Once again it is the € gold price that is leading the way, currently back above €1300 and looking like having its best weekly close in 6 weeks. In fact gold priced in €s is only 4% away from making fresh weekly closing highs. In terms of $ gold the tight trading range that we’ve now been in for 9 weeks looks set to continue. In fact on a weekly basis gold has been trading in one of the tightest ranges in over a year (just before the gold price explosion last summer), $1625 marks the top and $1570 marks the low. It’s hard to see what would shake gold out of this trading range this side of the next Fed meeting scheduled for the beginning of next month. Everyman and his dog knows that the Fed ‘stands by ready and able’ to pump more money into the system if/when it is required, which they will – what is unclear is whether this happens at the next Fed meeting. Michael Pento of Pento Portfolio Strategies is speculating that when the ‘monetary ease’ does come in the States, it will come in the form of removing the interest the Fed pays on the excess reserves held by the banks with the Fed. Currently there are some $1.4tn in excess reserves that are laying fallow at the Fed – and earning the banks 0.25% in the process. Removing this interest paid on excess reserves, which has been effectively bribing the banks not to flood the market with new credit, would mean that banks would look for a home for all this cash. Most likely it won’t find its way into new loans for businesses and individuals, but rather will be funneled into more loans to the government – which is beginning to look like the plan all along. To put $1.4tn being released from excess reserves into perspective Pento notes;

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