Gold World News Flash |
- What The Big Money Is Doing After The Fed’s Historic Decision
- US COLLAPSE, FED IMPACT, GOLD, WHAT’S NEXT & MORE
- India to resume gold imports but rules mean no rush
- Guest Post: What's In A Bubble?
- Gold And Silver – Fed Taper? Never! Never, Never, Ever.
- Fed Unleashes Gold
- Venezuela Seizes Toilet Paper Factory Amid Fears Of US Sabotage
- Real US Unemployment Rates Reveal True State of Economy
- Sean Hyman – Stocks are Expensive and Gold is Cheap
- Guest Post: Gold And Monetary Inflation Prospects
- Help Obama Start WW3 !
- Triple Witching Hit on Gold GLD and Silver SLV, COMEX Next Week
- Warren Buffett: "The Fed Is The Greatest Hedge Fund In History"
- Silver Not Ready For Prime Time
- GOLD Elliott Wave Technical Analysis
- AMERICA COLLAPSE Imminent
- Silver – Not Ready For Prime Time
- Gold Bugs Get Adjusted
- Gold Bugs Get Adjusted
- Saving the Economy, 2008
- Saving the Economy, 2008
| What The Big Money Is Doing After The Fed’s Historic Decision Posted: 22 Sep 2013 09:01 PM PDT  On the heels of the Fed's historic decision not to taper, today 40-year veteran, Robert Fitzwilson, put together another tremendous piece. Fitzwilson, who is founder of The Portola Group, discusses what the Fed may really be up to and what all of this means for major markets, including gold and silver.This posting includes an audio/video/photo media file: Download Now |
| US COLLAPSE, FED IMPACT, GOLD, WHAT’S NEXT & MORE Posted: 22 Sep 2013 02:40 PM PDT from KingWorldNews:
Dr. Roberts: "Here's the situation for the Fed: All of the markets, and the solvency of the big banks, are totally dependent on the Fed buying the bonds. If they don't buy the bonds, then the interest rates are going to rise, the prices of all debt-related instruments are going to go down, the insolvency of the banks again reappears, the bond market collapses, and the stock market collapses…. "So they can't stop QE because the whole system is rigged-dependent on that (QE). The other part of the trap they are in is that the longer they carry on QE, the closer they get to the time when the rest of the world simply loses all confidence in the dollar because of the enormous rate at which new dollars are being created, and they bail out (of dollars). |
| India to resume gold imports but rules mean no rush Posted: 22 Sep 2013 02:20 PM PDT from Reuters:
But monthly shipments by the world’s top importer are unlikely to be even a quarter of May’s record 162 tonnes to start with and annual imports will be sharply down, helping to cut a bulging current account deficit and support the rupee. India’s gold shipments came to a virtual halt after the Reserve Bank of India (RBI) told importers on July 22 that a fifth of their purchases would have to be turned around for export and that 80 percent would be available for domestic use. |
| Guest Post: What's In A Bubble? Posted: 22 Sep 2013 02:12 PM PDT Originally posted at The World Complex blog, Bubbles are on a lot of minds lately. Bonds. Housing. Stocks. Are any of these in a bubble? How do we decide? A bubble is usually defined as a situation in which the value of an asset exceeds its true worth. What does that mean? How are we to know that the true worth of something differs from its price? It sounds like something St. Thomas Aquinas would think up.
Here is a reconstructed phase space of what is generally agreed to be a popping bubble--the Case-Shiller index. It's not always clear when the popping takes place. Is it the moment it falls from a high to which it never returns (or at least not for a considerable time)? That's first quarter, 2006 in the above figure. Is it when it becomes clear that no area of stability is going to form in the upper registers of phase space? That would be about the second quarter of 2008 in the above figure. Or is it only when the system returns to the area of stability that characterized it? That hasn't happened yet, but it looks imminent. For today's discussion, consider the S&P 500 and the price of gold.
Starting from a remarkably similar starting point, they have reached pretty similar levels. But although the S&P 500 may be slightly ahead over our 20+ year chart, it hasn't always been so. In fact it is painfully obvious in hindsight that switching from stocks to gold in early 2000 would have been especially sweet. One approach I have been working on is based on the notion of stability. It looks good for the Case-Shiller index at top, but that index has been adjusted for inflation--the gold price and the S&P 500 are not. We may be able to assess stability by reconstructing state spaces from the original time series.
