Notes From the Underground

Posted at 7:08 PM (CST) by & filed under General Editorial.

Dear Friends,

Remember the key number is $1,764

Today the ECB launched Quantitative Easing as we all know will go to infinity. Gold got a second kick up from the combination of Moody’s recognition that an A rating has little to do with municipalities that issued structured debt and QE to Infinity via the ECB. My former partner Yra gives us an excellent review of what really is going on.


By Yra

As expected, the ECB began buying Spanish and Italian bonds. The ECB actions brought about a drop in yields of 82 basis points on the Italian and 92 points on the Spanish. Today was one of the few days in recent memory when the Italian and German Bond Futures both staged significant rallies, meaning this was just not a rotation out of one and into another. The collapse in equity prices obviously caused a flight into DEBT as global investors ran to safety. GOLD, of course, was the greatest recipient of the search for safe havens. BUT THE BID FOR GOLD WAS HELPED BY THE ACTIONS OF THE ECB, FOR TODAY WAS THE FIRST DAY OF QE1 FOR EUROPE. Further proof for this was that the EURO FX failed to rally in conjunction with the ITALIAN BTP rally. Italian bonds up; EURO down as the ECB was creating short-term liquidity.