The Significance of Rising Commodities Prices

inflationPrecious metals expert Michael Ballanger expounds on how Federal Reserve policy affects the commodities markets, and expresses cautious optimism about how that policy will play out in gold markets.

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One look at the recent chart of U.S. home prices city-by-city and I had to sit down armed with an Extra-Strength Tylenol and a quarter flagon of Glenfiddich. Zerohedge has been all over this entire commodities rebound since they (amazingly) sourced out the reason.

From the minute the phone call went out on Feb. 11 from Fed Chairman Yellen to BOE Chairman Mark Carney followed the next day to ECB head Mario Draghi, the four most important markets on the planet changed direction dramatically, with all of the markets representing the greatest risks to the banking business turning on a literal dime and continuing on a tear ever since. Firstly, before I down my second belt of single-malt, here is the itinerary of the call made by Janet Yellen to Carney and Draghi. . .

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Now look carefully at the charts of the S&P500, copper, West Texas Intermediate crude oil and lumber. Stocks have historically been the advanced barometer for economic growth; copper (or “Dr. Copper”) is widely seen as a barometer for economic demand; WTIC (“oil”) around February was creating huge dislocations in the credit markets (HYG); and lumber is the surrogate for “mortgages” found in housing. What do all of these markets have in common? They are all markets to which the global banking cartel were dramatically overexposed and overleveraged. If these markets stayed in the tank for another quarter, the default “covenants” would have been triggered, the immediate result of which would have been very “bank-unfriendly.” Observe the dramatic changes that occurred after Feb. 11 and 12 (see charge above). All forms of bank collateral were immediately lifted to debt covenant safety as the invisible hands of the Fed, the BOE and the ECB went to work. . .

Now let’s look at the relationship of the High-Yield Bond Market (“HYG”) to stocks and to the now-legendary “Yellen phone call” from Feb. 11. . .

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So all of this talk regarding “economic growth” and “Fed Policy” and “portfolio management” has NOTHING to do with securities analysis; it has EVERYTHING to do with PROTECTING the BANKS. There are zero provisions in place to protect the AVERAGE INVESTOR; there are countless provisions in place to protect the BANKS. By ensuring that the collateral represented by assets underwritten by the global banking cartel continue to rise, the bankers continue to PROTECT their ability to finance political campaigns and political agendas.

In other words, on Feb. 11, these central bankers ORDERED the escalation in asset prices, deemed all-too-necessary and highly germane to the interests of the global banking cartel.

Have you ever noticed that everything we get “fed” (large swig of Scotch interruption) by the “FED” is essentially designed to placate the major shareholders of that non-governmental institution called “The Federal Reserve Board?” Do a Google search on “The Creature from Jekyll Island;” you will get the following review of G. Edward Griffin’s superb book. . .

“The Creature from Jekyll Island—one of the classic exposes of the treachery and thievery we call ‘The Federal Reserve’—which is curiously neither federal, nor is it a reserve. No one cuts to the center of the issue quite like Griffin. This is an issue that impacts nearly every aspect of your material life, since you probably earn and buy almost everything you have with ‘Federal Reserve Notes. ‘ The IRS, too, is little more than a collection agency for the ‘Federal Reserve.’ Find out the truth and the history of this evil which strangles our society.”

Does it get any better (or worse) than that?

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