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January 28, 2012 / Hal (GT)

It’s a QE world. Thanks to fabulous Central Banking.


I’ve posted a number of articles I’ve come across this day and this week over at my Scoop.it feed: Gold and What moves it.

This week has seen a resurgence in gold which has put a number of bears back into their caves. But the question is why? Why did the precious metals move higher retracing a fair amount of lost ground?

The answer of course is the FOMC and Ben Bernanke who declared what the market is referring to as QE 2.5. The truth of the matter, at least as I can tell, is that QE never really ceased from the last round. What seems to have been taking place is a lot of stealth moves.

Now the Fed is putting inflation as a target. And frankly I in no way think he’ll hit his target of 2%. I think inflation will likely go well above that before attempts bring it under control. It reminds me a lot of the old Superman cartoon where the Man of Steel is trying to stop the runaway train from going over the broken bridge with stacks of gold.

Sure he did it. But what was the cost to those on the train? And frankly, Ben’s no Superman, and I’m sure, to be fair, he wouldn’t claim to be. (the bridge event is at the six minute mark)

Now the markets find themselves yet again trying to figure out what the news will mean and thus a number of people are rushing back into the real currency, Gold.

The one article that I think you need to go read is:

Living In A QE World

All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE

The degree to which central banks around the world are printing money is unprecedented.

The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB).  Noted on the charts are significant events or growth rates.

Shown is the size of each respective balance sheet in its local currency.  Note that all are exploding higher as every chart goes from the lower left to the upper right.  Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.

Until next time.

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