Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
Gold Prices Hit 13 Month High as ECB ‘Bazooka’ Shoots Blanks


 -- Published: Friday, 11 March 2016 | Print  | Disqus 

Gold prices climbed to a 13-month high in dollar terms overnight ($1,282.51) after the increasingly adventurous, dare one say reckless, European Central Bank unleashed its latest ‘bazooka’ and initiated more interest-rate cuts, a significant extension in currency printing and bond purchases and also a potential subsidy to banks lending.

gold_euro_march_2016

Gold in EUR – 1 Year

Draghi cut the ECB’s deposit rate by a further 10 basis points to minus 0.40 percent, and its main refinancing rate to zero and announced that the ECB may buy nearly a whopping €1 trillion in corporate debt.

The move was even more dovish than expected and confirmed, if any confirmation was necessary , that the ultra loose monetary policy adventure has intensified and will actually deepen in the short term.

Gold reached 3 year highs in euro terms at €1,161.40 per ounce on Monday after 4% gains last week – likely anticipating ‘Super Mario’ Draghi’s latest attempt at pulling a rabbit out of the hat. There is likely an element of ‘buy the rumour and sell the news’ as year to date euro gold has already eked out strong gains of 17%.

On the announcement yesterday, the euro fell initially versus gold from €1,135 per ounce to €1,155 per ounce prior to reversing and falling back to €1,135 per ounce as the euro strengthened. Gold in euro terms was actually marginally lower by the close yesterday and is marginally lower this week after the multi-month record high on Monday.

euro_wild_ride

Huge volatility was seen in all markets as Draghi surprised even the monetary doves by making already ultra loose monetary policies even looser. This was most evident in the foreign exchange markets where despite deepening currency debasement the euro surged in value. Versus the dollar, the euro surged from 1.082 to over 1.11 in minutes or a near 3% surge. By the end of the day, the euro had surged from 1.082 to over 1.121 or a move of over 3.6% in a few hours.

Such volatility is more akin to a casino rather than a stable foreign exchange market between two leading international mediums of exchange. It is great for and welcomed by CFD providers, spread betters, brokers, hedge funds and speculative banks. But it has real world economic consequences for small and medium enterprises and all EU companies and international companies trading in the EU. Such volatility and extremely rapid moves in the value of the two world’s leading trading currencies is a sign that something is very wrong with the monetary system.

It will likely badly impact many employment generating companies in the import and export sectors and is not good for the trading of goods and services internationally and for world trade. Trade and commerce, the backbone of the economy is being put at risk in order to protect the interests of banks and a dysfunctional banking, financial and monetary system. This is a simplification, but it is largely the truth.

The strength of the euro yesterday was counter intuitive and given the scale of manipulation in markets today may have been due to intervention. A collapse in the value of the euro during and immediately after Draghi’s speech would not be welcomed by monetary moderates – labelled hawks – in the Bundesbank, in Germany and elsewhere in Europe and indeed by savers and depositors throughout the monetary dis-union.

Stocks moved higher briefly prior to giving up gains as did bonds. This is likely due to Mario Draghi saying that he didn’t anticipate further rate cuts. Stock and bond markets are now hopelessly addicted to the cocaine of cheap money and currency debasement. Something that will not end well and bodes ill for these markets.

The ECB’s drastic action reeks of panic and was not the panacea that “cheap money” addicted banks and markets had hoped for.

“Insanity is doing the same thing over and over again and expecting a different result.” So said Albert Einstein and the ECB is in danger of not realising that its QE programme and ultra loose monetary policies are failing. You cannot print your way to prosperity and it may be slowly dawning on market participants that you cannot print your way out of deflation.

Markets remain subject to a weird combination of irrational complacency and significant denial. But beneath this comes a deepening concern amongst the smart money that the imbalances that brought the global financial system to its knees in the first financial crisis remain and are in many cases worse today.

There is a distinct whiff of 2008 in the air. However today, the belief in central banks as monetary saviours of the universe is increasingly in doubt. Indeed, there are real and growing concerns that they are contributing to the creation of much bigger financial bubbles with similar if not worse consequences.

The financial insurance that is physical gold has never been more important to own.

LBMA Gold Prices
11 Mar: USD 1,262.25, EUR 1,136.50 and GBP 883.03 per ounce
10 Mar: USD 1,247.25, EUR 1,137.04 and GBP 876.67 per ounce
09 Mar: USD 1,258.25, EUR 1,146.69  and GBP 884.16 per ounce
08 Mar: USD 1,274.10, EUR 1,155.69 and GBP 894.35 per ounce
07 Mar: USD 1,267.60, EUR 1,156.96 and GBP 896.13 per ounce

 

Mark O'Byrne
Executive Director

 - www.GoldCore.com


| Digg This Article
 -- Published: Friday, 11 March 2016 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.