Wednesday, September 14, 2011

Obama's Golden Smile

A few weeks ago I cheekily forecast that the next version of quantitative easing would have some fancy name attached.

Well, the moment has arrived. Mr Obama couldn't really call it a stimulus package or QE3, that would be too obvious. No, he called it "The American Jobs Act".

Interestingly though, the market reacted like it has to all other statements coming out of the mouths of politicians as of late. They ignored it, or even sent a message that all is too far gone and we are adjusting accordingly...down.

This Act is purported to cost around half a trillion dollars. Small by QE standards but large by "where in the heck are they going to get this new money" standards. Mr Obama says he is going to reduce the deficit by $1.5 trillion over ten years and raise taxes on the rich to fund this. But the US is already has a large deficit and is already in a huge debt hole. This new stimulus package will need the Federal Reserve to step in and newly monetize fresh bond issues.

Governments never create anything, let alone jobs. They just use other peoples money until it runs out. Having them stop spending and taxing outrageously is the best way to create jobs.

On gold, the main stream financial press, like CNBC, are still stating that gold is in a bubble and you should sell if you have some. But gold isn't in a bubble, currencies are. Gold is only moving upwards via a loss in value of currencies. The more you print the more paper you have chasing the same amount of real money; gold.

Further to yesterdays blog, Bill English, the New Zealand Finance Minister, says that risk is building for the NZ economy. He states, "jitters in global financial markets were a risk for the government and banks here due to their reliance on access to international funding lines". He finishes off by saying; "We are concerned, but it's not too serious".

Mr English, you can fool some of the people some of the time, but...

Gold in New Zealand dollars: $2235.00 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $49.93 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

The Anglo-Far East Company
The Original Private Gold and Silver Bullion Custodian
Your reference: an-001

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