Below is an interesting chart. I ask myself, how can the S&P 500 just have hit an all-time high when earnings are plunging?
Of course the answer is the inflationary QE to Infinity policy of the Fed. All that money, $45 billion a month on newly printed money, goes to the banks and the Wall Street firms get first shot at it. (The other $40 billion a month goes to purchase bonds and hold interest rates down.) With QE holding down interest rates and making bonds a poor investment, the funny money is pouring into the stock market – and a strong economy or strong profits are NOT the reason. It’s all about QE.
We live in an upside down world.
The QE that is the fuel for the rise in stocks has – and will again in the future – fuel the rise in gold. QE will sink the dollar and gold will be the beneficiary. Count on it.
Of course, this begs the question, “Why did gold fall if QE is inflationary?” There is no logical answer – other than it was pure paper manipulation on the COMEX! Since gold (and silver) didn’t plunge due to an “event” or to a change in fundamentals that are not gold friendly, then gold (and silver) will recover quickly. There is a “Price Put” in place now for gold. The lower the paper price, the greater the demand – especially in India, China and the Middle East. Not to mention the retail business here in the US is so strong that there are shortages, delays and rising premiums on physicals. Check out the graphs in Andy Hoffman’s comments, below.
Those of you who are waiting for a fall to $1,000 (along with Larry Edelson and a couple of other newsletter writers) may be disappointed! Eric Sprott, Jim Sinclair and Ted Butler are very bullish now. You can choose to view this anyway you wish, but I believe the odds are great that the bullish scenario will prevail now.