Gold continues its march higher amid rising risk aversion. The yellow metal has extended to new 5-month highs, nearing the $1300 level.The IMF downgraded their global growth outlooks for both 2015 and 2016. The IMF now sees growth in 2015 at 3.5%, down from their expectations of +3.8% back in October. Growth for 2016 was cut to 3.7%.The IMF's chief economist, Olivier Blanchard, also expressed concern about deflation. He warned that deflation could reignite the eurozone debt crisis.
Expectations that the ECB will announce QE later this week is also helping to push gold higher, as it becomes increasingly evident that the era of easy-money is a long way from being over. Saxo Bank's CIO and chief economist, Steen Jakobsen, also worries that the end-game for central banks has commenced.Noting last week's extraordinary surprise move by the SNB, Mr. Jakobson wrote the following in a report republished at ZeroHedge:
Many central banks will envy the SNB for its move last week, as it at least tries to regain some control of its future, but the conclusion remains: central banks have as a group lost credibility and when the ECB starts QE this week the beginning of the end for central banks is completed. They are running out of time – that’s the real real bottom line: the SNB ran out of time, the ECB will run out of time this week, and the Fed, Bank of Japan and the Bank of England ran out of time in 2014.
There seems to be a growing realization that central banks may indeed be part of the problem, rather than offering a solution in their incessant debasement of fiat currencies.
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