The commodity markets are off on a tear today. As I wrote to my Red-Hot Commodity ETFs subscribers this morning:
The Fed has made an aggressive commitment to monetary expansion through its balance sheet to support the financial system.
So why did gold sell off so sharply before the announcement? To me, the action looked coordinated. I think it was a major bear raid on the precious metals. In other words, insiders knew that the Fed was going to start buying Treasuries, so they sparked some selling in order to activate sell signals — so that, just before the Fed’s announcement, these insiders could buy gold on the cheap. Fixing this crisis should not be an occasion for looting, deception, and personal enrichment by insiders … the same insiders who in many cases caused the problems which we face today.
That said, the Fed’s announcement is a major policy shift, and one that should be bullish for metals and other commodities for some time to come.
Perhaps gold can go much higher.
In Other News
John Kenneth Galbraith writes that in the economy, there is “No Return to Normal”
U.S. 30-Year Mortgage Rate Falls to 4.98% After Fed Plan to Purchase Debt U.S. mortgage rates may fall to the lowest since World War II on the Federal Reserve’s plan to buy up to $300 billion of Treasuries and increase purchases of mortgage-backed bonds.
China to Press for Iron Ore Price Cuts to Below 2007 Levels, Group Says China, the world’s largest iron ore consumer, will press mining companies to cut benchmark prices to below 2007 levels, following a decline in steel prices, said the China Iron and Steel Association.
Gold Soars, Silver Surges in N.Y. as Fed Plan Ignites Inflation Concerns Gold jumped the most in six months in New York after the Federal Reserve’s plan to buy debt weakened the dollar and revived concerns inflation will accelerate. Silver headed for the biggest gain in 29 years.
Wheat Gains as Dollar’s Decline Boosts Prospects for U.S. Grain Exports Wheat rose, heading for the biggest weekly gain this year, as the plunging value of the dollar boosted the prospect of increased exports from the U.S., the world’s largest shipper.
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