Gold and silver prices bounce back as the Fed stops manipulating them down and why this will continue
The bullion banks are no longer getting late night calls from the Fed to take down gold and as the gold price recovers so the silverbugs get more confident in a tighter market and the price of silver spikes even higher. How long will this continue?
Don’t fight the Fed!
The obvious answer is until the Fed finds itself trapped in a corner again and needs to defend the US dollar. Pulling the rug out from under gold is one way to do this but it is not a trick you can play every day of the week or month of the year.
Will the dollar now hold its own against other global currencies or start to fade away again? Longer term dollar weakness is a very strong reason to hold gold. In the shorter term we would be more worried about China, Japan, Europe, emerging markets and the UK. That does not leave much room for dollar weakness. Against what will the greenback devalue?
What is likely going to happen with bullion is that it will now advance gradually against all these depreciating paper currencies. The central banks are going to keep the printing presses going for as long as it takes to achieve their goal: that’s a global economic recovery, not the hyperinflationary slump that is coming!