Commodities Essential - June 28, 2011

The Fed is behind the curve again. Watch gold for clues … 

The Federal Reserve knows nothing else but to print money, extend dollar-based liquidity, drive down the value of the dollar and create inflation. It is the Federal Reserve growth model, more or less. I normally ignore this elementary name-calling and finger-pointing that often lacks consideration of many items like the velocity of money, deflationary trends and public vs. private balance sheet analysis. But this idea might have some credibility in that the Fed lags developments in economic data.

Many in the consensus believe there will be no QE3 because the Fed has given no signals for such a thing. The Fed, of course, has been operating around economic data which, up until the last two months or so, had been showing some promising improvement. You may even compare the recent uptick in negative market sentiment surrounding the latest disappointment to this time last year when global economic risks surfaced and analysts began predicting a double-dip recession. 


Similarly, the S&P 500 cratered in May and June 2010, just as it did this year.

Commodities Essential. 28 June 2011

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