Gold Marches in the Printing Money Parade

 @MikeObelm.obel@ibtimes.com
on November 10 2011 1:58 PM

Our own Fed started it, the Bank of England followed and now the European Central Bank is likely on the verge of joining in.  PRINTING MONEY!

Am I the only one sick of hearing about Europe and its on-again-off-again fixes to debt crises?  If there was a reasonable fix, don't you think they would just get on with it?

I think the message is clear.  Europe is about to embark on its own shock and awe QE initiative.  According to a recent Reuters report, the ECB, albeit reluctantly, has been buying bonds issued by its troubled states in order to stave off threats of default.  However, of the 300 billion Euros available for deployment toward this effort, only 115 billion remain.  

According to Elwin de Groot, senior market economist at Rabobank, If you look at the past two months, they have bought about 5.5 billion euros each week, so continuing that trend actually would mean that they run out of fuel somewhere around the first quarter of next year.  

Italy has been the most recent beneficiary of the ECB's bond buying spree.  Who's next?  It appears the dominoes are starting to fall.  And, what happens when the 115 billion euro cushion expires?  Is that when the ECB finally joins in the money printing parade?  

I, for one, believe the entire world will embark on some variation of Quantitative Easing.  That spells global inflation.  Some are of the opinion that when Europe prints money, the resultant appearance of dollar strength will drive down the gold price.  The charts beg to differ.  

Prior to the most recent Bank of England's printing of 75 billion pounds in early October, the gold price rested below the $1600 per ounce level.  Today, even after the retracement of the last two days, the gold price sits near $1750 an ounce.  It is hard to make a case that foreign printed currency somehow erodes the gold price.  Inflation is inflation and if it's foreign inflation (through new QE measures) that drives the dollar higher, then gold becomes cheaper to foreign investors who hold dollar reserves.  

Like they say, it's always midnight somewhere.  So it is with gold.  Somewhere in some currency it is cheap.  Cheaper gold means higher demand which then leads to less supply and more upward price pressure.  And the parade marches on.

Is the gold price about to break loose to the upside?  Is the dollar's recent strength just smoke and mirrors?  Check out this FREE Video and see for yourself. 

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