<"Impending liquidity correction/contraction" why particularly now???.>
64k question, and you should understand that I'm not necessarily talking about tightening, just a pull back from the extreme monetary (also remember that fiscal stimulus equal to 4% of GDP is added to that) stimulus that's been going on this year. The patient is so loaded on heroin, that even a lower dose of the toxic will cause a steep sharp selloff in all these markets, including gold.
I'd say we are seeing a shot across the bow already. The spread between the 2yr and 10yr treasury has narrowed some to 254 from about 280.
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Now admittedly that's not a tight or flat yield curve, but it's still an indicator if that were to continue. Look at the Eurodollar yield now. The market is pricing in some tightening: from Friday's close the Sept, 03 yielded 1.15, the Dec. 03 1.27, the March, 04 1.55, and the June, 04 1.97. The Libor rate spread between the one month and one year is widening some as well.
kitco.com
This all suggests that we are near a crossover or inflection point, and that the correction time bomb is ticking. Next week? the week after? the Sept. 20th G-7 meeting? (what do you see significant about this event?), But could we get another final spike? Maybe, I hope so, you're guess is as good as mine. The point is we are entering a higher risk period for gold equities, and especially financial instruments.
BTW, the Spectrum Commodities link you provided has been one of the best sources in that area I've encountered. It's really first class, and I've used it to research corn in particular, as I'm now long probably too many Dec corn futures from 2.19. The play ties into the reserves issue raised here. Right now I'm just biting nails on this extreme dry hot weather this week, that may be nailing the corn crop. |
