After Signor Draghi’s announcement, the markets have been “reassured”. Markets from stocks over precious metals to the euro currency itself moved higher, with gold again going above the $1600 per ounce level and closing around $1620 for the week. Silver was up and closed around $27.80 an ounce. We have to ask ourselves though what kind of reassurance this would be: didn’t we have a sneaky feeling that government bureaucrats around the world would rather print more money than, for once, return to fiscal discipline and enact sound policies? Didn’t we know before that they have the ‘printing presses’ at their disposal and, hence, would make thorough use of them. Draghi’s statement is exactly in line with that, which means, after all, there isn’t much news in it and any market ‘reaction’ will be short lived: we continue on our way toward falling paper currency values and rising Hard Asset prices.
The fact that, in an actually very contradictory mix, all asset classes have jumped upwards together should not overly puzzle us: it’s the kind of background noise to be ignored in order to keep our eyes on the big picture. And that is, more government spending, more deficits and, ultimately, an even bigger problem down the road.