Fred Hickey says gold’s correction may be over as surprise $60 billion a month QE program is to combat shadow banking crisis.
“The Belly Of The Beast”
October 17 (King World News) – Fred Hickey: “Had interesting discussions today including with one who’d been in “the belly of the beast” (shadow banking system). I’m convinced the Fed’s surprise $60B a month QE program (while everyone was focused on the Trump/China show Friday) is to combat an evolving shadow banking crisis.
Shadow banking – the land of little oversight, leveraged loans, covenant-lites, leverage on leverage, investments in zombie cos. & now much lower valued Unicorns, has seen the exit door (IPO market) shut and the WeWork types implode. Bank loans that can be called bi-weekly.
WeWorks’ World Implosion
Also interesting is (coincidental?) timing of WeWorks’ world implosion & money market/repo interest rate crisis that doesn’t seem to be getting much better. $75B in repos today, despite fact that quarter end has passed as did the Sept 15 corp. tax payments.
S&P And Gold Rally Right As Repos Begin At 10:15 AM
QE -even $60B a mo. worth is a blunt tool, meaning Fed can’t direct funds where they necessarily might want them to go. Today’s $7.525B (maximum t-bill purchase) began at 10:15AM -almost the exact time the Dow Industrials, S&P & gold all started turning up from their lows of the day.
Will Shadow Banking Problem Lead To 2008-Style Crisis?
All of them bottoming & rallying at same time the t-bill purchases began. Coincidence? I think not. Will this potential shadow banking problem lead to a 2008-type crisis.Probably not. But there’s lots more t-bill purchases ahead in coming mos. which should be good for “quality” assets.
Gold’s Correction May Be Over
For gold, a week ago ECB was leading the charge with $20B QE per mo. & lowering rates. Now Fed is doing 3X ECB’s QE & also cutting rates. Not good for US$ which is rolling over (breaking below 98 tonight), but good for gold. Gold’s correction may be over. Would catch many by surprise.”
James Turk’s powerful audio interview has now been released where he discusses exactly what to look for in the gold and silver markets, mining shares, the coming crisis, the U.S. launching QE4 and much more, and you can listen to it immediately by clicking here or on the image below.
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