January 28, 2015

With central banks ok with banks leveraging 60 times plus with loans to Greece, the sky seems the limit for gold prices

Sir, Jamie Chisholm in “Trading Post” January 28 writes: “There has been much talk recently about how investors are growing fearful that central banks are becoming a source of uncertainty rather than suppressors of volatility… It’s a view that… along with a large swath of global debt sporting negative yield, is bolstering demand for gold”

Of course, how could it be different? The irresponsibility and or stupidity of central bankers are the most important drivers of gold prices.

Here we have central banks that first, when regulators imposed Basel I, had no problem with the fact that banks needed to hold so much less equity when lending to sovereigns than when lending to citizens; and then when Basel II arrived in 2004, had no concerns with how segmenting the private sector into the AAArisktocracy and “the risky” could distort the allocation of bank credit to the real economy.

With central bankers like that, the sky seems the limit for gold prices.