Image only. link below.
This piece of news comes not from any news channel. It is not to be found on FT or WSJ. It comes from a guest of a tiny precious metals website, called Kitco which recently added a daily TV report. The guest’s name is George Gero of RBC Capital Markets, and he was being interviewed today as to why the gold price is falling, and not holding onto its recent gains.
His answer sounds like it comes from someone in the know, and it is extremely significant. He says the Fed has ‘signalled the addition of money funds for overnight repos’, which implies in his opinion a coming rise in interest rates. The fear of rising costs is what is hampering gold buying, in his opinion.
This information is not yet in the public arena, but is given in this tiny report made each day for gold buffs, as if it was well known.
Watch the Kitco TV report HERE.
If interest rates are now rising in the US (there was one rise last month of 0.25%), this will have a huge impact on markets which are mostly traded by hedge funds. Hedge Funds borrow to leverage their bets and send markets on dramatic moves. If that leverage is now going to cost them more, the current bubble which has sent the S & P 500 up 68% in under one year, the fastest rise in stock market history, will start to unravel, also the gold price and other asset markets dependent on hedge fund buying.
If rising US interest rates are coming in the next week or so, the financial knock-on effects will be felt globally. The British stock market will track any decline of the S & P, and the social mood across Europe, already rocky from the sovereign debt crisis unfolding in the PIGS, will ratchet up to a higher level of distress.
It is not often that such serious news is found on a small website for mostly private investors before it hits the main news networks. But here it is. Given how the world’s markets depend on hedge funds, the effects of rising interest rates could be devastating to stock markets and the current optimism.
This would have knock-on effects on the British general election.
John Authers of the FT explains on video, also made today, how the hedge funds are driving markets higher through leverage – HERE.