The crisis of central banking is deepening just as signs of recession are appearing. How would they affect the gold market? These are the key themes covered in this edition of the Market Overview. First, we deal with the U.S. repo crisis, as something clearly stinks there. Second, we analyze the ECB's introduction of tiering system and the implication for its monetary policy and the gold market. Third, we examine the manufacturing recession and its impact on the whole American economy and gold prices. Last but not least, we - inspired by the Mervyn King, the former Governor of the Bank of England - study the role of narratives in the gold market.

One of the most important recent developments in the world of finance was the September liquidity crisis in the U.S. repo market. As a reminder, the repo market is where borrowers borrow cash from lenders against collateral in the form of safe securities such as government bonds. As we wrote in the Gold News Monitor, the U.S. overnight repo rate, which is the rate demanded to get cash in exchange for Treasuries for 24 hours, shot up from slightly above 2 percent to as high as 10 percent.

Not so fast! On October 4, the New York Fed said that it would extend the overnight and term repurchase operations until November 4, 2019. And on October 11, the FOMC announced that the Fed will purchase Treasury bills at least into the second quarter of next year and will conduct term and overnight repurchase agreement operations at least through January of next year. So, everything is fine, but the repurchase operations will last longer. The GDP is growing at a decent pace, while the unemployment rate is at the lowest level in 50 years, but the Fed expands its balance sheet and cuts interest rates. Something stinks here, dear Watson!