Turk - Commencement of QE3 to Send the Dollar Into Oblivion
With gold and silver up strongly today along with the mining shares, today King World News interviewed James Turk. When asked about the lengthy consolidation in both metals Turk responded, “This correction has lasted longer than I expected, but importantly the underlying fundamentals remain intact. All this correction has done is push large numbers of people out of the market. The drop in precious metal open interest over the past week ranks with some of the biggest we have seen since the bull market began over 10 years ago.”
“A lot of people who normally trade paper gold and silver from the long side are now on the sidelines. If gold can push above $1,510 and silver above $35 we are going to see a tidal wave of buying coming into the market from these sidelined buyers.
The purchasers of physical metal remain very active. Asian premiums on gold have jumped back up providing clear evidence that support at $1,500 is solid. Another piece of evidence is the huge drop in registered silver inventories on the Comex. Silver inventories have been disappearing for months, but the trend is starting to accelerate at these low silver prices.
I take this as an indication that support for silver at $35 and below is solid. So to me Eric, the bottom line is the metals are ready for the big summer rally that I’ve been anticipating. All we need now is a little upside momentum to develop as that will bring a lot of money from the sidelines into the market. Buyers of physical metal who have been waiting around for lower prices might be surprised to find how difficult it is to obtain immediate delivery if they are purchasing significant weights of metal...
“It’s interesting to note Eric that even though quantitative easing has ended, the dollar remains weak. Even though the dollar index is bouncing a little bit today, it is closer to the lower end of its trading range. It is also below its long-term moving averages which suggests that today is nothing more than a dead-cat bounce, after the pummeling the dollar took last week.
I think the dollar chart basically confirms my point that quantitative easing will be started again soon. Last week’s big jump in the major stock market indices is basically saying the same thing. All we need now is an indication from policy makers that QE3 is imminent. The effect this will have on gold and silver will be nothing short of spectacular given how sold out both of the metals have become during their correction over the past two months.
When they start QE3, the Us dollar index will plunge to new lows. Gold will also be at a record high by then as well. The scary thing is they are going to shove through this debt limit increase one way or another. If there is an impasse in Congress with Tea Party Republicans holding the line, word has come from Washington that President Obama will use the 14th amendment to declare the debt limit as unconstitutional. By removing this last piece of discipline, that will open the floodgates and will be the tipping point to send the dollar into oblivion and gold and silver into the stratosphere.”