ECB head Mario Draghi made it clear where the real battle is taking place in the world this morning. When asked what form QE would take, his response was to the point... "On what sorts of assets should be included in QE... we discussed all assets BUT gold" and gold dropped, right on cue.
Not really sure which assets we discussed but definitley not gold!!
And the result...
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So to summarize, the ECB will willingly take on Greek bank CDOs, Italian 3rd lien espresso shop loans, Spanish condo HELOCs, and Portuguese Used-Car ABS... but not - never - gold.
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It appears we now know who the enemy really is... not deflation but the dreaded barbarous relic, gold.
Perhaps this is why, as Kyle Bass so eloquently noted:
"Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"