Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
The Ultimate Demise Of The Euro Union - 1st Sep 14
Palladium Price Breaks Multi-Year High Over $900 - 1st Sep 14
When Complexity Becomes Chaos - 1st Sep 14
Designer War By Default - 1st Sep 14
Islamic State or Russia? Ten Key Questions Towards Pragmatism - 1st Sep 14
Mixed Emotions for the Gold Market - 1st Sep 14
These Clowns Are Dragging Us Into War with Russia - 1st Sep 14
Marx And The Capitalist Cancer Of Overproduction - 1st Sep 14
Scottish Banks Salivating at the Prospects for an Independent Scotland of 6 Million Debt Slaves - 1st Sep 14
Small Man Europe Is Now In “Effective State Of War” With Russia - 31st Aug 14
The Unintended Blowback Of False Flags - 31st Aug 14
Tesco Supermarket Death Spiral Latest Profits Warning and Dividend Slashed - 31st Aug 14
Dow, Gold and Silver - A Last Stand, A Fake Out And A Surge - 31st Aug 14
If U.S. Consumers are so Confident Why aren't They Spending? - 31st Aug 14
Scotland Independence House Prices Crash, Deflationary Debt Death Spiral - 31st Aug 14
Obama’s “Catastrophic Defeat” in Ukraine - 30th Aug 14
Stock Market Inflection Point Approaching - 30th Aug 14
Gold And Silver - Elite's NWO Losing Traction. Expect More War - 30th Aug 14
Corporations Join Droves of Americans Renouncing US Citizenship - 30th Aug 14
Peter Schiff U.S. Housing Market, House Prices Bubble Warning - 30th Aug 14
Russia, Ukraine War - It’s Time to Play the “Gazprom Card” - 29th Aug 14
The One Tech Stock Investment You Should Never Sell - 29th Aug 14
Bitcoin Price $500 as Current Downside Barrier - 29th Aug 14
Don't Get Ruined by These 10 Popular Stock Market Investment Myths - 29th Aug 14
Low Cost Transcontinental Gold - 29th Aug 14
Gold Bullish Central Banks Should Give Money Directly To The People - Helicopter Janet? - 29th Aug 14
US House Prices Bull Market Over? Trend Forecast Video - 29th Aug 14
The Fed Meeting at Jackson Hole Exposed Yellen’s Greatest Weakness - 29th Aug 14
AAPL Apple Stock About To Get sMACked - 29th Aug 14
A History of Unlimited Money: Learn From It or Repeat Its Mistakes - 29th Aug 14
How You Can Play to Win When Market Makers Are Calling the Shots - 28th Aug 14
EU Gas Supply Is In Real And Imminent Danger - 28th Aug 14
Central Banks at the Root of Evil - 28th Aug 14
European Bond Market: Bubble of all Bubbles! - 28th Aug 14
Employers Aren’t Just Whining: The “Skills Gap” Is Real - 28th Aug 14
The ISIS Menace - Just What We Need, Another War - 27th Aug 14
The Risky Business of Methane-Rich “Fire Ice” - 27th Aug 14
CFR Recommends Policy Shift that is Very Bullish for Gold - 27th Aug 14
Ukraine Standoff Signals Global Power Shift - 27th Aug 14
Stock Market Panic Decline Begins - 27th Aug 14
The Monopoly of the Government Education Cartel - 27th Aug 14
How to Invest in Silver Today for Double-Digit Gains - 27th Aug 14
The Big Solar Energy Breakthrough We've Been Waiting For - 27th Aug 14
U.S. Empire’s Bumpy Ride - 27th Aug 14
Gold Market and the Interest Rate Trap - 27th Aug 14
Stock Market Staring Into the Great Abyss - 27th Aug 14
A Look at the Coming 30-year Inflation Cycle - 27th Aug 14
Forex Trading - Will USD/CHF Rally Above 0.9200? - 27th Aug 14
Europe’s Depressing Economy Dog Days of Summer - 27th Aug 14
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 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