Precious metals expert Michael Ballanger expounds on how Federal Reserve policy affects the commodities markets, and expresses cautious optimism about how that policy will play out in gold markets.
One look at the recent chart of U.S. home prices city-by-city and I had to sit down armed with an Extra-Strength Tylenol and a quarter flagon of Glenfiddich. Zerohedge has been all over this entire commodities rebound since they (amazingly) sourced out the reason.
From the minute the phone call went out on Feb. 11 from Fed Chairman Yellen to BOE Chairman Mark Carney followed the next day to ECB head Mario Draghi, the four most important markets on the planet changed direction dramatically, with all of the markets representing the greatest risks to the banking business turning on a literal dime and continuing on a tear ever since. Firstly, before I down my second belt of single-malt, here is the itinerary of the call made by Janet Yellen to Carney and Draghi. . .
Now look carefully at the charts of the S&P500, copper, West Texas Intermediate crude oil and lumber. Stocks have historically been the advanced barometer for economic growth; copper (or “Dr. Copper”) is widely seen as a barometer for economic demand; WTIC (“oil”) around February was creating huge dislocations in the credit markets (HYG); and lumber is the surrogate for “mortgages” found in housing. What do all of these markets have in common? They are all markets to which the global banking cartel were dramatically overexposed and overleveraged. If these markets stayed in the tank for another quarter, the default “covenants” would have been triggered, the immediate result of which would have been very “bank-unfriendly.” Observe the dramatic changes that occurred after Feb. 11 and 12 (see charge above). All forms of bank collateral were immediately lifted to debt covenant …read more