By Dominique de Kevelioc de Bailleul
Following the surprise announcement on Wednesday that six central banks have lowered dollar swaps rate by 50 basis points in an effort to allow European banks to bypass a rising LIBOR rate, Dow Theory Letter author Richard Russell told King World News investors should expect a jolt in commodities price in the future.
“The world’s major central banks launched a joint action to provide chief emergency U.S. dollar loans to banks in Europe and elsewhere,” Russell stated. “In a desperate effort to raise stocks, the central banks of the world coordinated by forcing more money into the world system.”
The announcement incited a stampede into equities and commodities, as traders fell over each other to buy more of their favorite inflation play, resulting in pre-holiday gifts of a 400+ points rally in the Dow, $30 rise in the gold price and a nice spike of a dollar to the price of silver.
“This is exciting for now,” added Russell, “but it will result in inflation within 6 months to a year.”
