"Dare I ask. Why are the markets in panic now that Ben says he will stop his 'Creating nothing' (according to you JMG)"
Up until last week, the Fed said QE and asset purchases will continue until mid-2015, last week they said it may start winding down late 2013. Look at the change in the yield curve below, there was a 60 basis points change in the middle of the curve.
When you increase interest rates, you increase discounts rates of stocks, decreasing the value of cash flow. The PE expansion of recent times was over. You also take away and carry trades with high yield stocks and currencies like the AUD.
Using your logic that adding reserves increases money supply, you must be pleased that these recent interest rate rises will decrease the Feds the balance sheet and money supply then? Of course not.
The fact China is down 6% yesterday probably not helping either.
Blackrivered,
I dont have a strong view on Gold either way. I think pretty much all the justifications for gold on this forum are nonsense though - Futures manipulation, Excessive Premium to Spot, hyperinflation etc...
