Now you see why the economy and especially the stock market faired as well as they did. How do you think they will fair, going forward, without QE?
I have not given up on Jim Sinclair. No one is right all the time, not in this heavily manipulated marketplace. Logic dictates that the Fed must continue QE in one form or another or interest rates will rise, and that is a political disaster since it will badly affect GDP and the stock market. Interest rates will not remain low with foreign countries backing away from our Treasuries and interest rates are the lowest in decades. The buyer of last resort IS THE FEDERAL RESERVE. Will the Fed follow the Bank of Japan and eventually purchase virtually all the maturing bonds? Until and unless interest rates rise high enough to cover “risk” and a fair return, the Fed can’t drop out. Gold is now suffering the wrath of the fickle hedge funds and the horrible manipulation of commodities by the bullion banks. Let them have their short-term day in the sun. This will turnabout sooner rather than later and the investments that are now being shunned (gold, silver, platinum, etc.) will lead the way back up. It must end up that way. Inflation is on the way, best shown when the dollar reverses direction and then the currency debasement of the dollar will push prices up. Not demand, but currency-driven. Don’t be fooled by the temporarily strong dollar. Its foundation is hot air and sand.
Now check the following two reports out from Jim Sinclair and Zero Hedge. They should be on your short-list of must reads.
My Dear Extended Family,
The Japanese central bank has stepped in to replace the US Federal Reserve’s QE.
The US Federal Reserve will step into MA (Monetary Accommodation) to maintain low interest rates after the end of QE.
The dollar is up in a mirror image to low yen as a result of their QE. Gold is down because the dollar is up and because an important Swiss vote is pending that could go quite pro gold.
Nothing has changed. This will make the gold internet Trolls wild.
– Jim Sinclair, jsmineset.com, October 31, 2014
Here is a report from Zero Hedge:
“The decline in asset yields especially during QE3 created large wealth effects. Since the Fed’s QE started at the end of 2008 the PE multiple of the S&P500 index (12-month forward) went up by five points, from 10.5 at the end of 2008 to 15.5 currently. This PE multiple expansion is responsible for around 650 index points or 32% of the current S&P500 index level. Extending that to the total stock of US corporate equities ($29tr currently), it implies an equity wealth boost of $9tr.” – Zero Hedge, November 1, 2014