Is Europe’s Solution Inflationary ?…………Update at 11:50 AM

 Many newsletter writers think so, but one has to keep in mind that what worked for 10 years for a different reason may not work now.  In any case the next few days will be a test of whether the austerity that will increase in Europe will offset the inflationary reasoning that has become so entrenched in every crisis and was a big factor when bailout money was directed to speculative areas in the US in QE1 and QE2.  I Think Europe’s bailout has a different direction.  So we will see how this plays out.

As to the US and what would be good for it, Samuelson gets it right in my opinion.  See the following article.

http://www.realclearpolitics.com/articles/2011/10/24/let_clinton_and_bush_apologize_111787.html

Update:

It appears that I underestimated the gold bug hyperactivity that can be generated from time to time. 

In any case it is interesting to look at the rally today in light of two things, first, normal technical bounces as a percentage of prior moves are usually 38 to 50 percent with 62 percent always an outside possibility. 

Secondly, some of the commodity traders have been advocating the gold trade denominated in Euros as a way to get the gold move and the weak Euro direction together.  For the year that hasn’t worked out too well as gold denominated in dollars is today up 19 percent for the year while gold denominated in Euros is up 14 percent for the year.  Going further, in looking at the reaction off the highs,  gold in dollars made its low on 9/26/11 and is up 11 percent from that low while gold in Euros made its reaction low last Thursday, 10/20/11 and is up only 4 percent from that level.  So ???   But looking at the bounce levels off the reaction lows, gold in dollars bounced 43 percent of the prior down-move low as of today, while gold in Euro’s had its bounce off its reaction lows much earlier, three weeks ago on 10/3/11,  at which time it also bounced 43 percent of the prior down-move.  My point….. gold in dollars did a little catch-up today.

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