Something May Have Blown Up Already In The Financial System

The price of gold ran higher eight days in a row before today’s interventionist price smack. Technically, whatever that means, the gold price was likely due for a healthy pullback anyway. The price of gold is responding to what appears to be the Fed’s decision to begin cutting interest rates, though maybe not at the June meeting. Also, the Fed’s Jame Bullard commented that a $3 trillion Fed balance sheet should be considered the “new normal.” This means that close to 75% of the QE program was outright money printing.  Hello Weimar-style printing, so long U.S. dollar…

In 2007 the Eurollar futures curve was steeply inverted by late summer 2007. Back then Ben Bernanke assured the world that “subprime debt was contained.” In truth, it was already blowing up. Currently, the Eurodollar futures curve inversion is steeper now than it was in 2007 (graphic from Alhambra Investments, with my edits).

Silver Doctor’s James Anderson invited me to be his debut guest from his new perch in Panama. He had just set up his office rig and the internet connection was a bit choppy.  But we chatted about why the various inverted yield curves and the recent rise in the price of gold may be telling us that the brown stuff could already be connecting with the fan blades in the financial system. Here’s the link: Something Has Blow Up In The Financial System or click on the video below:

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One thought on “Something May Have Blown Up Already In The Financial System

  1. Thank you for your article, Dave. The house of cards called the financial markets has many stability issues and the maintenance of the price control grid gets ever more difficult. Deutsche Bank looks like a falling star that might hit planet earth like the meteors that hit New Mexico and Arizona in ancient times.

    There is an easier way to explain the inversion of the yield curve. US Treasuries are a temporary safe haven in a developing depression. Sophisticated investors demonstrate that inflation is not an issue. But in a depression, even 0.0001 per cent of a treasury yield is still a bargain if you do not worry about the return on your money but about the return of your money. For some time the dollar will gain more and more purchasing power until the US economy collapses. PM are obviously the ultimate safe haven and the determined efforts of the Cartel to keep gold from going through $1340 are plain to see.

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