Gold Rises on World Developments; Are We on the Eve of New QE? Big Day at Apple
Today we are confronted by a very mixed of news.
The good news for the financial establishment via Reuters:
“Germany’s Constitutional Court said on Wednesday the country could ratify the euro zone’s new rescue fund and budget pact as long it could guarantee there would be no increase in German financial exposure to the bailout fund without parliament’s approval.
“I think it should be seen as a positive step in the long road to solving the eurozone debt crisis. I think markets will be relatively pleased with the announcement, and the conditions put in place,” said Henk Potts, market analyst at Barclays Wealth.”
“Solving the Eurozone debt crisis,” says Mr. Potts of Barclays? Is he trying to be funny?
Gold is up another $10 in early trading as the approval of the ESM has the bottom line implication of further paper money creation and dragging out the European situation and really NOT solving the Eurozone debt crisis. To boil down how the ESM shall work in a sentence: The ESM will issue bonds/debt to be bought by private banks with debt from the ECB. Good luck with that!
ESM festivities get underway Jan 1st, its first board meeting takes place this October 8th.
Gold news: More Trouble in South Africa: Security guards have fired teargas at protesters at the Gold Fields mine near Carletonville http://owl.li/dEtFv. As a result, platinum is rallying.
Gold news: Woman gets to keep $18,000 in gold bars she found on a beach after handing it into police. Honesty is the best policy. http://yhoo.it/OpbsCt
Gold news: Gold Will Top $2,000 in Next Year: Barrick CEO http://cnb.cx/S8dXVb
Then there is the bad news in diplomatic circles this morning:
“The U.S. ambassador to Libya and three other embassy staff were killed in a rocket attack on their car, a Libyan official said, as they were rushed from a consular building stormed by militants denouncing a U.S.-made film insulting the Prophet Mohammad.
Gunmen had attacked and burned the U.S. consulate in the eastern city of Benghazi, a center of last year’s uprising against Muammar Gaddafi, late on Tuesday evening, killing one U.S. consular official. The building was evacuated.
The Libyan official said the ambassador, Christopher Stevens, was being driven from the consulate building to a safer location when gunmen opened fire.
“The American ambassador and three staff members were killed when gunmen fired rockets at them,” the official in Benghazi told Reuters.”
May Mr. Stevens and his colleagues rest in peace. I will resist launching into a diatribe about how this could happen in a supposedly “liberated” country. How many U.S. ambassadors were killed under Qadaffi’s long and miserable regime (not that I ever supported Qadaffi)? Zero. These deaths today, follow by about 24 hours the near overrun the U.S. embassy in recently “liberated” Egypt where the American flag was burned.
This sort of news adds further support to haven assets as we are again reminded that the world is a dangerous place.
Correction: The two day Fed meeting starts today. These had normally started on Tuesdays. But the meeting starts today and shall conclude tomorrow. CNBC is slanted toward highlighting Fed action coming tomorrow: “Investors are looking for the Fed to announce fresh asset purchases as soon as Thursday, but doubt it will do much to bring down unemployment, the latest CNBC Fed Survey says.”
Bingo. At least the poll respondents are smart enough to realize that monetary policy alone has not been successful in bringing down unemployment. For that matter, historic lows in interest rates have done little to revive real estate nationally. Even where there are pockets of strength, favorable sales comparisons are keyed to exceeding the extreme lows of the past three years and NOT pre real estate crash lows.
Structural reforms are needed to be taken up by our absent minded and ineffective law makers. Bernanke has said as much! Those reforms ought to center on making America competitive once again and not having the country so dependent on farming its manufacturing to overseas factories. Those reform ought to focus on streamlining bloated government agencies and programs which take a lot more thinking that just simply cutting program $$ with no thought to inefficiencies.
As long as the present order remains which is CONgress failing to undertake structural reform, expect the U.S. economy to grind along at near zero official growth, which means mild recession in real terms, for years to come no matter what the Fed stimulus is. The corporatists have secured what they have wanted – control, really a separate set of laws for themselves – for everyone else… good luck.
I tire of seeing QE being deployed merely for the good of the stock market and bank bottom lines.
Apple iPhone 5 will be introduced today. I told my daughter in May to wait for the 5, but to no avail, she picked a 4s. J
The stock has had quite the run up to this event, though has underperformed in recent days.
Many worry that Apple is upon a near term peak. Maybe so, but tell me, how many long term shorts exist in Apple?
Have a day!
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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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