Gold Makes Another Move Above $1,700: Brace for Draghi and Employment Friday
There can be no doubt that Ben Bernanke’s Jackson Hole, Wyoming speech last week has indirectly lit a fresh fire under gold. More desperate central bank quantitative easing (beyond ongoing and open swap lines to other G7 central banks; operation twist; European LTRO, etc.) is on the way at the behest of the banking system and to keep appearances looking good in the stock market. Gold is an indirect beneficiary to the Fed’s limited resources. Today’s assignment for the GC_F futures contract is for gold to remain perched above $1,700. We warned weeks ago that gold would leave the $1,600/ounce station for $1,700 plus. Unless gold is on one of its don’t look back moves, there could be further testing in the near term in the upper 1,600’s to lower 1,700’s before making a move for even higher ground. This space has long preached that QE3 would eventually come, would HAVE to come because of the core defect in the banking system: the need to “print” ever more digital cash to extend the perpetual practice of what amounts to a paper Ponzi scheme that relies on replacing old bad debt with fresh new debt that eventually becomes bad debt and so on, and so on, and so on. There really is not much to the story.
Related: RT @reuters: ECB holds rates as inflation eclipses growth risks http://reut.rs/OWE3tX
In large part, gold has jumped the $1,700 Rubicon ahead of ECB president Mario Draghi’s speech that shall outline details of European bond buying. This is something the Spaniards see has a must do to rescue their very nearly insolvent banking system. A link will be posted with further details as they become available. If Mario disappoints, I expect gold to scoot back below $1,700 for at least a brief tyme (a little 17th century lingo for ya there this morning). Should Mario please the markets, then gold should hold closer to the day’s highs.
Tomorrow, monthly non farm payrolls are due for release. Imho, I would be surprised to not see a weak print (in payrolls) as help wanted advertising has really hit the doldrums once again. The Labor market is a reflection of a mishandled economy. Seasonal and other hedonic adjustments will no doubt be conjured up with this data series to perhaps make the headline numbers look good, but the devil will as usual be in the details. Don’t expect much once you dig into the reports when they are released tomorrow at 8:30 a.m. Eastern Time.
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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