We ended almost every one of nearly 100 webinars in 2011 with "Don't Worry, They'll Print the Money". This is how confident my Co-Host, Ty Andros and I were that the global central banks had no other recourse but monetization.
We felt strongly that the western economies had passed the 'event horizon' and that the economic spiral was now inescapable.
Outright Monetary Financing or OMF is what presently lies in front of us as QE¥ ends and it has profound implications for precious metals.
The charts as we will show are signaling that the smart money sees this and are already quietly laying down their bets. These players include the central banks not presently part of the Currency Cartel. The path however is going to be tricky and the charts also show why.
The global central bankers are feverishly loading the helicopters, but these are helicopters like we have never seen before.
We have been carefully observing that the global central bank balance sheet expansions have exhibited the following:
- Each new increase has been significantly larger,
- Each new increase has come with diminishing intervals,
- Each increase has been more coordinated between central banks,
- Each central bank balance sheet appears to keep the total expansion within a well defined boundary condition,
- Each time the TOTAL RATE OF INCREASE approaches zero (see blue line below) it soon triggers the next increase.
Charles High Smith and I recently laid out how large central bank balance sheets could grow and what were the 'limiters'. It appears that a collapsing currency is no longer the 'limiter' it once was but in fact is now a goal as the global currency wars heat up.
Gold as shown below has tracked amazingly close to the cumulative growth in the balance sheets of the ECB, PBoC, BOE, BOJ, Federal Reserve and SNB (cumulative values of this group are reflected in the chart above and below).
Gold Signaling a Completing Consolidation
One of the more predictable technical analysis patterns is a flat bottomed triangular formation indicating a consolidation. The Descending Triangle is more about time targeting than price targeting.
Gold is suggesting that we have a smaller 'DE' wave combination to complete the standard 'ABCDE'. it will tax the patience of gold investors and the pocket books of the options players as time decay is a killer. Our SPX analysis has suggested for some time that we expect a market scare between April 15 and early summer which would match gold's 'DE' timing.
Indication are strongly pointing to the 'heavy OMF helicopter' lift off to be in late Q3. We have labeled this as the Great Reflation - Part III.
We do a lot of work with Fibonacci Ellipses and they have proven extremely accurate within this central bank controlled environment which we are presently witnessing. We refer you to: REDUX: Beware the Ides of March.
Our Fibonacci Spirals (below) has confirmed the consolidation pattern with a high probability.
A couple final charts show that in the larger context, a lift in gold with a correcting equity market should not be unexpected.
As we have done since 2011, we end this note with:
"Don't Worry, They'll Print the Money!!"
Get up to speed at MACRO ANALYTICS which can be found at GordonTLong.com.
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