You are here
King Report: Central planners fear their liquidity moving into gold
By Bill King
The King Report
M. Ramsey King Securities, Burr Ridge, Illinois
Friday, September 25, 2015
http://www.mramseyking.com/king-report
The most intriguing aspect of trading on Thursday was the surge in precious metals while stocks tumbled and the dollar declined modestly.
It's clear to most objective observers that the global economy is contracting. The mitigating factor for bulls is the hope and belief that central banks will increase or reinstitute QE. Obviously this yin/yang has been present for many months and it is the reason for the heightened volatility in markets.
We have argued that the recent sharp decline in global bourses is due to concern that further central bank largesse will not keep economies from contraction.
... Dispatch continues below ...
Silver Coins and Rounds with Employee Pricing and Free Shipping
Grab your Silver Starter Kit at cost from Money Metals Exchange, the company named "Precious Metals Dealer of the Year" by industry ratings group Bullion Directory.
Simply go to MoneyMetals.com and type "GATA" in the radio box at the top of the page.
This special silver offer contains 4 ounces of silver coins and rounds in the most popular 1-ounce, half-ounce, and 10th-ounce forms. Claim yours now, because GATA readers get employee pricing and free shipping.
So go to --
-- and type "GATA" in the radio box at the top of the page.
Over the past few days the usual suspects demanded that the European Central Bank, People's Bank of China, and Bank of Japan increase their QE. As economic data continues to deteriorate, the hope for and belief in more central bank stimulus is growing.
If a critical mass of investors believes that the global economy is contracting and central banks will increase stimulus but it will not boost the real economy, they will eschew stocks.
Eventually investors will move to tangible assets out of fear of currency debasement. If the fear of economic contraction is high, investors will favor precious metals over industrial commodities and stocks.
Over the past two weeks gold has rallied sharply while copper and stocks have declined. This is a resumption of the asset allocation of selling stocks/buying gold that first appeared in early August.
Central banks can tolerate and rationalize excess liquidity flowing into stocks; that can't get into the real economy directly. But the central planners become checkmated when the excess liquidity flows into gold.
Ergo, if the burgeoning shift in preference for gold over stocks develops into a trend, Yellen, Draghi, Kuroda, et al. will have a very serious problem -- a late-'70s environment that will be remedied only by Volcker-like policies.
* * *
Join GATA here:
New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
Wednesday-Saturday, October 28-31, 2015
https://jeffersoncompanies.com/landing/gata
The Silver Summit and Resource Expo 2015
Park Central Hotel, San Francisco, California
Monday-Tuesday, November 23-24, 2015
http://cambridgehouse.com/event/50/the-silver-summit-and-resource-expo-2015
Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:
https://jeffersoncompanies.com/landing/2014-av-powell
Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:
http://www.goldrush21.com/order.html
Or by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
http://gata.org/node/wallstreetjournal
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
