Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Will the Fed Continue to Inflate the Stock Market By Printing Money?

Stock-Markets / Liquidity Bubble Nov 15, 2007 - 12:17 PM GMT

By: Greg_Silberman

Stock-Markets

The 100 Dollar Bill drop - In spite of money drops and liquidity injections we continue to see a volatile scary stock market. Will the Fed ultimately lose control and the stock market deflate or will the money presses continue to levitate the stocks at the expense of the Dollar?

The market got its ¼ point rate cut on Wednesday the 31 st of October and has been slaughtered ever since. Gee, thanks a lot Mr Bernanke!


The markets message is clear – Market to Fed: Send more money! More rate cuts please.

We've been telling subscribers for a while that this market is resting on quicksand. This is a market which requires constant support, hugs and kisses from the Fed in order to remain elevated. So a ¼ point didn't do the trick this time. No problem! You can bet the Fed will be back in December bearing further gifts – maybe sooner.

In fact, we've been so sure the the official policy is “support the markets and to hell with the Dollar” that we've been advocating buying non-resource stocks as well as our regular Gold and Oil stocks. The thinking being that the stock market is headed higher on a Super Inflationary Wave ( forecast of u. s. inflation rate )

Lucky for us we've got some hard thinking subscribers who pointed out that our views are somewhat inconsistent.

For years we've been saying that nothing will prevent this Gold Bull market from expressing itself fully. No amount of government intervention or derivative games will prevent Gold from going to 4-digits and beyond. Ofcourse we still stick to that.

But now subscribers are telling us (and rightly so) that we've done a flip-flop by saying that the Fed will be able to constantly elevate the stock market by reducing interest rates.

So which one is it?

Can the Fed manipulate the stock market and keep it rising forever or will market forces eventually prevail as in the case of the Gold?

Truth is, its not much of a question. If growth in earnings is real then stocks should naturally outperform Gold. There should be no need to artificially support the market by printing obscene amounts of money. However, today we have a situation where growth is being engineered through the printing press. How do we know this?

Text Box:  Illustration 1: Stock Market falling against Gold but rising in Nominal terms (below)

Gold / Real money has been outperforming the Dow since 2000 and it now looks as if it is about to enter the next phase (target of 10 ounces : 1 Dow). The bottom of the chart shows the S&P500 in Dollar / nominal terms. Fact is, even though the S&P is higher today then in 2003, in real terms (as measured by Gold) it is quite a bit lower. We're about to learn the hard way that PROSPERITY CAN NEVER BE PRINTED. If it could, Zimbabwe would be the worlds super power.

So whilst we will continue to get scary days like we've seen over the last 2 weeks, we feel that the Fed through its unlimited printing press will continue to keep the Stock market Bear at bay but will sacrifice the Dollar and keep Gold well bid.

More commentary and stock picks follow for subscribers…

By Greg Silberman CFA, CA(SA)
Profession: Portfolio Manager and Research Analyst
Company: Ritterband Investment Management LLC
e-Mail: greg@goldandoilstocks.com
Website: blog.goldandoilstocks.com

I am an investor and newsletter writer specializing in Junior Mining and Energy Stocks and small caps listed in the US, Canada and Australia.

Please visit my website for a free trial to my newsletter http://blog.goldandoilstocks.com

This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.  

Greg Silberman Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in