Commodities Falling Despite QE: What Does That Mean?
January 22, 2014 5:54 pmVideo
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Robert Prechter: “Charts tell the truth. Let’s look at some charts.”
By Elliott Wave International
During QE3, the latest round of the Fed’s quantitative easing, the stock market rose. We all know that.
But did you also know that commodities fell?
That’s right: QE3 had zero effect on commodities — or maybe
even a negative effect. In fact, an unbiased observer of the
trend might conclude that the Fed drove commodity prices down.
That, of course, would be heresy to investors who believe
that the Fed’s actions have been inflating all financial
markets.
What should you make of the fact that commodities have failed to respond to the massive, historic, unprecedented central-bank stimulus? We see it as a red flag.
What’s more, you may be surprised to know that not one of the Fed’s stimulus programs — QE1, QE2 and QE3 — pushed up commodity prices.
As Robert Prechter, the president of Elliott Wave International,
wrote in his November 2013 Elliott Wave Theorist,
“Charts tell the truth. Let’s look at some charts.” These
four charts and analysis that he published in May, July, and
November 2013 tell the story:
Prechter gave another update in his November 2013 Elliott Wave Theorist:
Prechter’s final point from the November 2013 Elliott Wave Theorist summarizes it best:
None of the believers in omnipotent monetary authorities and their pledges to inflate saw any of those changes coming. Meanwhile, we couldn’t see how it could turn out any other way.
The largest inverted debt pyramid in the history of the world is the reason that QE won’t work. The future is already fully mortgaged.
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