We ended almost every one of nearly 100
webinars in 2011 with "Don't Worry, They'll Print the Money". This is
how confident my Co-Host, Ty Andros and
I were that the global central banks had no other recourse but monetization.
We felt strongly that the western economies had passed the 'event horizon'
and that the economic spiral was now inescapable.
Outright Monetary Financing or OMF is what presently lies in front of us as
QE¥ ends and it has profound implications for precious metals.
The charts as we will show are signaling that the smart money sees this and
are already quietly laying down their bets. These players include the central
banks not presently part of the Currency
Cartel. The path however is going to be tricky and the charts also show
why.
The global central bankers are feverishly loading the helicopters, but
these are helicopters like we have never seen before.
We have been carefully observing that the global central bank balance sheet
expansions have exhibited the following:
- Each new increase has been significantly larger,
- Each new increase has come with diminishing intervals,
- Each increase has been more coordinated between central banks,
- Each central bank balance sheet appears to keep the total expansion within
a well defined boundary condition,
- Each time the TOTAL RATE OF INCREASE approaches zero (see blue line
below) it soon triggers the next increase.
Charles High Smith and I recently
laid out how large central bank balance sheets could grow and what were
the 'limiters'. It appears that a collapsing currency is no longer the 'limiter'
it once was but in fact is now a goal as the global currency wars heat up.
Gold as shown below has tracked amazingly close to the cumulative growth in
the balance sheets of the ECB, PBoC, BOE, BOJ, Federal Reserve and SNB (cumulative
values of this group are reflected in the chart above and below).
Gold Signaling a Completing Consolidation
One of the more predictable technical analysis patterns is a flat bottomed
triangular formation indicating a consolidation. The Descending Triangle is
more about time targeting than price targeting.
Gold is suggesting that we have a smaller 'DE' wave combination to complete
the standard 'ABCDE'. it will tax the patience of gold investors and the pocket
books of the options players as time decay is a killer. Our SPX analysis has
suggested for some time that we expect a market scare between April 15 and
early summer which would match gold's 'DE' timing.
Indication are strongly pointing to the 'heavy OMF helicopter' lift off to
be in late Q3. We have labeled this as the Great Reflation - Part III.
We do a lot of work with Fibonacci Ellipses and they have proven extremely
accurate within this central bank controlled environment which we are presently
witnessing. We refer you to: REDUX:
Beware the Ides of March.
Our Fibonacci Spirals (below) has confirmed the consolidation pattern with
a high probability.
A couple final charts show that in the larger context, a lift in gold with
a correcting equity market should not be unexpected.
As we have done since 2011, we end this note with:
"Don't Worry, They'll Print the Money!!"
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