Sunday, November 24, 2013

QE, Inflation & Deflation: Gold, Bonds & Equities

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ITZ takes a look at gold, with several charts this weekend. Those trading/investing in gold will be interested, because they can indicate whether deflation or inflation is the major theme in play. ITZ observation on MZM (Money Zero Maturity) chart is especially interesting, because it excludes large time deposits. MZM is a comprehensive money supply measure designed to represent money that is immediately available for spending by consumers, and it has been declining since gold peaked in 1980. MZMV (velocity of money).

Earlier this year, Market veteran Art Cashin alerted us that a key indicator was giving a warning READ

Most expect the Fed will begin tapering soon...or will they?
The Federal Reserve will remain accommodative for years with a mix of tools, and it won't taper its bond-buying until the economy is ready and financial markets are prepared, Atlanta Federal Reserve President Dennis Lockhart told CNBC on Friday LINK

Peter Schiff appears on BNN and explains how the FED will do the exact opposite of Tapering. They will print MORE money! He says the FED has checked in to a roach motel and is stuck. LINK

Looking at the equity and bond market as well as that of gold. Stocks have been the best performing asset via QE. The chart compares the S&P500 to the total assets held by the Fed.

Will all of this QE someday bring us inflation?  It already has, in recent decades, many people including Fed officials have come to think of "inflation" as what happens to consumer prices.  But the original definition of inflation refers to the excessive expansion of the money supply.
 Inflation Or Deflation: Which Is The Greater Risk?

Performance charts of Gold, Bonds & $SPX:

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