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Why is Gold Trading So Low During Balance Sheet Expansion?
Collectively, the world’s Central Banks have put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.
Despite this rampant money printing, the price of Gold has in fact fallen against every major world currency since 2011.
In a time in which every major central bank is expanding its balance sheet through money printing, Gold has fallen against every major currency.
Indeed, in the US, the Federal Reserve is now expanding its balance sheet at a pace of nearly $1 trillion per year. The Fed balance sheet is already at $3.8 trillion and will likely surpass $4 trillion in early 2014.
Any yet, the price of Gold, denominated in US Dollars is lower today than it was when back in early 2011, when the Fed’s balance sheet was just $2.4 trillion.
Does this make sense? Gold falling in value at a time when balance sheets expanded by multiple TRILLION dollars?
Make no mistake, gold is not dead. Not by any means. The day is coming when its price will soar again.
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Best Regards
Graham Summers
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Thanks, especially for that last chart.
If it weren't for the GLD and active suppression Gold would be much higher.
With all that FED liquidity sloshing around there is no shortage of captial for the TBTF's to speculate with.
Gold is artificially suppressed via that speculation in the GLD as well as every other asset class in the Wall Street/Brussels casino.
Tangible Gold is worth $10,000/ounce but this won't be realized until the speculative margin debt derivative securitized FED QE debt casino burns to the ground.
When Governments are willing to let their Central Banks debase human labor and the coin of the realm with stratospheric debt there is no telling when sanity will return, but it will.
Gold is falling because confidence in the system is climbing. BS statistics that make everyone feel better, keeps the game going. The peak oil peak has been postponed due to fracking, pushing that climatic moment out to the future. There will be enough oil to keep the economic engines running and growing. The extra paper is going to oil producers for the extra effort needed in extracting.
I don't care why. Don't look a gift horse in the mouth.
Make no mistake about it. In the face of China's moves to move away from the U.S. dollar and bolster their own currency with an historically epochal program of systemic physical gold accumulation, the U.S Government and the Fed are waging a nuclear currency war with a war on the physical gold market at its nexus. Anyone who asserts that it is any less than that is a complete coward.
http://truthingold.blogspot.com/2014/01/precious-metals-intervention-in-extreme.html
Who cares? It's the perfect time to add to the stack.
The size of FED balance sheet doesn't matter since the money sits in higher Stock prices and has no velocity (no capital investment, spending or employment impact. The 1-2% get very rich but their spending is not apparent in most measures of inflation. Maybe the cost of private jet travel and $100 million homes.
Graham,
Still waiting for explanation why, but don't expect me to pay one dime to sign up for your opinion. There are plenty of opinions with detailed analysis on the web free of charge. Opinions are like assholes. Everyone has one.
Mine are well-rounded.
Fucking pointless article. Where's the value added in this?
Well, his articles generate a decent amount of snark in the comments, so there's that.
If only there was a way to monetize or securitize snark. We'd be rich. That would be money that I'd be happy to let ride on bitcoins.
again...these are all great articles...but simply put there is a weather function to precious metals trading and commodity trading in general. That would be a COLD weather function. Why did industrialization happen in northern climates? A good argument can be made due to production being "shut in" (meaning humans in the north placing a premium on building structures, safety, energy production, mining, and conservation) meaning that demand basically collapses in the winter. The common sense view on pricing (gouging in the winter...price freedom in the summer) is in fact the exact opposite. The goal is to produce as much as possible in the winter and store it...then as all of us go bankrupt due to "Christmas" production suddenly explodes come springtime to "make up for all those pricing differences." In other words it's the oddity of industrialization: with huge storage come winter gives huge opportunities for price manipulation...DOWNWARD. we'll see but with so much production in the USA located in Northern climates you could get tremendous boost to production come springtime...and a building boom as well. I would not be long equities here as the hit to earnings this year will be substantial. I'm also very hopeful that the Space X launch goes off "perfectly" as that in theory can represent a whole new mining play. But we'll see. You'll need good information management.
Or you can just park it anywhere.