Apart from the run-up in price over the past 20 years, the main feature on this graph is that the plot does not stray far from the green dashed line, which is the only part of the graph where areas of stability can appear. Apart from the cluster at about $300, there aren't any areas of stability. I'm not alarmed by this, and don't expect the $300 area to come into play again. This is a reminder of the importance of adjusting for inflation.
Even though this graph is also not corrected for inflation, it does not behave as the gold chart does, but cycles twice around the yellow dashed circle. In terms of a deviation from the regions of stability, it did get about as stretched as did the housing market, both in January 1998 and November 1999. It's current position is not stable but it is not nearly as extreme as it has been in the past. Some have suggested that gold price is a proxy for inflation. So let's look at the S&P 500 with respect to gold. The comparison will be as follows: the difference between the S&P and the gold price, divided by the gold price.
Here we see a tremendous peak in early 2000. The current level of the index, however, does not seem out of line with respect to gold. If the S&P 500 is in a bubble, then so is gold. Both the stock market and the dollar price of gold are influenced by monetary creation. As long as money continues to be created, we should expect both to increase in price. There have been times in the past when the money blew up the stock market much more rapidly than gold, and if that were to happen again, there may be an arbitrage opportunity. Such does not appear to be the case today. I find it hard to imagine that we will see the extremes of early 2000 again. In a time of monetary or credit creation, there are opportunities to preserve wealth through investments in productive enterprises as well as gold. Unfortunately, it is difficult to distinguish between enterprises that are truly productive and those which merely look productive as long as the credits keep flowing. |
| Gold And Silver – Fed Taper? Never! Never, Never, Ever. Posted: 22 Sep 2013 01:20 PM PDT By Michael Noonan, Gold Silver Worlds:
The Fed announcement not to taper was a "surprise" to all mainstream media talking heads[less], who must tow the Party line or join the growing millions of other Americans out of a job. Without the faux fiat injections into the stock market, it would collapse, as it inevitably will, anyway. Those in that market should be prepared for the worst for the worst will happen. |
| Posted: 22 Sep 2013 12:20 PM PDT by Adam Hamilton, Gold Seek:
All year long, gold has been plagued by fears of the Fed tapering QE3. Starting with the January 3rd release of the minutes from the December FOMC meeting (where QE3 was more than doubled to include direct Treasury monetizations), QE3-tapering fears have dominated the gold markets. Futures traders in particular have been pathologically obsessed with the QE3 taper, ignoring everything else that affects gold. |
| Venezuela Seizes Toilet Paper Factory Amid Fears Of US Sabotage Posted: 22 Sep 2013 11:51 AM PDT The Venezuelan government is in a bind. They realize that 'the people' will stand-by idly as the nation's currency is devalued, as inflation soars, and blackouts continue as food shortages grow...(and the stock market soars) but take away a critical personal care item and the riots will begin. As Yahoo Maktoob reports, Venezuela's leftist government said Saturday it temporarily seized a major toilet paper factory hoping that it can end troublesome shortages of the staple personal care item. "The temporary occupation of [the toilet-paper manufacturing plant] is aimed at verifying that toilet paper industry production, marketing and distribution" are all in line with state policies, Vice President Jorge Arreaza said on Twitter, without indicating how long the takeover would last. This action follows 'nationalization' of large farms amid President Maduro's claims that the White House is plotting the "collapse" of his government next month by sabotaging food, electricity and fuel supplies.
But, of course as we noted previously, none of that matters - as the Venezuelan stock market is surging (which, if American talking heads are to be believed judging from thei reaction to US equity markets) must mean the country is doing great... The Caracas Stock Index is +270% YTD...
