Gold, Silver and “Crashing Markets”. It’s Ugly if You Look Under the Hood
Global Research, May 01, 2015
Url of this article:
http://www.globalresearch.ca/gold-and-silver-and-crashing-markets-its-ugly-if-you-look-under-the-hood/5446440
http://www.globalresearch.ca/gold-and-silver-and-crashing-markets-its-ugly-if-you-look-under-the-hood/5446440
Q1 GDP came in at .2% growth, this was a whopping $6 billion worth of growth for the quarter.
This number was an obvious disappointment as estimates were around
1%+. Of course the apologists were immediately out in full force to
remind us of how terrible the winter was and “weather” was to blame. I
would ask, isn’t that what “seasonal adjustments” are for? Steve
Liesman of CNBC even posed the question why seasonal adjustments are
“not working”. The obvious answer is because you can only stretch,
massage and outright lie about economic numbers so far before you cannot
any longer …because even the blind will see it.
Breaking
the quarter down and looking under the hood, were it not for the
biggest inventory build of any quarter in history, the quarter would
have shown a negative 2.6% growth rate .
What exactly does this mean? It means the consumer or final user has
shut off their purchases. It means “stuff” was produced but wasn’t
sold. The inventory build number was over $120 billion, can this happen
again in the 2nd quarter? And what if the end buyer keeps their
pocketbook shut again? Something must give, either the inventory gets
sold or the producers must cut back production drastically.
It is
worth mentioning that QE 3, the “final QE” ended in the fourth quarter.
Is this an example of the economy convulsing because the juice was
taken away? And let’s not forget, today (yesterday) was a Fed meeting
and announcement, can they possibly even hint about raising rates and
actually withdrawing some of the previous “juice”? Another “blame” is
being pinned on the strong dollar, can the Fed really raise rates and
put a further bid under the dollar?
What
does this mean for the future of the economy and more importantly the
financial markets? The markets are at record high valuations, the news
of an economy going in reverse can only augur for lower earnings. The
strong dollar can only augur for a Fed who doesn’t want a stronger
dollar. The leverage in the financial system is so thin already, can
the risk be taken that something will snap? I don’t believe so, I also
believe it will not be long before QE 4 gets floated seriously and then
implemented.
As I
wrote yesterday, “the money has to go somewhere”. It looks to me like
some sort of come to Jesus moment is close in both the economy and the
markets. If you have been awake, you understand the economic and
financial systems, are dichotomized yet so intertwined, a spark anywhere
means a fire everywhere! Literally hundreds of $trillions will be
shaken, some of it “shaken loose” and will look for a safe place to
hide.
All the
gold ever mined in history is worth some $6 trillion, what do you
suppose will happen when $10′s of trillions seek the safe harbor of
gold? No matter how you look at it, the Fed is in a box of their own
making, any action or inaction has the possibility of shaking the tree
and dislodging capital, forcing it to look for safety. The result will
be your “no offer” moment in time. As capital floods toward the only
monetary asset that cannot default, owners will pull their wares off the
shelf and withdraw their offers. This only makes sense because the
movements will be so large and so fast, no one will even know what
various assets are worth or where they will settle until after the dust
clears.
I leave you with this thought, if you need to build a fire or light a
cigarette, how much would you pay for a BIC lighter? The same could be
asked about “money”, if one needs to put capital somewhere that cannot
ever default (which is gold only), what is one ounce of gold worth? It
is crystal clear to me, when this question gets asked, it may take some
time for the physical market to clear and give an answer! The true
value of gold will shine as a vortex of defaults occurs.
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