Friday, May 24, 2013
You can fool
If the Ben Bernanke Fed has proved anything at all it's that you can fool most of the people all of the time.
Just a few years after engineering world history's biggest transfer of wealth from the public sector into the hands of a very few bankers, and just a few months after the ECB engineered the first official confiscation of banks deposits, the Public Trust in the Central Banks and the Banking Sector is at an all time high.
The clear measure of this massive misplacement of Trust, lies in the massive repricing of gold, an all time Low on the Vix and a record 133 billion dollars of Junk Bonds sold this quarter.
The question of when the gold bull will resume is answered quite simply: The Gold Bull will resume when the Trust in Central Banks and the Big Banking Sector is shaken once again.
What could shake this trust?
With US and international debt - and Bank Debt - at unprecedented levels in the history of the world, it could really be almost anything from a bad derivatives trade at a Bank or a Hedge Fund to a Sovereign default in France, Japan, Italy, Spain to a natural disaster that wipes out an insurance company and its entire web of counter-parties.
Or, it might simply be caused by the equity markets getting the strange idea that the Fed might slow its massive easing, and everyone racing for the exits at once.
But if one thing in life is certain its that misplaced trust will lead to disappointment - and an acute sense of betrayal...
What that looks like is anybody's guess. But one facet of the picture will be the resumption of the gold bull.