Wednesday, February 20, 2013
Non iligitimi carbarundum
As gold dives day after day, we hear a chorus of Becauses:
Because the economy is strengthening
Because the unemployment situation is healing
Because housing is rebounding
Because Europe's ailments are behind them
Because the Market (stock Market) is a leading indicator looking out into the future and seeing good time ahead.
Not one of these becauses contain a grain of truth.
How do we know?
Because in a reasonably strong economy with reasonably strong employment and a stable housing market along with relatively healthy trading partners - there is no need for ZERO INTEREST RATES.
ZERO INTEREST RATES AND WILDLY NEGATIVE REAL INTEREST RATES is a symptom of a DYING ECONOMY.
It's like saying the body is healthy because the breathing is stable, and the muscles are responsive to stimuli and the heart beat is normal, and the eyes respond to light. All this indicates it is improving and will soon be back to normal. Than why is it hooked up to life support machines? For five solid years no less. Five years on life support, yet it's healthy and improving?
Oh but the Fed is readying an exit strategy! Really? What is it? Pulling the plug on Life Support? That's a strategy? With 120 Trillion dollars of nominal debt how can they normalize rates?
Remember: the longer you're at Zero Interest Rates - the more debt you accumulate. Just as the longer you're on Life Support - the more dependent you are on the machines. It's axiomatic.
So meanwhile why is gold diving?
The only question that can answer that is CUI BONO?
Because in a fake market, a rigged market - such are the currency markets - such are the bond markets - such are the stock markets - you need only ask CUI BONO to understand the short term movements.
This will explain this SHORT TERM GOLD MOVE.
But whether they can push gold to 1550 or even 1500 it doesn't matter. Because eventually the ECONOMY CORPSE will catch a cold. And then the LIFE SUPPORT OF ZIRP will start to blink red again. And all the rigging will be overwhelmed by the forces that no longer see it in their best interest to prop all this garbage up.
And the Real Primary Trends will assert themselves.