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| Real US Unemployment Rates Reveal True State of Economy Posted: 22 Sep 2013 11:30 AM PDT The 'official' US unemployment rates pushed by number cookers may seem grim, but the real unemployment rates within the US tell a much more realistic and concerning tale. by Daniel G. J., Story Leak:
The Labor Department reported that the number of those applying for unemployment benefits fell by 31,000 during the first week of September. Yet just a week later a Labor Department spokesman admitted the real cause of the drop was that two states he wouldn't identity changed their computer systems. This delayed the reporting of some claims and produced the "drop." |
| Sean Hyman – Stocks are Expensive and Gold is Cheap Posted: 22 Sep 2013 11:00 AM PDT from WallStForMainSt: John Manfreda of Wall Street for Main Street interviews Sean Hyman of the Ultimate Wealth Report about the Fed’s most recent announcement, Gold, Hard Assets, the Stock Market, Apple, Oil, and many more interesting topics |
| Guest Post: Gold And Monetary Inflation Prospects Posted: 22 Sep 2013 10:25 AM PDT Submitted by Alasdair Macleod via GoldMoney.com, On Wednesday last the Fed surprised most people by deciding not to taper. What is not generally appreciated is that once a central bank starts to use monetary expansion as a cure-all it is extremely difficult for it to stop. This is the basic reason the Fed has not pursued the idea, and why it most probably never will. That is a strong statement. But consider this: Paul Volcker faced this same dilemma in 1979, when he was appointed Chairman of the Fed. In raising interest rates to choke off inflation he had two things going for him that his successor has not: rising inflation was already over 10% so was an obvious priority, and importantly private sector debt-to-GDP was at a far lower level than today. It was a tough decision at the time to nearly double interest rates. Today, with official inflation low and private sector indebtedness high it would be extremely difficult. Until official inflation picks up, it is far more comforting to pretend it won’t be an issue, which reasonably describes the Fed’s approach. Instead it is targeting unemployment rates, on the basis that price inflation is tied to capacity utilisation, which in turn is tied to employment. One thing is certain in life, besides death and taxes, and that is if you expand the quantity of money prices eventually rise; or more accurately the purchasing power of debased money falls. The problem is how to measure currency debasement, and this has been a topic of heated debate since fiat currencies first developed. This has led me to propose a new measure of money, which at James Turk’s suggestion I am calling the Fiat Money Quantity (FMQ). The purpose is to gives us a measure of fiat money that enables us to assess the danger of currency hyperinflation. I shall be publishing a paper on this shortly explaining the methodology. The principle behind it is to signal deviations from the long-term trend of currency growth to alert us to both monetary crises and excessive inflation. The approach is to unwind the historic progression from full gold convertibility to the current state of no convertibility. Our gold was first deposited with our banks, and then from there with the central bank. In return for our gold deposits we have been issued cash notes and coin and credits in the form of deposits at the bank, and our bank equally has deposits at the central bank. The FMQ is therefore comprised of the sum of cash and coin, plus all accessible deposits, plus our bank’s deposits held at the central bank. This for the US dollar is illustrated in the chart below.
The dotted line is the long-term exponential trend rate, and it is immediately obvious that the FMQ is now hyper-inflating. It currently requires a $3.6 trillion contraction of deposits to return this measure of currency quantity back to trend. This accurately sums up the problem facing the Fed. We must understand they are in an almost impossible position that dates back to their monetary response to the banking crisis. Not even Paul Volcker could have got us out of this one. Once the addiction to weak money hits this pace there is no solution without threatening to bring down the whole system.
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| Posted: 22 Sep 2013 09:26 AM PDT President Obama needs your help starting World War III! Find out how you can help! ,This is what America has done each time they have started a new war.. The dollar is used in all kinds of trade by... [[ This is a content summary only. Visit http://FinanceArmageddon.blogspot.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  |
| Triple Witching Hit on Gold GLD and Silver SLV, COMEX Next Week Posted: 22 Sep 2013 08:35 AM PDT All those happy momentum buyers of paper gold and silver, GLD and SLV, got a stiff gut check today, especially if they were playing the miners and ETFs with options, because gold and silver took a determined bear raid selloff in honor of the September triple witching expiration today. It happens four times per year. The front month in SP 500 and NDX stock futures is now December. Can you believe it? Where has the summer gone? |
| Warren Buffett: "The Fed Is The Greatest Hedge Fund In History" Posted: 22 Sep 2013 08:05 AM PDT In a world in which all the matters is "scale", the ability to Martingale down on losing bets as close to infinity as possible (something which JPMorgan learned with the London Whale may not be the best strategy especially when one can't print money out of thin air), and being as close to the Fed's Heidelberg rotary printer as possible, it was expected that that "expert" of government backstops and bailouts, the Octogenarian of Omaha, Warren Buffett, would have only kind words for Ben Bernanke. But not even we predicted that Buffett would explicitly admit what we have only tongue-in-cheek joked about in the past, namely that the Fed is the world's greatest (and most profitable) hedge fund. Which is precisely what he did: "Billionaire investor Warren Buffett compared the U.S. Federal Reserve to a hedge fund because of the central bank's ability to profit from bond purchases while accumulating a balance sheet of more than $3 trillion. "The Fed is the greatest hedge fund in history," Buffett told students yesterday at Georgetown University in Washington. It's generating "$80 billion or $90 billion a year probably" in revenue for the U.S. government, he said. From Buffett's presentation at Georgetown last week:
