Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
More Clarity for the Short Term for Bitcoin Price - 22nd May 18
Study: A Rising and Strong U.S. Dollar Isn’t Consistently Bearish for the Stock Market - 22nd May 18
Gold, Silver & US Dollar Updates with Review of Latest COTS - 22nd May 18
Upside DOW Stock Market Breakout May Be Just the Beginning - 22nd May 18
5 Reasons Why Forex Trading Is Becoming Such A Big Deal In SA - 22nd May 18
Fibonacci And Elliot Wave Predict Stock Market Breakout Highs - 21st May 18
Stock Market Ideal Cycle Low Near - 21st May 18
5 Effects Of Currency Fluctuations On The Economy - 21st May 18
Financial Conditions are Still too Easy for the Stocks Bull Market to End - 21st May 18
US Stock Market Elliott Wave Predictions for 2018 and Beyond - 20th May 18
Are You Still Fearful of Cryptos? - 20th May 18
US Stocks - Why I am Short-term Bearish, Medium-term Bullish - 20th May 18
Looking for a Turn in Gold Price - 20th May 18
GDX Gold Mining Stock Fundamentals 2018 - 19th May 18
Semiconductor Stock Market Canaries: Chirp, Warble… Soon a Croak and Silence? - 19th May 18
Three Drivers of Gold Price - 18th May 18
Gold Market in First Tertile of 2018 - 18th May 18
What Happens Next When Small Cap (Russell) Leads the Stock Market - 17th May 18
Negative Signs for EUR/USD? AUD/USD - Battle - 17th May 18
DOW Jones and CRUDE Oil on a Cliff Edge, Waiting for a Nudge! - 17th May 18
Gold Price No More Subtleness – It’s Show Time! - 17th May 18
VIX Cycles Point to Stock Market Correction - 17th May 18
Trump Sounds End Times Armageddon Trumpet for Jerusalem, Israel Evangelical Prophecies - 16th May 18
Our Next Stock Market Dow Fibonacci Price Targets – Get Ready! - 16th May 18
The Coming Copper Crunch - 16th May 18
Stock Futures Are on a Sell Signal - 16th May 18
What to do When the IRS Comes for Your Property - 16th May 18
IS BITCOIN ANONYMOUS? - 16th May 18

Market Oracle FREE Newsletter

Trading Lessons

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

© 2005-2018 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

6 Critical Money Making Rules