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The U.S.
FED's status update last month about how it still loves cheap money always
and forever was sure to work magic. Even if the pixie-dust did blow straight
past output, incomes and capital formation.
European
crude oil this week pushed up through $112 per barrel, taking the average
price since Quantitative
Easing began in February 2009 above the 3-year "oil bubble"
average of mid-2005 to 2008. Swiss commodities trader Glencore
is looking to merge with Xstrata mining to create a $79 billion giant - all
settled in paper. And the Nasdaq ended this week at
an 11-year high, just as Facebook gets ready to float with little but
Farmville for income.
Facebook's
valuation adds the tang of nostalgia to frontal lobotomies. More than 1 human
in every 8 now alive apparently spends an average 33 minutes per day in the
roomful of mirrors. But Facebook's profit for scalping their souls? Scarcely
a dollar a lobe in 2011. So its brokers expect a price-to-sales ratio near 27
and a likely price/earnings ratio of 100-to-1 - the kind of mindless pricing
we saw when the Nasdaq first crossed 2,900.
To repeat:
gold and silver prices have both risen on the same tsunami of cheap money,
that seismic tide set to gift even Facebook's
worst enemies a $300 million payday. When the flood next retreats, both
gold and silver will likely be left well below their high-water mark, too.
But that could look nothing next to the destruction around them.
Which is why
cheap-money love is proving so very more-ish to the
big central banks.
See how UK
housing, in terms of
average income, is still more expensive than at the very top of the late
1980s' bubble? See where the sharp discounting, back towards something like
affordable, was arrested in early 2009 by the Bank of England's first
injection of queasing?
Cheap money
continues to cause more
trouble than mischief, in short. And thanks to Ben Bernanke's old-new
best friend forever, gold just put in its best 1-month
gain since 1999.
It's not
surprising after that rate of gain to see Friday's trade taking a profit. But
cheap money will surely get another +1 when London and Frankfurt's central
banks both meet next Thursday. Euro investors in particular will want to like
the ECB's Mario Draghi, what with Greece on the
verge of default and another two weeks still left before the next round of
unlimited 3-year lending to banks.
Gold already
topped €1335 per ounce this week. It breached that level on only 5
trading days in last summer's frenzy.
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