Friday, September 6th 02:53 PM IST

Precious metals shortage to support, once tapering shock talk wears off

# QE Fed  # tapering  # gold  # US dollar  # fiat currency  

The Fed QE taper plans have dramatically impacted emerging market currencies causing crash in Indonesian, Mexican, Indian currency as hot money flows into dollar assets.

image courtesy of FreeDigitalPhotos.net

LONDON (Bullion Street): Precious metals gold and silver will continue to gain support on shortage of the commodity, once the US Fed tapering shock talk wears off, according to Dr Jeffrey Lewis of Silver-Coin-Investor.com.

The Fed QE taper plans have dramatically impacted emerging market currencies causing crash in Indonesian, Mexican, Indian currency as hot money flows into dollar assets.

"For now the focus is on U.S.Treasuries and currencies, but this is only foreshadowing the upcoming rush into physical commodities —- whose market value remains hostage to false speculation and manipulation— the poster children of which are the precious metals," Jeffrey Lewis said.

Fiat currencies lack the hard collateral value of precious metals.Furthermore, the global financial system is quickly running out of collateral, hence signs of a growing gold shortage abound.

The new emerging market currency crisis also comes on the heels of horrible precious metals sentiment and virtually zero interest in the PM mining sector. Why is the mining sector important?Because mainstream investors "understand stocks better" than commodities, and they are not especially in touch with monetary and investment demand for these hard assets.

In addition, exerting more pressure on physical metals means putting even more artificial pressure onthe paper futures exchanges that are already being questioned for being out of touch with the physical market’s reality of precious metal shortages. Ultimately, this disparity will be price positive for physical precious metals after the initial tapering talk shock wears off, Dr Jeffrey Lewis said.

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