by Bill Holter, MilesFranklin.com:
The last nearly 6 months has seen a constant barrage on the pricing of the precious metals. This process coincided with the last US quantitative easing and of course was completely counterintuitive. How, one would (should) ask, can a dollar increase in value versus another (any) real, fixed asset if dollars are more plentiful? If we did not already know why this was done prior to last Wednesday, now we know for sure. Japan’s BOJ plans to add $2 trillion worth of Yen to their balance sheet over the next 2 years. When you add in the Fed’s $85 billion per month ($1 trillion per year) you get to $2 trillion per year just from these two entities. We WILL have inflation one way or the other, the question is “How much?”
So, in the gold market we now have (have had for quite some time) “official policy” stomping on the brake and the gas at the same time. This cannot last and surely will not work. Something has to and will finally “give.” The cash markets, particularly in silver are tight. Premiums for physical over the paper price are rising and delivery times extending. This can only end one way, “cash and carry” will ultimately price these markets and a force majeure will be unavoidable as the physical does not exist system wide (never mind on COMEX) to satisfy demand.
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