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 Strategies & Market Trends : The Aristocrats (tm)

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To: Zilyunz who wrote (92)8/6/2012 2:40:22 PM
From: sense of 196
 
As far as the focus on gold...

I think it says more of what I've been saying all along...

That the "conflict" between the "gold bugs" and the "bankers" is a contrivance... as they both depend on inflation to support and sustain their "story".

I've noted that in the past as a function of the "gold bugs" as much as any other in the market REQUIRING the Fed must continue SUCCEEDING in generating inflation... in order to support their perpetually increasing valuation of gold. If the Fed were to quit pumping money into the economy... we'd collapse into deflation, and gold would be a horrible investment... given the extreme inflation expectations that are already built into the price now. There's real risk that could happen, too.

Now, what's changed is... the bankers appear to have shifted away from "resisting" the gold bugs arguments... and appear intent, instead, on validating them and making gold the purposeful subject of the next bubble...

The rules changes just enacted... will mean banks will begin loading up on gold... investing in it as a tier one capital item, for the first time in a generation... The rules are JUST NOW changing to ENABLE that shift... they've not yet been IMPLEMENTED... but, they WILL BE... SOON...

That should initiate a trend... not have us close to the end game in the result...

You see the same thing now being mentioned in other context... as there appears to be a growing market consensus that the Fed has to do more... including even raising its targets in wanting a higher inflation rate... as that is the only thing that will allow them to retain any real influence in the market, at this point... is generating MORE than expected... killing deflation fear...

I'm betting the Fed CAN succeed in generating inflation... and steering the markets... when push comes to shove...

As it happens, now, that means the Fed and "gold bugs" are on the same side... but, it isn't going to be the "gold bugs" who "win" the argument by virtue of "being right"... rather than the impact of the changes in the markets driven by the changes in the rules... that will FINALLY begin to make them right ?










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