Yen Weakness Creates Risk-On Gold Raid
The Yen smashed through Â¥100 yesterday just in time to push the Euro below $1.30 today, taking Gold, Silver and U.S. Treasuries to the cleaners.Â Yesterday’s rumor of more Fed jawboning about the end of QE started the rout and today the follow through occurred.Â It is, at this point, nearly comical to watch this situation unfold.Â As the Fed desperately tries to convince the world not to invest in the one thing that it cannot control, Gold. So, Gold dropped back towards $1420 this morning before Uncle Ben opened his mouth to speak and then recovered back near $1450 on the close.Â Another buying opportunity for those that like shiny metal, I guess.Â And with the Yuan surging it only makes things even that much more attractive and shiny.
Oh sure, they can muck around with the paper price all they want and since they truly believe that their paper has value and Gold doesn’t that if they just keep pushing yield and prices lower eventually everyone will cry, “Uncle Ben’s Perverted Markets Rulez!” and buy more paper.Â It’s a nice theory but it’s not true.
The more they try to lock everything down and force more money into equities the more Gold flows from their vaults to those in the East.Â I remember when I first started studying monetary policy and theory I came across an insight by one of the great Austrian economists who very pithily said that in the end all the Fed does is print money, everything else is just variations how they go about it.
So, the money junkies keep printing and the world keeps buying.Â The only thing they know is money printing.Â Yes, they can push yields on bonds around and force people to buy some of them, but it won’t matter in the end.Â At some point the music stops and the game is over.Â When that happens Gold will rise to levels you won’t understand.Â if you don’t have it now, you will be bankrupted.
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.
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