Archive - Oct 31, 2010 - Story

Whoooosh... or just another DXY flash crash? If this was indeed a BoJ intervention, it is the worst money spent by a central bank in the history of Keynesianism, with a half life of less than 30 minutes. Elsewhere, gold is predictably nearing its all time highs.

As of today, one of the world's top oil exporters disclosed that it has exchanged about $15 billion of its FX reserves into gold. Earlier, Iran announced that the country has converted about 15% of its foreign exchange reserves into gold, and "will not need to import the metal for the next ten years." There is your mystery buyer to all that gold the IMF was selling in Q3... And since Ahmadinejad said that Iran's total FX reserves exceed $100 billion, the amount of gold in stock held by Iran is more than $15 billion. Which is equivalent more than 345 tonnes at a closing price of about $1350. Which also means that the WGC's official gold holdings are in dire need of an update, as Iran does not appear anywhere on the IMF's listing of official gold holders, and with over 345 tonnes, it would make Iran a top 15 holder of the yellow metal.

Overall, whether or not the FOMC outcome is seen as dovish enough relative to market expectations will dictate the immediate price action. But if global cyclical indicators show further signs of global decoupling, the backdrop of Fed easing plus the expected political buy-in for burden sharing in adjusting global imbalances means the underlying dominant macro theme that will persist after the dust settles is likely one of broad USD weakness still.

"Americans today are constantly watching their speedometers and trying to conform to every little rule yet there are so many rules that it's impossible for even the most honest and hard-working Americans not to be breaking some type of law on a daily basis. We are slaves in a criminal monetary system, where the Federal Reserve steals from the middle class through inflation and transfers this wealth to their banker friends on Wall Street. We are forced to accept pieces of paper of money while the US constitution defined only gold and silver as legal tender...We are now seeing countless signs on a daily basis that the US is headed for a complete societal collapse as we know it, forever."

The rise in oil and grain prices over the last several months will be reaching Main Street by this winter. Gonzalo Lira argues that those price rises, coupled with the Federal Reserve's Quantitative Easing 2—scheduled for announcement in the coming two weeks—as well as the escalating Currency War with China will inevitably lead to runaway inflation: And he is prediciting it will start this March of 2011. —Gonzalo Lira