From Bloomberg: Good thing none of the present had any idea what Mark To Market or what DV01 are, and how, if one actually marked the Fed's balance sheet to reality, the Fed would have already lost nearly $300 billion in the past few months (or 5 times the Fed's own regulatory capital) courtesy of the massive and rapid blow out in rates, driven exclusively by the Fed's own inability to communicate with markets and warn about a taper that never came, because the global market had become unhinged precisely due to fear of a Taper, aka the Fed's Tapering Catch 22. Which by the way, takes care of Buffett's concerns about Fed deleveraging: it will never come if the merest hint that the leveraging would be reduced by even the tiniest amount, sent the global carry trade into a tailspin. There is a reason why some, such as Zero Hedge, nearly 5 years ago showed that once you set off on a path of bailouts, there is no exit until everything ultimately collapse into a handful of dust. And we have Ben Bernanke to thank for proving us right again and again. Finally, regarding Buffett's claim, he is absolutely correct that when one has unlimited capital to invest, and has no concerns about downside risk, it is easy to quite easy to become the world's biggest and most profitable hedge fund. Well, there is one downside: losing the dollar's reserve currency status of course. And the more incidents that get even Fed presidents to admit that Bernanke is increasingly losing credibility with the markets, the closer we get to having a peek at what the ultimate cost of Bernanke's unprecedented error will end up being. |
| Silver Not Ready For Prime Time Posted: 22 Sep 2013 07:40 AM PDT There are two distinct advantages derived from reading charts. They are all based on factual information, in the form of executed trades, and they are a short-cut for reading about all the exogenous factors, [mostly fundamental], that impact the market. Everyone familiar with or interested in silver knows about the dwindling supplies, the manipulation of the COMEX/LBMA paper markets, the M F Global disappearing act of accounts that stood ready to take delivery of [unavailable] silver, the inability to make good on deliveries, etc, etc, etc. All facts sufficient to drive silver to above all-time highs, yet price continues to languish in the $18 - $25 range. |
| GOLD Elliott Wave Technical Analysis Posted: 22 Sep 2013 06:57 AM PDT Last analysis had two hourly wave counts. The alternate was confirmed quickly with movement below 1,359.20. The alternate hourly wave count expected more downwards movement to the most likely target at 1,323.12. Friday's session reached down ... Read More... |
| Posted: 22 Sep 2013 06:53 AM PDT When will America Collapse? Today's bad news provide a timeline to Economic Collapse. Double dip recessions, falling home prices, mortgage foreclosures, high unemployment, tight oil supply and... [[ This is a content summary only. Visit http://FinanceArmageddon.blogspot.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  |
| Silver – Not Ready For Prime Time Posted: 22 Sep 2013 04:10 AM PDT There are two distinct advantages derived from reading charts. They are all based on factual information, in the form of executed trades, and they are a short-cut for reading about all the exogenous factors, [mostly fundamental], that impact the market. Everyone familiar with or interested in silver knows about the dwindling supplies, the manipulation of the COMEX/LBMA paper markets, the M F Global disappearing act of accounts that stood ready to take delivery of [unavailable] silver, the inability to make good on deliveries, etc, etc, etc. All facts sufficient to drive silver to above all-time highs, yet price continues to languish in the $18 – $25 range. We attribute silver's inability to fulfill PM holder expectations because Western world central bankers will not allow the price to rise. For years, central bankers have been winning all the battles, but the ultimate outcome of the war has them doomed. However, it may be many more months, possibly a few years, before the war is lost. What happens in between will financially ruin paper holders, [contracts, stocks, fiat currencies, etc.], and reward those smart enough to have accumulated and personally held the physical metal. See Do You Prefer Fundamental Tale Or Technical Reality? The stackers will be rewarded for their insight and patience. The latter continues to be tested, but at the same time, it offers the advantage to accumulate more at these likely never-to-be-seen-again prices for the next few generations. Americans have been "conditioned" to "want it now!" Chinese think in terms of future outcome[s] and planning accordingly to be in a position to enjoy the benefits of what is almost sure to come. Nothing is ever guaranteed, just like tomorrow is promised to no one. We get to live in the present tense and conduct our lives as to what will bring continuity for the next day/week/month/year/decade. The reasons for buying and accumulating silver are more pressing with each passing month. No one knows how the central bankers and their compliant governments will "change the rules." As an example, it may become a "criminal act" to buy or trade in silver. Already, there are reporting requirements in place that allows the government to track who is buying. Right, NSA? Already the CIA has told bankers to get out-of-the-way when agents raid suspected safety deposit boxes that might contain silver and gold. Always remember: If you do not hold it, you