Quantitative Weaning

Quarter 2 (2013) has seen history repeat itself. The Fed has indicated QE will be coming to an end. Like The Asian Crisis(1997), bond prices have risen in response to QE slowdown and commodity prices are declining.

BRIC economies, which drove global growth from 2007-2010, are seeing further output contractions. Brazil ends Q2 with riots. China is restricting money supply this is having  negative impacts on manufacturing. Russia is in slowdown and India cannot fuel global growth alone.

QE continues to distort financial markets. As output declines, QE is masking negative fundamental indicators. With markets anticipating the end of tapering; bonds, shares and commodities have all become more volatile. Developing country currencies have seen extreme volatility as money flows out in response to slowdowns in easing.

Q3 will see more commodity volatility and tapering will destabilize fragile financial markets.

Gold Wars

Disparity persists in gold markets. Futures markets remain relatively benign,  spot gold has been rising over the past 30 years. All major currencies have lost considerable value versus gold, however, futures markets do not indicate this fundamental. With suppressed futures markets, which drive gold production, restricted future supply will drive up prices long term. All this will happen in an environment favoring increased money supply.
These dynamics explain disparity between western and eastern gold markets. The future is still up for gold.