A stealth QE was distributed yesterday as banks were handed just shy of 1 trillion dollars from the ECB. As Jim Sinclair points out – “Today was a cover-up by the US Federal Reserve and by the mainstream media of one of the largest injections of liquidity into the system that has ever occurred.”
Timing is crucial for the kind of operation we saw yesterday. At the same time as Ben Bernanke’s speech where he hinted that their would be no more QE for the foreseeable future (an outright lie) there was a precious metals sell-off. At the same time the ECB released the $712.4 billion of liquidity into the market. This was a very cleverly orchestrated hit – as Sinclair points out.
None of this changes the game plan – which makes yesterdays actions seem pretty pointless. Greece will face a default this month as creditors are due repayment by the end of March. Sinclair has already previously posted about the dangers of a Greek default as Credit Default Swaps will be triggered in the event Greece cannot pay (it can’t) The implications for these CDS’s are huge. Leverage beyond the comprehension of mere mortals have been applied – into the trillions. When CDS’s are triggered, several well respected financial pundits have predicted the end of the major US banking institutions.
This leads us back as to why the announcement of there being no more QE had an effect on precious metals yesterday and why this was so pointless.
The implications of a banking system which is imploding under trillions of dollars/pounds/euros of debt has caused many investors to seek refuge in gold and silver. Similarly, investors have flocked to precious metals due to Bernanke’s Zero Interest Rate Policy (ZIRP) which effectively makes returns negative for savers. Yesterdays actions on the rigged stock market changes nothing.
There is no doubt we are witnessing very scared central banks at present. The central planners are also incredibly nervous and these players are orchestrating their efforts to attempt to survive. Survival is possible but at a cost. The costs will be revealed very soon.