Gold in Euros Surges As ECB Print Trillion Euros and ‘Grexit’ Election Sunday

by Gold Core Research, Gold Core Stocks, bonds and precious metals surged yesterday as markets cheered the latest wave of money printing on a grand scale. Gold surged 3 per cent in euro terms (see chart below) after Mario Draghi in the ECB announced a massive quantitative easing or QE programme of over EUR 1 trillion from March 2015 to September 2016. The QE programme is even larger than expected at €60 billion every month rather than the €50 billion that had been expected. The euro fell another 0.9 per cent against the dollar to an 11-year low and has shed another 1% versus the Swiss franc. Gold was nearly 1% higher in dollar and sterling terms also. Gold is headed for the third week of gains and is 4.2% higher this week and has jumped 9.3 percent this year in dollars and 17% in euro terms as stagnating economies again lead central banks to the default position of ultra loose, zero percent interest rate policies and debt monetisation – the creation of currency to buy government bonds. Stock and bond markets, increasingly dependent on central bank largesse, ’stimulus’ and support also saw gains. European shares have jumped 1.7%, gaining ground for the seventh consecutive session as traders, banks and many market participants celebrate the ECB’s decision to buy government bonds, and after a strong session for Asian stocks overnight. Further financial repression mean that borrowing rates for indebted and in some cases insolvent euro zone countries hit new record lows. As we saw with the Swiss franc recently, financial repression and price manipulations can only work for so long prior to being overwhelmed by market forces and the laws of supply and demand. Gold in Euros - 30 Days (Thomson Reuters) Silver, the poor man’s gold rose 1.4%. Among other commodities, oil prices jumped, with benchmark Brent crude futures climbing 1.3%, as news of the death of Saudi Arabia’s King Abdullah added to uncertainty in energy markets already facing some of the biggest shifts in decades. Ultra Loose Monetary Policies and Currency Wars The ECB moves confirms that ultra loose monetary policies are set to continue globally and currency wars and beggar thy neighbour currency devaluations are set to continue. As ever context is important. Japan has doubled down and is now printing yen with reckless abandon in what appears to be a last ditch desperate attempt to prevent Japan falling into a Depression. Canada, Denmark and India have all cut interest rates in recent weeks – showing that ultra loose monetary policies and currency wars are here to stay. Also, the fragile narrative of a U.S. economic recovery and rising interest rates by the Federal Reserve is now being questioned and interest rates look set to remain near zero percent in the coming months in the U.S. Draghi’s “big bazooka” or weapon of mass delusion was bigger than expected, promising €60 billion every month, although he did not have it all his way and in the small print it is clear that Germany played a large role in crafting the final details. Angela Merkel had made Germany’s opposition to the ECB underwriting the purchases of bonds of weaker countries well known. The Netherlands, Austria and Finland were supportive of Germany’s stance. Continue Reading>>>

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