Unfortunately few market analysts will pose or even acknowledge questions of government intervention, even though, especially with the gold market, government intervention increasingly is a primary determinant of prices.
It’s easy to make a lot of money on highly risky illiquid stocks and look like a genius during a stock bubble. It’s even easier to blow up a fund and inflict financial damage on the investors when a bubble pops.
“The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion — policemen, customs guards, penal courts, prisons, in some countries even executioners — had to be put into action in order to destroy the gold standard."
Gold bull and bear markets is the theme of our opening piece this week. And what does all this money being pushed into the financial system mean? Hyperinflation as some are calling for? The U.S. job numbers were much better than expected. But were they? Underneath there is rot.
No one said it would be easy to get short at the top. This bull market is proving especially challenging to fade because the herd knows how grotesquely overvalued stocks are.
Several factors influence gold prices (mainly the US dollar, gold ETF inflows/ outflows, inflation rate, bond yields, safe haven demand, physical gold demand, gold supply) but none is more reliable than real interest rates.
The Federal Reserve may also be on the verge of restarting Operation Twist. Under that program, the central bank sells some of its short-dated Treasuries and buys longer-term bonds.