do not own it." If anyone is storing PMs in any financial institution, you are at risk of losing it all. Get while the getting is good. Play the financial chess game for desired end results that are not dependent on the next rally/decline in the faux paper markets. Time is running out to buy and hold. Price does not matter. If price were to go to $200 the ounce, would you be concerned that you paid $28 instead of $22, not that $22 is currently available. Or, how about if at $200, you missed buying because you did not want to pay $28 or $35, so you have none/less when price reaches the $200 example? Better to be smart, not "right." What are the prospects for silver, according to the charts? Everyone can have whatever opinion [s]he wants, but facts prevail. Everyone can have a belief about what the market should do, but charts tell you what the market is doing, irrespective of opinion or belief. There is a high degree of logic within the markets, and it is evident when one suspends opinion/belief and considers only the known facts, available to everyone at the same time. The market is the most reliable source of information, and all we need do is read the developing "story" unfolding. We break the monthly down into its various phases. You can see each phase has shortened its time element. The current, new phase just getting underway is way under the element of time. Logically, does the latest developing phase have enough framework to overcome the largest, just completed peak phase? Common sense says no. Even we are of the belief and opinion that silver will ultimately go much higher, but the key word is ultimately. For the present tense conditions, that is an unrealistic expectation. From this chart, we know silver is highly unlikely to rally to $100, $200, or $300. Actually, not even $50. Facts keep our beliefs in check and context. From this, it would be futile to expend mental energy promoting the premature notion that silver will become worth considerably more per ounce. Right now, it is struggling to maintain between $18 – $25. That is a fact.
The weekly chart zooms in on the difference between the last peak phase and the currently just developing new price phase. As mentioned, trend lines, TLs, are not the most reliable charting tool, but they can be a general guide, and right now, silver is not positioned to challenge/break the existing TL. The "Market NMT," [Needs More Time]. The reason why we keep referencing opinions/beliefs is because they are subservient to the factual market forces. Right now, the fact[s] of the market have silver "valued" where it is, rightly or wrongly within the context of your own belief/opinion. Always remember beliefs and opinions are expressions of the Ego. Egos are emotionally driven; facts are reality based. Upon which would you rather rely?
Buying and holding the physical metal aside, [the best and most consistent choice for reasons outside of charts], near-term traders have some valuable, factual information provided by the market. Putting price into market segments, we can see support from the first box, on the left, was broken to the downside, and another lower trading box formed. Broken support becomes future resistance, and you can see how price was unable to rally above that established broken support/now resistance from the first box. Once price rallied above the resistance of the second box, that now former resistance becomes new support. strengthened by the same support from box 1. The resistance of box one, the $25 area, acted as effective resistance for the third and current box. We already have a context for market expectation in buying and holding physical silver. The lower, daily time frame can be used for making short-term buy/sell decisions in the paper market. Yes, it is blatantly manipulated, but if we have some rules of engagement, then we need no be concerned about purposeful market manipulation. We can choose to buy/sell based upon sound trading rules that offer an edge. One such rule is buying a known support area, if and only if developed trading rules determine there is an entry signal, based on past, similar market set-ups. There was one such opportunity on Wednesday, marked as Buy on the chart. It was prior to the Lying Ben comment that in line with all previous broken promises, the promise to taper would also be broken, and there would be none. Good luck often comes to meet preparation, and we got "lucky" at a known support. The next day, note how small the price range was. That is the market giving us factual information that buyers were being matched by sellers who prevented the range from extending higher. The recommendation was to exit half the position to lock in a great gain and see what develops on the balance, with a large potential profit cushion. Most were waiting for the Fed announcement before deciding what to do. Established rules said to engage from the long side, which was prior to the "announcement." If we were wrong, the risk was small. If the signal were timely, there was an opportunity for profit. One can never know how much potential profit may result, but in this instance, it was substantial, given current market conditions. Charts tell us whatever we want to know about the market, in whatever context we choose to view it, and even take advantage of the available information. At the time of the trade decision, everyone else had the exact same chart structure available to them. Many simply choose not to learn how to use it. They prefer formed opinions or beliefs over facts.
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| Posted: 22 Sep 2013 03:54 AM PDT But but but...gold always goes up on monetary inflation. Wrong...! In TODAY's policy and media-stoked market environment, anything is possible, writes Gary Tanashian in his Notes from the Rabbit Hole. It's the wonderful, magical world of hands-on policy making, five years after the financial crisis. Still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)...? Then just sit back, relax and let the man in charge control the image.
