Friday, September 7, 2012

The Echoing Green

The Echoing Green by William Blake

The Sun does arise,
And make happy the skies.
The merry bells ring,
To welcome the Spring.
The sky-lark and thrush,
The birds of the bush,
Sing louder around,
To the bells cheerful sound.
While our sports shall be seen
On the Echoing Green.

Yep, happy days are here again. It's green all over the markets as prices rise; stock markets, precious metals, commodities. Risk is on, the birds are somehow 'louder around'.

Last night, there was a leak that Mr Draghi of European Central Bank fame, was to announce unlimited bond buying for cash strapped European countries like Spain and Italy. On this leak, up went precious metals.

Well, the leak was proven correct. Mr Draghi wants to wrestle control of European interest rates. So what's a Central Banker supposed to do? You got it, the only thing they can do, manipulate what is supposed to be a free bond market. Crank up the digital printing presses and buy as many bonds as necessary to halt those pesky bond interest rates from rising further and causing a catastrophic default event.

But there is a little hitch coming. Germany. Maybe this is why gold and silver showed a measured increase. The Germans vote on September 12 to agree or not to agreee to these bailouts. This could decide the fate of the whole of Europe. Then, of course, there is the counter-fire expected from the US Federal Reserve, as the Euro cannot be allowed to fall too far, hurting US exporters. 

But markets have liked what they see, so far. Spanish bond yeilds have already fallen. This could be it, this could be the answer to all our economic ills. We might all be wrong about money printing.

But then, William Blake ends his poem thus:

Till the little ones weary
No more can be merry
The sun does descend,
And our sports have an end:
Round the laps of their mothers.
Many sisters and brothers,
Like birds in their nest.
Are ready for rest;
And sport no more seen,
On the darkening Green.

Gold in New Zealand dollars: $2123.05 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $40.82 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)

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