Hints of mutiny within Fed as attempt to crash dollar becomes clear
Thursday, Oct 14th, 2010
The US dollar plunged once again today as the currency continues to be battered by increasingly substantial rumours that the Federal Reserve will announce, within the next three weeks, plans to buy $1 trillion of government debt in the form of “monetary easing”.
The dollar hit a fresh 10-month low Thursday morning, falling for a third day running against a basket of six major currencies.
The greenback is trading at a near 15-year low against the yen as the selling pressure picks up momentum.
The euro rose 0.8% against the dollar, trading at $1.40, the Canadian dollar traded parity, while sterling gained almost 1% against the US currency, trading at $1.6.
Dollar negativity is now at its highest point for the last eight years of the weakening trend.
Of course, this is coupled with another record breaking day for gold, with Comex gold prices hitting another record high of $1,388.10 in December futures.
Spot bullion in London hit $1,387.10 a troy ounce, up 1.2 per cent on the day, and 26.5 per cent up since January.
The next psychological resistance point of $1,400 for gold looks well within reach.
“Gold is expected to rally towards $1,404 per ounce as it has climbed above a consolidation range between $1,324.85 and $1,364, said Wang Tao, a Reuters market analyst.”
Gold is so strong that it has also been gaining on the euro.
Earlier this week Goldman Sachs reevaluated its forecast for the gold price to $1,650 per ounce within the next 12 months. That forecast, a revision of more than 20 percent, also included an expectation for gold to hit $1,400/toz and $1,525/toz within 3 and 6 months respectively. These figures are now beginning to look extremely conservative.
“Gold’s climb is not showing any signs of slowing: $1400 is now being eyed as a short-term target, which seems easily achievable as long as the dollar continues to fall across the board,” Edel Tully, precious metals strategist at UBS in London, told the Financial Times.
Ms Tully has increased her one-month forecast for bullion to $1,425 an ounce.
Sales of one ounce gold coins on ebay continue to routinely exceed a markup price of over $200 higher than spot price value, a difference of over 15 per cent.
This one ounce Buffalo, for example, which is particularly desirable due to its pure 24-karat content, attracted a winning bid of $1,625, some $237 above the current price of gold:
The US mint is now selling American Buffalo coins at a whopping $1,610, with American Eagle proof coins at $1,585 and American Eagle uncirculated coins completely unavailable due to the overwhelming demand:
Silver also surged to $24.90 per troy ounce today, up 3.9 per cent to the highest level since March 1980.
Meanwhile the Federal Reserve’s own St Louis branch has indicated that it believes turning on the printing presses for another massive round of quantitative easing would not only be useless, but may very well do more damage to the economy over all.
As highlighted by Tyler Durden at the Zero Hedge blog, Daniel Thornton of the St Louis Fed made the comments in a report titled “Would QE2 Have a Significant Effect on Economic Growth, Employment, or Inflation?”
“Some analysts are already concerned about the potential inflation consequences of the Fed’s previous QE measures. To the extent that QE2 would exacerbate those concerns, it could raise inflation expectations.” Thornton writes.
Thornton also notes that some of his Fed colleagues are worried that an ineffective QE2 “could damage the Fed’s credibility and possibly erode the effectiveness of our future actions to ensure price stability.” as well as “raise concerns that the Fed is seeking to monetize the deficit [which] might make it more difficult to return to normal policy in the future.”
It is clear that some within the structure of the Fed are attempting to distance themselves from, or are even attempting to prevent the madness that they know is about to ensue under the policies of their superiors.
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Steve Watson is the London based writer and editor at Alex Jones’ Infowars.net, and regular contributor to Prisonplanet.com. He has a Masters Degree in International Relations from the School of Politics at The University of Nottingham in England.
This article was posted: Thursday, October 14, 2010 at 1:28 pm