Sunday, May 22, 2011

Scouting report

7:55 pm (Hawaii) Overseas markets are down in the -2% range so far. US Dollar is above 76. Crude Oil at 98.45. Gold 1508. Silver 34.68. With so much uncertainty on both sides of the QE3 coin, it's no wonder so many people are cashed out.

So much anticipation about the days and weeks ahead. But I think we'll be underwhelmed. There will be no magic bullet. Things will not be as volatile as we may imagine. Cash will be on the sideline as politicians and bureaucrats push keyboards and, in the words of the great David Byrne, things will be "Same as it ever was . . . same as it ever was."

To QE3 or to not QE3 ... so many gray areas. If it isn't officially announced, but the market is propelled long after June 30 by inflows and buying, there you have it. It will have begun covertly. If not, it'll be just a matter of time. The alternative is a crash across the boards in due time, and Big Ben will have to assert the Federal Reserve's authority in these matters. In the meantime, gold and silver are deep into the equation. Somewhere. So is China. How beautifully combustible it all is.

Zero Hedge: Goldman aligns itself alongside China for next IMF head (May 22 2011)
Zero Hedge: China prepares to launch Gold ETFs, Utah makes gold, silver legal tender (May 22 2011)

Update 8:40 pm (Hawaii) "Silberblick" at The Silver Gold Hedge blog points out that it is in China's best interest — in the near term — to keep gold and silver prices relatively low. Eventually, however, the People's Republic could use the newly-formed gold futures trading instrument in Hong Kong to burn rubber and destroy the US Dollar sometime down the road. True or not, it's an interesting picture.

Silver Gold Hedge: Why the Hong Kong Exchange will disappoint, for now anyway (May 22 2011)

Update 10:44 pm (Hawaii) Interesting interview of Hugo Salinas Price regarding his concept of a silver Mexican peso and a quoted monetary value. An interview with Hugo Salinas Price on a return to a silver Mexican peso (May 19 2011)

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