oct 16 post in the archives titled "Schrodinger Wave Hypothesis".
I will leave the reader with two quotes to ponder:
"I find it simply fascinating how little is currently being written about the big bull market in gold. Where anything is written, it's almost a warning that 'gold is volatile,' that 'speculators are driving gold up,' or that 'the gold shorts are simply being squeezed.' Never a word about the Fed creating new inflationary oceans of liquidity, never a word about the dollar losing its purchasing power, never a word about real money rising against all other asset classes. Silence reigns regarding what could be the most significant bull markets in recent history."
"We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."