Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
How Inflation Changes Retirement Benefit Choices - 17th Dec 14
The Real Reason It's Tough to Beat the Stock Market - 17th Dec 14
Russian Currency Crisis and Debt Defaults Could Create Contagion in West - 17th Dec 14
How to Profit From Russia's Stock Market Crash - 17th Dec 14
Russia Crisis - If You Put Your Money in the Bank Will You Get it Back? - 17th Dec 14
Crude Oil Price Crash, U.S. Employment and Economic Growth - 17th Dec 14
Opposing Forces At Play In Gold and Silver Precious Metals Complex - 17th Dec 14
Wall Street Will Always Find An Excuse For Not Raising U.S. Interest Rates - 17th Dec 14
Torture, Terror And Elite Schizophrenia In The UK - 16th Dec 14
Eurozone Conflict Will Bring a Major Stocks Buying Opportunity - 16th Dec 14
Viewing Russia From the Inside - 16th Dec 14
Gold and Silver Stocks Bottom - Are We There Yet? - 16th Dec 14
The Financial Industry Pigmen Win Again - 16th Dec 14
Crude Oil Price Epic Blowout - 16th Dec 14
Asian Stocks Markets: Sand In The Gears Of The Bull Market - 16th Dec 14
U.S. Dollar Trend Forecast 2015 - Video - 16th Dec 14
Silver Price Bottom? - 15th Dec 14
Gold Price Base Building Bullish Pattern - 15th Dec 14
Stock Market Probable Pop-n-Crash Today - 15th Dec 14
Stock Market Time for a Bounce - 15th Dec 14
Stock Market Euphoria: The Mother of All Ponzi Schemes - 15th Dec 14
Gold - The Weight of Time as Trend - 15th Dec 14
U.S. Dollar Collapse? USD Index Trend Forecast 2015 - 14th Dec 14
The Rushing Stocks Bear Market and How to Prepare - 14th Dec 14
Gold and Silver Dreaming of a White Christmas - 14th Dec 14
Cyprus-style Bank Bail-ins to Take Deposits and Pensions - The Global Bankers' Coup - 13th Dec 14
How To Renounce Your US Citizenship And Become Stateless - 13th Dec 14
Stock Market Downtrend Underway - 13th Dec 14
Gold And Silver - Wall Street, aka United States, Pulls Off Another Destructive Coup - 13th Dec 14
U.S. Congress Has Guaranteed the Secular Stocks Bear Market is Not Over - 13th Dec 14
Gold and Silver Starting to Show Bullish Signs - 13th Dec 14
Arab Spring II is Coming Fast - The Unintended Consequences of Lower Oil Prices - 13th Dec 14
Commodities - Is Inflation Oversold? - 12th Dec 14
Stock Market SPX Top Valuations - 12th Dec 14
Scary Stocks Investors Should Shun in 2015 - 12th Dec 14
New York Times on Benefits of Gold in Currency Wars - 12th Dec 14
Will Crude Oil Kill The Zombies? - 12th Dec 14
Largest Financial Bubble in History - 10 years of 'Why Sell Now?' - 12th Dec 14
How the Rising U.S. Dollar Could Trigger the Next Global Financial Crisis - 12th Dec 14
Central Banks and Government Policies Control the Markets Myth - 12th Dec 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Dramatic Stock Market Selloff

Future Silver Prices and Inflation- Bernanke Says Don’t Worry

Commodities / Gold and Silver 2012 Dec 28, 2012 - 07:21 AM GMT

By: Dr_Jeff_Lewis

Commodities

The aftermath of dramatic balance sheet expansion is bound to be a rebound in inflationary pressures, but Fed Chair Ben Bernanke said the central bank is not going to react to a short term increase in current inflation.

Basically, if the FOMC is convinced that a rise in inflation today is going to be reversed in the future, they are not going to do anything to offset it with a rise in benchmark interest rates.


So, if inflation picks up in the here and now, then that is not going to worry Ben Bernanke because he is going to look beyond that to the future.

Unpredictable Flow and Predicting the Aftermath

Strangely, Bernanke specifically said that he is not going to look at increases in the price of globally traded commodities.That means inflation in oil, food, energy and basic materials, which includes key commodities — like silver — that are essential to each of those sectors.

It seems that if all of the Fed’s recent money printing activities creates an increase in oil prices or food prices, Ben Bernanke is not going to care. Of course, the net effect is going to depreciate the U.S. Dollar, which the world is already selling, so perhaps you should too.

When it comes to guessing which way the hot money will move, inflationary monetary policy offers no real control over where that highly liquid capital flows to.

It's All About Interest Rates

How does the Fed propose reversing inflation? Well, by raising interest rates and then attempting to sell the toxic securities on its balance sheet.

Nevertheless, rising interest rates after the greatest expansion of sovereign debt the world has ever seen will immediately crater a fragile economy already teetering on the edge. Market interest rates would soar and should easily eclipse tax revenue collections.

The Fed obviously knows this, and it will continue to manage perceptions as long as the market consensus is willing to believe or their survival depends on it. The U.S. central bank has already discounted the future by many generations in the hope that markets will follow its increasingly tenuous lead.

Banks’ Market Manipulation Facilitates Charade

Many participants in the market now know that the manipulative actions of central banks have made prices in financial markets essentially meaningless.

By controlling interest rates, the central banks have destroyed interest rates’ important function of providing information about holding intrinsically valuable assets like silver and gold.

In the meantime, the age of sub-$100 silver hangs in the balance between bullish fundamentals and the ability of bullion banks to pull off the modern equivalent of alchemy by turning metal into paper as captured regulators look the other way.

This charade can only last so long.

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.

Dr. Jeff Lewis Archive

© 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