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So we're off ... a strange mix of elation at an eleventh hour deal to rescue the US from the fiscal cliff, disappointment at the threat of 'throttling back' QE-Infinity and a total shoulder-shrug at the US postponing, and raising, the $16trillion debt question.

I mentioned in my last post that I couldn't see the contradictions present in the market lasting long ... I'm glad to say that much wiser men than me agree.

Please find below extracts from an artcile by Jim Sinclair, an expert in precious metals with an incredible track record and talent for speaking common sense when none around want to hear it:

"The Federal Reserve Has No Practical Option To End QE

... The implication of stopping QE is so dire to the economy that it is in a practical sense impossible. When gold was being sold by central banks during the 1970s market announcements were made constantly with the bias to depress metals.

There is no way that the implications and consequences of what has been done up to now can be talked or manipulated away. There is no practical way that QE can cease here or in Euroland without a total and final collapse of the financial system ... If QE ceases, the US bond market collapses and the Fed must debt monetize all required debt, which means if QE stops, it starts up again immediately and in a crisis mode.

The statement that QE can stop is simply MOPE (management of perceptions economics). QE cannot stop or the world ends as you know it.

Please print this out and post it on your computer because every time the long cycle guy repeats his year-old bear gold price prediction or the Fed says anything about stopping QE, you all go wild. It is embarrassing really.

... The Federal Reserve has no practical option to end QE without ending the economic world for decades to come. Should that actually occur in some parallel universe, only gold will protect those citizens from the collapse of the by-default reserve currency. I am sure I have written this at least 200 times."

 

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Saturday January 5, 2013 by Robin Newbould