What has been happening for the last year is that people have been obeying these instructions. Yes, the same herd that reviled 'Helicopter Ben' (didn't you just know in your gut that these taunts would come back to bite inflationists, commodity bulls and gold bugs?) in 2011 is now enthralled and awaiting the next chapter in the great adventure. "The stock bull is a reflection of an organic and healthy economy," claim the politically biased or mentally challenged.  We have reviewed graphs in the past comparing the S&P 500 to Monetary Base and other measures of monetary inflation. (Charts courtesy of SlopeCharts.) The cyclical stock bull out of March, 2009 has risen in lockstep with money supply. The current leg of the 13-year long (and counting) big picture stock consolidation per the graph above, has been dependent on money supply creation fueled by increases in the public debt. The stock market loves this policy and is dependent upon it. Why did the FOMC blink on Wednesday? They have smart people who can look at a chart and conclude the same thing: dependency. Many have proclaimed that the S&P 500, at new all time highs, has just begun a new secular bull market. For a grim reminder of how a breakout can fail miserably (I know, because I had bad upside targets based on this breakout), we once again refer to Mr. Huey, the HUI Gold Bugs Index of Gold Mining stocks...  The question remains, how do you project a new secular bull market 4.5 years into a cyclical bull market that is getting long in the tooth? Stock market bulls making such projections are staking claim to a contrarian mantle. In my opinion, they are merely capitalizing on a newly bullish public that is ripe to be sold a 'new secular bull' story as the cyclical bull matures. Precious metals players have suffered untold ignominy in this great adventure. "But but but...precious metals always go up when inflation's effects (i.e. prices) do!" Well no, they don't. Over the long term they effectively protect against the price effects of inflation subject to certain err...adjustments. Over the last 2 years the gold "community" has gotten adjusted. It is as simple as that. The steady march of inflation's embedded effects continues unabated. This brings us back to Biiwii/NFTRH's biggest picture theme; we are in an era of chronic economic contraction being fought by policy makers in the only way they know how; through inflation. One day the system is going to puke up all of this debt. That is where the first real deflation since the 1930s could come in (2008 was a liquidation within an ongoing inflationary era).  Meanwhile, there are signs that the deflationary pull in play over the last 2 years may be changing. Nobody expects an inflation problem because the effects of the current inflation have been so well contained over the last 2 years (post-2011 commodity blow off). This is not a prediction that inflation's effects are going to rise to the surface soon, but we do note that it is a distinct possibility. We also note that despite this post's Outer Limits shtick (it's getting over played, I know) policy makers are not in total control. Casino patrons merely perceive them that way in the current phase. The Fed wants inflation and is trying to achieve it, per FOMC's own words. But will they get it? If so, how much of it will they get? The desired amount (that they think they can control) or something more undesirable? Is it a coincidence that China and Japan were net buyers of T bonds in July? They were net sellers in June and then we were served Huey, Dooey & Louie (Fed talking heads in the media) and a 24/7 "taper" hype job. Now, global supply and demand has taken a 'tic' toward favorable for T bonds (for July, anyway) and suddenly the Fed surprises with NO TAPER. Are you kidding me? Who is really in control here? |
| Posted: 22 Sep 2013 03:54 AM PDT But but but...gold always goes up on monetary inflation. Wrong...! In TODAY's policy and media-stoked market environment, anything is possible, writes Gary Tanashian in his Notes from the Rabbit Hole. It's the wonderful, magical world of hands-on policy making, five years after the financial crisis. Still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)...? Then just sit back, relax and let the man in charge control the image.
