The end of QE is bullish for the Dollar. Note that the Fed has ended QE and the European Central Bank is threatening QE. This is Dollar bullish and Euro bearish. The US Dollar ETF held its support zone and surged to affirm support at 22.60. Gold gave us a little preview of the Fed policy statement by breaking down last week. This break held as GLD consolidated in the 118 area. GLD continued lower after the Fed announced the long awaited end to quantitative easing, which is Dollar bullish and bullion bearish. I will not move key resistance to 119.
Tag: gold is money
Regarding the US dollar, global confidence for it as reserve currency has definitely started to wane. Without a return to sound financial and monetary policy the US dollar sooner or later will be questioned sooner or later. I am absolutely certain, that the renaissance of gold in classical finance will continue.
I have written many articles about Gold, about the Unadulterated Gold Standard, about the components of a Gold based economy. Perhaps it’s time for a bit of a ‘reality check’. Is the very idea of Gold money, the very idea of honest money in an honest society Utopian? Especially in this day and age, an age of the big lie, of tyrannical governments, of crony capitalism, of loss of human vitality…
The interesting part for us, gold enthusiasts, is the price of gold in the slaughtered currencies. Gold in Argentine’s Peso is up 30% in the last 30 days; it is trading at all time highs.
Gold in Turkish Lira’s is up 17% in the last 30 days; it is trading just 10% below its all time highs of September 2011.
Only gold serves as the objective measure of value necessary to act as the numeraire. It is no coincidence that the quantity of monetary gold is not fixed, but has elegant mechanisms to expand and contract in response to changing market demand.
In his latest video appearance, Peter Schiff explains in detail the difference between gold and bitcoins. His main point: gold is real money because it has an intrinsic value! People want gold for itself. Yes it can also be used to exchange but it has a value unique to itself. It has its own properties that are desirable; there is nothing you can do with a bitcoin except give it to somebody else.
Excessive monetary stimulus and low interest rates create financial bubbles. This is the biggest debt bubble in history. It is a potent deflationary force and central banks are forced into deploying increasingly aggressive offsetting inflationary forces.
During a recent webinar by TheStreet.com a gold expert panel discussed the question if gold is still in a bull market. The outcome of the discussion was that gold being in a bull or bear market is somehow irrelevant. The gold price does matter, of course; owners of physical gold have a hard time stomaching the recent price decline. But the key point is that gold is a currency. So owners of PHYSICAL gold are holding the metal as an insurance policy against a currency crisis. Obviously that is not the trader’s perspective.
Today not one country has a currency tied to gold. However, as the fiat currencies get devalued to deal with the sovereign debt crisis gold demand will soar. The problem and opportunity we see is that the supply is already maxed out. So if a wave of demand comes we could see the gold price move rapidly on supply and demand fundamentals. Inflation will simply be the icing on the cake.
It seems very likely that physical gold is moving from weak to strong hands which is the people who recognize the monetary value of gold and chose to physically own it. They prefer to hold their metal which they consider more important than price swings. On the other hand, the investment community is not at the point yet where they chose for the metal for its monetary protection.
While we reported earlier this week that Arizona was as good as ready to adopt gold and silver as legal tender, after the Senate voted 18-10, it now appears that Arizone Governor Jan Brewer vetoed. In this short article we publish the letter that the Governor has written in which he explains his veto.
This week it is Arizona who is one step away of adopting gold and silver official as currency on a state level. The Senate voted 18-10. It is the governor who needs to sign off (but could refuse as well in extremis). The bill will make gold and silver coins legal tender as of mid-2014.