This will likely be the shortest WrapUp I'll do for the year and by shortest I mean by length of text. A well known maxim is that a picture is worth a thousand words and with that being the case, I will put forth two arguments for why gold should remain strong despite short-term price swings.
Rampant Global Money Printing
Stocks Gain Modestly As European Central Bank Lends $500BNEW YORK (AP) -- Wall Street rebounded modestly Tuesday from recent losses, finding some comfort in the European Central Bank's issuance of $500 billion in loans to the world's commercial banks.The ECB's massive 16-day tender boosted investors' optimism that the world's central banks may help bring back demand to the struggling areas of the credit market. The Bank of England also said it will offer additional reserves to lenders Tuesday, after the U.S. Federal Reserve on Monday conducted a $20 billion auction of 28-day credit.Fed Loans Banks $20 BillionWASHINGTON (AP) -- Cash-strapped banks took the Federal Reserve up on its offer of $20 billion in short-term loans to help them overcome credit problems, but the interest rate wasn't as low as some had hoped.The central bank said Wednesday that it had received bids for $61.6 billion worth of loans, more than three times the amount that was made available.A second auction will be conducted on Thursday, offering banks another chance to get a slice of another $20 billion in 35-day loans. The Fed said it would conduct two more auctions in January and then assess whether the process was worth continuing.Table 1. Money Supply Growth Rates
Source: Bloomberg
Rising Inflation
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Source: Moody's Economy.com, DismalScientist
Today's Market
Volatility dominated the markets today on continued credit concerns with news of a $9.4 billion writedown at Morgan Stanley and a lowered Standard & Poor's outlook for bond insurers weighing on the markets. The U.S. Fed announced today the results of its Monday auction of $20 billion in 28-day credit, which met with strong demand.
The markets staged a rally in early afternoon trading only to give up the modest gains in the final hour of trading. The Dow Jones Industrial Average fell 25.20 points to close at 13207.27 (-0.19%), the S&P 500 lost 1.98 points to close at 1453.00 (-0.14%), and the NASDAQ put in a small gain of 4.98 points to close at 2601.01 (+0.19%).
Treasuries rose on a flight to safety with the yield on the 10-year note falling 5.0 basis points to close at 4.070%. The dollar index put in a small gain, rising 0.18 points to close at 77.60. Advancing issues represented 43 and 48% for the NYSE and NASDAQ respectively, reflecting a mixed market.
