July 13, 2011 – As the anniversary of QE2 approaches do not be surprised if gold bullion prices finally break away, or more precisely, the dollar tanks.
Whether our politicians can get their minds off reelection for just a moment t get serious about the impending default is immaterial. Since 2007 America’s only economic strength has been ill- conceived reverence for the dollar backed by faith in the leadership of this country. But that faith got lost long ago amidst the endless infantile bickering.
Our economic policy has made it abundantly clear to everyone sufficiently distant from Capitol Hill that the Fed has run amok. Even half of the committee has come forward and confirmed it. Bernanke, however, isn’t fazed. There have been some unforeseen speed bumps and a few detours, but the economy is doing OK. That’s his story and he’s sticking to it.
Since the equities rally is all Bernanke can point to in his defense, it bears looking into. Back on August 27 it took roughly 1096 Swiss francs to buy the S&P 500 but thanks to the Fed that has soared to 1098 today – a stunning 0.16% growth. In terms of gold, however, the index fell by 2%. The Dow did not fare any better, falling 0.5% in francs and 2.6% in terms of gold.
Still, if you had invested $100,000 in the S&P 500 back then you would have made a handsome gain of over $23,000. That’s jaw dropping, at least on the surface, and it’s all the politicians need to buffalo Americans – at least until elections. Never mind the fact that had you bought gold bullion instead you now be $2,500 richer.
One need only listen to what the markets are saying to see through all the propaganda the government keeps pumping out. They tell us that equities are going nowhere, that bonds are racing downhill like a one-man luge, and that the greenback is withering on the vine.
And the markets are almost shouting the warning to buy gold bullion now because the price is about to break away.
