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Silver may well explode in price but given how tiny the trigger is for gold I would expect jewelry to take off since it is not covered by the 1099 form or so I understand. Also this should be a big boost for cruise ships.
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.
All currencies cannot fall against each other. But they can all fall against real assets.
For example, if the total money supply of the world comprised of various currencies is $1 billion, and all the countries double their money supply, everything else being equal, the price of real assets should double. Thus, the price of gold should double.
Yes, a Canadian company pays in euros, not in gold, but they could pay in gold if both parties wished.
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.
How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.
How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.
The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.
None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.
All currencies cannot fall against each other. But they can all fall against real assets.
For example, if the total money supply of the world comprised of various currencies is $1 billion, and all the countries double their money supply, everything else being equal, the price of real assets should double. Thus, the price of gold should double.
Yes, a Canadian company pays in euros, not in gold, but they could pay in gold if both parties wished.
If that were so then you would see a world wide rise in prices. We're not seeing it. We're not seeing hints of it. The yield curve is flat in the US, Europe, Britain, and Japan.
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.
How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.
The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.
The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.
How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.
The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.
Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.
The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.
How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.
The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.
Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.
The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.
Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.
Euro bonds. Japanese bonds. Australian bonds. Lots of ways to make money when you borrow at zero.
None of that suggests gold is going to go up up up. I'm not aware of any market sector that has a rally lasting more than 5 years.
Other commodities are much more a function of the real economy. But it is interesting that oil is at $80 while most of the world's economies are weak. What's going to happen to the price of oil when the US economy starts to strengthen?
As for real estate, I think the cheapest asset in the world right now is US land. Given the massive supply of real estate still sitting on banks' books, I don't expect real estate prices to move upwards much anytime soon. But raw land prices here in parts of Florida have fallen by up to 90%-95%. And decent properties, too. Beachfront has fallen by 60%-70% in some areas. With all this money sloshing around the world, it will eventually flow back in.
The Fed has been pumping cash into the markets to prop them up, dude.
GASG: Is the FED propping up the stock market?
Tepper tells CNBC Fed will prop up market Hedge Funds - MarketWatch
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
HUH? Are you daft?
Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
HUH? Are you daft?
He will not answer that honestly.
Anyone who reads those articles and thinks they prove the Fed is pumping money into the stock market is daft.
With some junk bonds selling to yield less than their probability of default such as the New York Times recently I would say there is ample evidence of inflation.
Anyone who reads those articles and thinks they prove the Fed is pumping money into the stock market is daft.
prove is the wrong word.
But anybody who doesn't believe that the Fed and the BOJ financed the housing bubble, the dot com bubble, the commodities bubbles of 08, and today's stock markets should just mail their money directly to Bernie Madoff.
With some junk bonds selling to yield less than their probability of default such as the New York Times recently I would say there is ample evidence of inflation.
