Seeking Alpha
October 15, 2010
By: Bo Peng
It’s been a textbook case of "bad news is good news" in the past few weeks, entirely driven by QE2 expectations. The expectations are so high that inflation is finally being priced in (see 30-yr bonds, commodities, and gold), and Bernanke would have to do it even if he had a change of religion tonight, or else. The only question is when and how much. While I don’t know the answer, I’m sure it lies somewhere between a dog and a fire hydrant. If QE2 is not big enough to cause another 10% drop in the dollar index, it’ll snap back 10% along with equities/gold/commodities crashing through a significant correction. If it is big enough to meet the markets’ insane expectations, it will most likely kick the currency war into full speed and start the sequence that leads to the dollar’s death as the international reserve currency. LINK...
***********************************
Professional money managers are beginning to enter the Gold market, unfortunately many of them are buying the "paper" Gold and using it as a trading vehicle. At least Mr. Peng has a core position in Gold and he's just taking some profits, but long term he's bullish. The QE2 (Quantitative Easing or Money Printing) that the FED is planning to introduce is the catalyst that sends Gold to the moon. We do NOT recommend trading Gold because it is your insurance policy, however for those who are trained professionals be my guest. But beware of the ancient rule, "He who has the Gold (not paper), makes the rules!" BK
