dramatic price surge in response to the Bureau
of Labor Statistics’ August jobs numbers, precious metals have cooled a little in trading this morning. Wednesday’s German Constitutional Court ruling and
Thursday’s FOMC verdict are the big market-moving events to watch out for this week.
The European Central Bank’s insistence that its unlimited
purchases of sovereign debt from troubled
eurozone nations will be “sterilized” offered a sop to the Germans, though some have doubts about this. Robert Wenzel points to a little commented upon ECB press release that announces the suspension of “the application of the
minimum credit rating threshold”
on collateral used to access short-term loans from the bank. At this
point it is worth quoting him at length:
“[This] creates a backdoor through which massive ECB monetization
of Eurozone sovereign debt can occur.
If you are an EZ government
having trouble raising funds, just issue paper that will
be bought by local banks that have ability to go to the ECB and use it
as collateral for newly issued ECB euros.
This is the serious
magic trick in Mario's
bag of magic tricks. His sterilized bond buying is smoke and mirrors. The new collateral rules create the potential for unlimited backdoor money printing.”
In other words,
the Bundesbank can scream
all it likes, but the debasement of the euro will proceed apace.
on the part of investors that
massive money printing is the only
thing standing between developed economies and deflationary collapse should
have a particularly dramatic
impact on the silver price. James Turk discusses silver
in a new interview with MarketWatch,
noting the huge upside-potential in the metal,
as more and more people are drawn to it as an affordable alternative
to gold. He expects the gold-silver
ratio to fall to 30 next year, which – assuming gold has reached
$2,000/oz – would mean
a silver price of around $67/oz.