bowman711

Gold (and Gartman) Haunting Some Investors

The Fed lowering interest rates or bailing out financial institutions isn't particularly inflationary (good for gold) unless the financial institutions pass it on in the form of loans. The Fed could lower interest rates a full point, but if the banks don't loan it out, where is the inflation? It looks to me that this is what is happening now. The financial institutions are severely increasing loan requirements, to the point that little of the Feds increase in liquidity is getting to the retail borrower. It is likely that financial institutions are actually reducing even the loans they already had out by imposing stricter standards that prevent them from being renewed. Hence, with retail credit constricting, the rate of inflation is declining and the dollar is going up.

The Great Depression is usually blamed on the Fed raising interest rates. I think they don't want the blame this time, so they are passing on the credit constriction to the banks or other financial institutions. Gold bugs need to not only look at whether the Fed raised or lowers interest rates, but to what the financial institutions are doing with what the Fed gives them.

Buying Gold for Oil Like George Soros

I would say that $145+ oil more accurately reflects the 'new economy' demand for oil and the debasing of the dollar (inflation) than does gold under $1,000/oz. It is well documented that gold is being artificially kept low. In the last reporting period, for example, every single open interest long position was matched by a naked short position by someone (or a group of the bullion banks).

When dollars are created by fiat, each dollar is reduced in value. Likewise, when gold is 'created' by naked shorts, each real ounce of gold is devalued.

If you have an economy made up of just 1,000 oz of gold, and another 1,000 oz is 'created' by naked shorting gold (creating a contract for gold that does not exist), you now have on paper 2,000 oz of gold, but still only 1,000 oz of real gold. So, the 'price' of gold is effectively cut in half.

Gold as an Investment? Think Again

I wonder what gold will look like after the election and all the 'smoke and mirrors' are cleared from the many different 'numbers' that have been producing up movement in equities?