In some developing news today the world’s major central banks (which hold more than 15% of global Gold stockpiles) are expected to reduce their sales or lending of their bullion reserves this year. This has the potential of restricting supplies and putting a floor under Gold prices. This is the third time in the last year that they have touted the IMF unloading Gold. The Chinese would buy them out. Well desperate people do desperate things. The Fed and Treasury are desperate. Nobody wants the US dollar and the rise in the price of Gold would be a spit in their faces.
A liquidity trap is a situation in monetary economics in which a country’s nominal interest rate has been lowered nearly or equal to zero to avoid a recession, but the liquidity in the market created by these low interest rates does not stimulate the economy. In these situations, borrowers prefer to keep assets in short-term cash bank accounts rather than making long-term investments. This makes a recession even more severe, and can contribute to deflation.
This is the central problem with leveraged (fiat) currencies and highly leveraged (indebted) economies…no one wants to be left holding the bag when the reckoning (final accounting) comes. Today’s POG pullback is just another opportunity to start to build up your Gold positions.
