On Wednesday, June 19, U.S. Federal Reserve chairman Ben Bernanke announced that the U.S. central bank planned to finish its five-year quantitative easing program later in 2013, when the U.S. economy is expected to pick up. That day, the Standard & Poor's 500 stock index tumbled by more than 1%, and all major U.S. indexes continued falling through the following week. The Fed's intentions reverberated around the globe, as prospects for higher U.S. interest rates and the end of easy money prompted capital outflows from China and other emerging markets. Indeed, Bernanke's speech helped catalyze a surprising liquidity squeeze in China -- one that signals more change to come in that country's financial system and carries broad implications for the global economy, experts say. On Thursday, June 20, China's overnight interbank lending rates -- the rates at which banks borrow from each other -- spiked to their highest levels ever: The seven-day repurchase rate reached a record 12.45%, closing at 11.62%, triple the year's average of 3.85%, according to Bloomberg. China's central bank, the People's Bank of China (PBOC), declined to inject liquidity to calm the markets. On Monday, June 24, the Shanghai Composite Index witnessed its biggest decline in four...
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by Chris Powell - GATA Technical analysis of a manipulated market like gold has been tedious nonsense for years, but these days, with virtually infinite paper dropped on the gold futures market at illiquid times to drive the price down even as the physical market remains strong, technical analysis has become insulting. The only analysis worth anything anymore is the identification of the source of all the paper. The suspects are obvious -- Western central banks. Even a little-known fund manager who managed to get on CNBC yesterday perceived it:  http://www.gata.org/node/12725 But while central bank intervention now has driven the gold price down below the cost of production, the nominal spokesmen for gold investors and the gold mining industry have nothing to say, or nothing relevant. Back on April 19, a week after the big gold smash, the World Gold Council could do no better than grumble about "speculative traders":   http://www.gold.org/media/press_releases/arch...ld_gold_coun... The gold council wasn't heard from again until this week, when it offered a new formula for calculating the costs of gold mining, the better to publicize the insolvency of the industry the council purports to represent:  http://www.gold.org/media/press_releases/arch...dance_note_o... This week the gold council also announced appointment of a managing director for worldwide investment,...
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