BC8 (ASX) Ann: Quarterly Activities Report and Appendix 5B

Originally posted by copperroad ↑

Pete11.
I can’t sleep so I might as well mouth flap. lol.
I understand where you are coming from in some ways. The FED has created a mess when you think about it. QE has been going on for so long it’s become almost normal. it’s not normal. That distorted rates and created a boom in asset prices. I reckon that’s all about staying ahead of China as well as pumping up the volume. This pumped up the prices of everything. They wanted inflation, well they certainly have got it now.
Then along came covid. The FED”s answer to this was to put the foot to the floor and pump more air into a coal bunker fire. Rates went negative and the printing press had smoke coming out of all holes. Gold marched higher along with the global property prices And Astro debt. Property is a real bubble and it’s making 2008 look tame. The recent talk of tapering caused the gold price and markets to react as it did some time ago with a taper tantrum. The FED use words to test the markets reaction and they know this is not going to be easy.
Prices are rising and they are saying that inflation is transitory. The problem is that Delta continues to hinder supply chains and hinder the recovery process. It seems better than it was as more people have learnt to deal with this virus and get the jab. This will keep prices rising In the short to medium term and we see this in the numbers. Once we all get enough people jabbed, then prices will continue to rise or stay high imo as things try and get back to some sort of normal. Not sure it’s as transitory as the FED would like.
Let’s say the FED starts to taper. This will be a really volatile time and gold will get caught up along with just about everything else even though you could see it coming. The shorts will make sure of that. I would announce a ban on short selling at the same time as tapering. That may prevent the minority from amplifying the downside as they did in 2008. The recent gold price Rort was not all natural selling. It was 3 times that in shorting. We haven’t really learnt anything because things like comex are allowed to have that much leverage in the first place. The banks have been told that they can’t use gold futures as an on balance sheet asset but that won’t stop them leveraging. They just follow the path of least resistance every time. All the markets are so leveraged that the reaction to relatively small things can cause big problems. The FED has basically put itself and the markets into a difficult position.
The tapper will come before a rate rise.
What does the FED do when it can’t hide inflation under the carpet any longer! Raise rates? Stop buying bonds? Let the markets melt? Stop printing? Let inflation go? The US govt can’t stop printing because it can’t pay all of its bills. The cost of running the govt keeps rising and it won’t trim. It’s too big but won’t face it. It is borrowing to pay interest at these low levels. I believe it’s called a Ponzi scheme but no one believes it. How can it pay higher interest rates without printing?. Imagine what it’s inflation linked pensions would look like down the track? The economy would have to grow so hard and fast to generate enough tax dollars to make up for the lack of printing that inflation would be out of control. Imagine two merging lines crossing. That’s the problem we all have. The rest of the world is also printing.
Some folks are suggesting that the FED will just let inflation run and perhaps taper a little but there is no way they can raise rates to where they should be to have a meaningful impact on inflation. Gold still has its place because it will always be that safe haven asset and given the unknowns in all of this, a safe haven isn’t a bad asset to own. That’s why gold is still in a range imo. The share prices will get pushed around regardless. The volatility will be nutty and scary at times. There is no guarantees with anything and gold is a sort of insurance policy to mayhem and the FED.
Things get smashed about but real companies survive over time.
If little old me is thinking like this at 4 in the morning, what is the Hell is the FED thinking about?

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A great summary, CR, and near exactly my line of thinking for the last year and a half too. Only way out of this mess completely... war.

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