What has been happening for the last year is that people have been obeying these instructions. Yes, the same herd that reviled 'Helicopter Ben' (didn't you just know in your gut that these taunts would come back to bite inflationists, commodity bulls and gold bugs?) in 2011 is now enthralled and awaiting the next chapter in the great adventure. "The stock bull is a reflection of an organic and healthy economy," claim the politically biased or mentally challenged. We have reviewed graphs in the past comparing the S&P 500 to Monetary Base and other measures of monetary inflation. (Charts courtesy of SlopeCharts.) The cyclical stock bull out of March, 2009 has risen in lockstep with money supply. The current leg of the 13-year long (and counting) big picture stock consolidation per the graph above, has been dependent on money supply creation fueled by increases in the public debt. The stock market loves this policy and is dependent upon it. Why did the FOMC blink on Wednesday? They have smart people who can look at a chart and conclude the same thing: dependency. Many have proclaimed that the S&P 500, at new all time highs, has just begun a new secular bull market. For a grim reminder of how a breakout can fail miserably (I know, because I had bad upside targets based on this breakout), we once again refer to Mr. Huey, the HUI Gold Bugs Index of Gold Mining stocks... The question remains, how do you project a new secular bull market 4.5 years into a cyclical bull market that is getting long in the tooth? Stock market bulls making such projections are staking claim to a contrarian mantle. In my opinion, they are merely capitalizing on a newly bullish public that is ripe to be sold a 'new secular bull' story as the cyclical bull matures. Precious metals players have suffered untold ignominy in this great adventure. "But but but...precious metals always go up when inflation's effects (i.e. prices) do!" Well no, they don't. Over the long term they effectively protect against the price effects of inflation subject to certain err...adjustments. Over the last 2 years the gold "community" has gotten adjusted. It is as simple as that. The steady march of inflation's embedded effects continues unabated. This brings us back to Biiwii/NFTRH's biggest picture theme; we are in an era of chronic economic contraction being fought by policy makers in the only way they know how; through inflation. One day the system is going to puke up all of this debt. That is where the first real deflation since the 1930s could come in (2008 was a liquidation within an ongoing inflationary era). Meanwhile, there are signs that the deflationary pull in play over the last 2 years may be changing. Nobody expects an inflation problem because the effects of the current inflation have been so well contained over the last 2 years (post-2011 commodity blow off). This is not a prediction that inflation's effects are going to rise to the surface soon, but we do note that it is a distinct possibility. We also note that despite this post's Outer Limits shtick (it's getting over played, I know) policy makers are not in total control. Casino patrons merely perceive them that way in the current phase. The Fed wants inflation and is trying to achieve it, per FOMC's own words. But will they get it? If so, how much of it will they get? The desired amount (that they think they can control) or something more undesirable? Is it a coincidence that China and Japan were net buyers of T bonds in July? They were net sellers in June and then we were served Huey, Dooey & Louie (Fed talking heads in the media) and a 24/7 "taper" hype job. Now, global supply and demand has taken a 'tic' toward favorable for T bonds (for July, anyway) and suddenly the Fed surprises with NO TAPER. Are you kidding me? Who is really in control here? |
| Posted: 22 Sep 2013 03:49 AM PDT Pelosi, Bernanke, Paulson – these people saved the US economy after Lehmans in 2008... AS EXPECTED, Ben Bernanke is not going to taper in the final months of his term, writes Bill Bonner in his Daily Reckoning. Too risky. Instead, laissez les bons temps roulez...! The newspapers are full of retrospectives on the Lehman Brothers bankruptcy of 2008 and what it meant. We have an observation of our own: Five years after the financial crisis hit the headlines it's amazing how so much fantasy, delusion and conceit have built up around the event. According to Nancy Pelosi – then Speaker of the House, and always Tommy d'Alessandro's daughter – she called then-Treasury secretary Hank Paulson at 3pm on Tuesday, September 18, 2008. She asked him to come by the next morning and explain what was going on. The headline on Pelosi's article in USA Today is 'The Day I Heard Our Economy Might Fail'. It is not clear whether she means that she learned that the economy might someday fail...or that she learned that it might fail that day. No matter. Either way is ridiculous. Economies don't fail. They do exactly what they want to do exactly when they want to do it. Fed chiefs fail to improve them. Politicians fail to understand them. And everybody fails to appreciate them. By 5pm Pelosi had gotten together the leading failures in town – including Paulson and Ben Bernanke. Paulson laid out what he had seen, as any blind man might. Then Pelosi turned to the man who had enabled the biggest financial bubble in human history – still in a fog – and asked what he thought. Naturally, Bernanke completely misunderstood the events going on in front of him. He took a deflating bubble to be a disappearing economy.
