Best of the Week
Most Popular
1.Stock Market in DANGER of Strangling the Bears to Death - Nadeem_Walayat
2. Germany Pivoting East, Exit US Dollar, Enter Gold Standard - Jim_Willie_CB
3.Flight MH17 – Kiev Flash Mob's Last False Flag? - Andrew_McKillop
4.Stock Market Crash Nightmare! - Nadeem_Walayat
5.Gold - The Million DOLLAR Question... - Rambus_Chartology
6.Gold And Silver – BRICS And Germany Will Pave The Way - Michael_Noonan
7.The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - Nadeem_Walayat
8.The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - Felicity Arbuthnot
9.Which Way is Inflation Blowing? Watch Commodities - Gary_Dorsch
10.U.S. Economy Quarterly Review and Implications for 2014-2015 - Lacy Hunt
Last 5 days
Stock Market Parabolic Collapse - Sowing the Seeds of the Next Depression - 30th July 14
How to Profit from the Russia Ukraine Conflict - 30th July 14
Greenspan: U.S. Economy Running Out of Buffer; Stock Market to See Significant Correction - 30th July 14
Rogue States And Loony Tunes - 30th July 14
Anne Elk’s Theory On Brontosauruses - 30th July 14
Our Totalitarian Future - Totalitarianism NOW! - 30th July 14
Stocks Bear Market Formation Revealed - 30th July 14
We Just Found “The Future” - 30th July 14
What the “Steak Bandit” Says About Asset Values - 30th July 14
Designer War By Default - Seven Types of Elite Madness - 30th July 14
Death of the U.S. Dollar? Gold an Inflation Hedge? Really? - 29th July 14
We’re Ready to Profit in the Coming Gold Price Correction—Are You? - 29th July 14
Their Economy Will Collapse, Including Ours - 29th July 14
Silver Prices – Megaphone Patterns - 29th July 14
Real U.S. Interest Rates - Fed Exit a Blue Pill? - 29th July 14
Why Israel Should NOT Exist, Just Like Any Other Rogue State - 29th July 14
Gold Still Looking Good - 29th July 14
Silver Price Set To Star - 29th July 14
Our Population Growth Totalitarian Future - 29th July 14
World War 1 Cause and Consequences - The Planned Destruction of Christendom - 29th July 14
Will Crashing Commodities Crash the Stock Market? - 29th July 14
Ukraine MH17 - Washington Thinks Americans Are Fools - 29th July 14
Stock Market Bubble Warning - 29th July 14
Gold Price and U.S. Dollar’s July Rally - 28th July 14
Second Quarter Corporate Earnings: Marching Toward a Strong Economic Recovery - 28th July 14
Time to Put a New Economic Tool in the Box - 28th July 14
Mossad in Gaza, Ukraine and the Cult Of The All-Powerful Elite - 28th July 14
Elliott Wave Gold Price Projection Since 1970 - 28th July 14
Investors Remain Uncertain As Stock Fluctuate Near Long-Term Highs - Will The Uptrend Extend? - 28th July 14
The Mass Psychology Of Decline - 28th July 14
Will the US Destroy the World? - Don’t Expect to Live Much Longer - 28th July 14
GDM and GDXJ Gold Stocks In-depth Look - 28th July 14
Stock Market One FINAL High? - 28th July 14
What It Means - Paradigm Collapse And Culture Crisis - 27th July 14
Wall Street Shadow Banking: You Can’t Taper a Ponzi Scheme: “Time to Reboot” - 27th July 14
6 Tips for Picking Winning Gold Mining Stocks - 27th July 14
Israel's War on Children, Exterminating the Palestinians Future - 27th July 14
Guilt By Insinuation - How American Propaganda Works - 26th July 14
Surprise Nuclear Attack On Russia To Liberate Ukraine - 26th July 14
Use "Magic" Of Gold/Silver Ratio To Greatly Increase Your Physical Holdings - 26th July 14
Derivatives Market Species Origins - Abuse, Props and Risks - 26th July 14
Stock Market Manipulation and Technical Analysis - 26th July 14
China’s Stock Market Finally Looks Like A Buy - 26th July 14
Ed Milliband Fears Israel Jewish Fundamentalist Gaza War Massacres Backlash - 26th July 14
The Big Energy = Power Battle Is Coming - 25th July 14
USrael - Zionists in Control of America's Goyim Brainwashed Second Coming Slaves - 25th July 14
More Weakness Ahead for Gold Miners - 25th July 14
Gold Price Strong Season Starts - 25th July 14
Geopolitics and Markets Red Flags Raised by the Fed and the BIS on Risk-taking - 25th July 14
Gold Lockdown Until Options Expiry - New Singapore Gold Contract Threatens Price Manipulation - 25th July 14
The Bond Markets, Black Swans, and the Tiny Spirit of Santo - 25th July 14
No Road Map For Avoiding The Future - 25th July 14
Israeli War Machine Concentrating Women and Children into UN Schools Before Killing Them - C4News - 25th July 14
Israeli Government Paying Jewish Fundamentalist Students to Post Facebook Gaza War Propaganda - 25th July 14
Why the Stock Market Is Heading For A Fall - This Time Is Not Different - 25th July 14
An Economic “Nuclear Strike” on Moscow, A “War of Degrees” - 25th July 14
BBC, Western Media Working for Israeli Agenda of Perpetual War to Steal Arab Land - 25th July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

The Direction of Silver Prices before QE Forever

Commodities / Financial Markets 2012 Sep 03, 2012 - 07:53 AM GMT

By: Dr_Jeff_Lewis

Commodities

The price of silver has moved up from $27.50 seen just a week ago to stage a test of the $31.00 level. Although technical traders may consider this market currently over bought, the fact remains that a bull market can stay over bought for quite a long time.

It will be interesting to look back on this rally that began in the wake of the Financial Times’ story about the CFTC’s lack of evidence and impending conclusion of its four year study into manipulation of the silver market.


As it stands, the big shorts remain active by virtue of the declining open interest.If this rally is sustainable, then the shorts seem to continue hoping they can cover at lower prices. Unless, of course, they are simply handling customer business that can readily stomach the paper losses.

What this implies for silver in the short term is anyone’s guess, as the world waits for the next coordinated monetary policy intervention that will largely determine silver’s longer term prospects.

Fed Hints at More QE to Come

Perhaps the most important driving factor for silver is that Fed policymakers are no longer talking about an exit strategy. They just talk about scope, room for more easing and new ideas for easing. Also, when will Japan intervene again?

One especially interesting indicator of monetary stimulus is the amount of Federal Reserve Credit outstanding. At the end of 1990, this amount was just $291 billion, but during the 91/92 recession, it rose to $342 billion over two years.

Another substantial credit expansion of $35 billion occurred in 1998, and again in 1999 as Y2K approached, leading to a record $108 billion rise for that year. The recessionary 2001/02 period then saw Fed Credit grows by $120 billion, leaving the total at $747 billion.

Nevertheless, the Federal Reserve then permitted a massive credit rise of $1.36 trillion in 2008 in response to the financial crisis, leaving Fed Credit at $2.247 trillion by the end of that year.

Perpetual QE on the Horizon?

The Fed now seems to be floating a trial balloon for the concept of perpetual quantitative easing. Remember how Operation Twist gradually evolved into ‘bond sterilization’?

Although there does not yet seem to be enough political will for more easing, if the new easing program can be made perpetual or recurring, it could provide a much-needed boost for the paper currency Ponzi scheme, while also lulling the masses by making QE seem normal and harmless. Another brilliant solution by the masters of perception!

In the Reuters article, "Fed mulls open season on bond buys to help economy”, the following passage clearly broaches the touchy subject of an open-ended QE program:

The Federal Reserve is considering a new approach to unconventional monetary policy that would give it more leeway to tailor the scale of its stimulus to changing economic winds.While fresh measures are not assured and the timing of any potential moves are still in question, some officials have said any new bond buying, or quantitative easing, could be open-ended, meaning it would not be bound by a fixed amount or time frame."I am inclined to think that if the Fed decides on more QE it would be of the open-ended variety," said Michael Feroli, chief U.S. economist at JPMorgan and a former Fed economist.

Contagious Money Printing Mentality Makes Inflation Virtually Inevitable

This worrying trend is not just seen in the United States. According to financial pundits, especially those located outside Europe, what the German court has to agree to so that the European Central Bank or ECB can start acting like a “real” central bank is really quite simple.

One New York based banking analyst summed it up like this: “Policy makers should empower the ECB to rescue banks,create a deposit insurance program and allow it to print money, like the Federal Reserve.”

All in all, this trend toward dilution of the value of paper currencies managed by central banks that permit an ongoing expansion of the money supply remains supportive of higher nominal prices for silver and other physical commodities as inflation appears virtually inevitable and endemic.

Furthermore, silver remains good value as one of the few hard assets still trading well below its inflation-adjusted highs. Even though silver’s price discovery mechanism remains dominated by a net and highly concentrated short position that commands almost half a year of global production, its future looks bright.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2012 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014