Where did he think it was going? It was silly to think that a $16 trillion economy might 'fail'. It was downright nutty to think it would vanish in a matter of days. But these hacks and hallucinators nevertheless worked hand in hand, like mental defectives headed for the short bus... ...to avoid an outcome that couldn't happen... ...and pervert an outcome that was actually underway into a twisted and grotesque debacle. In September 2008, the world's economy had had enough of the Fed's credit bubble. Companies had drunk too deeply from that cup. Their legs wobbled and their brains turned fuzzy. They collapsed. A great correction had begun. It should have been allowed to continue. It should have been allowed to wash out bad debts and trim back good ones. It should have been allowed to do its work. Instead, after the Lehmans collapse the feds came up with a quick $700 billion and spread it out among their friends and campaign contributors. The Federal Reserve cut its target rate to zero...and as much as $23 trillion in US credit guarantees were put to work on behalf of Wall Street's reckless risk-takers. This sequence of mistakes and corruptions was greeted by the press and by its perpetrators with high fives...and big bonuses. Even now - after five years - Bernanke, Paulson and Pelosi regard it as a great triumph, in which they bravely came together to save the US economy...and the world. But wait. Something went wrong on the road to recovery. We just sent Ms.Pelosi the following email:
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| Posted: 22 Sep 2013 03:49 AM PDT Pelosi, Bernanke, Paulson – these people saved the US economy after Lehmans in 2008... AS EXPECTED, Ben Bernanke is not going to taper in the final months of his term, writes Bill Bonner in his Daily Reckoning. Too risky. Instead, laissez les bons temps roulez...! The newspapers are full of retrospectives on the Lehman Brothers bankruptcy of 2008 and what it meant. We have an observation of our own: Five years after the financial crisis hit the headlines it's amazing how so much fantasy, delusion and conceit have built up around the event. According to Nancy Pelosi – then Speaker of the House, and always Tommy d'Alessandro's daughter – she called then-Treasury secretary Hank Paulson at 3pm on Tuesday, September 18, 2008. She asked him to come by the next morning and explain what was going on. The headline on Pelosi's article in USA Today is 'The Day I Heard Our Economy Might Fail'. It is not clear whether she means that she learned that the economy might someday fail...or that she learned that it might fail that day. No matter. Either way is ridiculous. Economies don't fail. They do exactly what they want to do exactly when they want to do it. Fed chiefs fail to improve them. Politicians fail to understand them. And everybody fails to appreciate them. By 5pm Pelosi had gotten together the leading failures in town – including Paulson and Ben Bernanke. Paulson laid out what he had seen, as any blind man might. Then Pelosi turned to the man who had enabled the biggest financial bubble in human history – still in a fog – and asked what he thought. Naturally, Bernanke completely misunderstood the events going on in front of him. He took a deflating bubble to be a disappearing economy.
Where did he think it was going? It was silly to think that a $16 trillion economy might 'fail'. It was downright nutty to think it would vanish in a matter of days. But these hacks and hallucinators nevertheless worked hand in hand, like mental defectives headed for the short bus... ...to avoid an outcome that couldn't happen... ...and pervert an outcome that was actually underway into a twisted and grotesque debacle. In September 2008, the world's economy had had enough of the Fed's credit bubble. Companies had drunk too deeply from that cup. Their legs wobbled and their brains turned fuzzy. They collapsed. A great correction had begun. It should have been allowed to continue. It should have been allowed to wash out bad debts and trim back good ones. It should have been allowed to do its work. Instead, after the Lehmans collapse the feds came up with a quick $700 billion and spread it out among their friends and campaign contributors. The Federal Reserve cut its target rate to zero...and as much as $23 trillion in US credit guarantees were put to work on behalf of Wall Street's reckless risk-takers. This sequence of mistakes and corruptions was greeted by the press and by its perpetrators with high fives...and big bonuses. Even now - after five years - Bernanke, Paulson and Pelosi regard it as a great triumph, in which they bravely came together to save the US economy...and the world. But wait. Something went wrong on the road to recovery. We just sent Ms.Pelosi the following email:
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Eric King: "Obviously the big news this week, Dr. Roberts, was the Fed and how they shocked the financial markets with no tapering. Your thoughts?"
The proverbial handwriting has been on the wall for quite some time. Lying Ben Bernocchio just sealed the fate of the already doomed fiat Federal Reserve Note, aka the "dollar," along with the financial well-being of most unsuspecting Americans who will be unprepared for what is going to happen, at some point and with certainty. Collapse.
The Federal Reserve shocked the financial world this week, defying universal expectations. It failed to start reducing the pace of its third quantitative-easing campaign's debt monetizations, delaying the long-anticipated QE3 taper indefinitely. This surprise ignited sharp moves in nearly all major markets, but gold's was certainly the most impressive. It rocketed higher on the Fed's startling new paradigm shift.
Even recent drops in the numbers of unemployed people reported by the U.S. Labor Department were apparently too good to be true. The U.S. Bureau of Labor Statistics 
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