Taking time to reflect what the future holds for humanity and I tell you every day I step further out of the system as I can to the extent I can. This article by David Stockman from April 2nd 2013 in the New York Times really hits home for what the future holds.
"When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth."
The ceiling has been lifted, and the Treasury has promised it will keep cash pumping into government spending programs beyond the debt limit.
Yours respectfully, CIGA Keith
Keith,
They might as well remove the debt ceiling entirely as it is a sick joke to start with.
Maybe we are in Financial Degradation to Infinity?
Jim
Jim Sinclair’s Commentary
The following is courtesy of CIGA Mark, our CIGA in the trenches…
True Value Reports a Decrease in Gross Billings May 17, 2013
True Value reported gross billings of $444.3 million for the quarter ending March 30, down 0.9 percent for the same period a year ago, due to a nearly non-existent spring and a decline in lumber and building material vendor direct ship sales.
“While winter-related product sales exceeded the prior year, the general lack of spring weather this March versus last year was too much to overcome,” said President and Chief Executive Officer Lyle Heidemann. “Last year our retailers’ comp store sales were up double digits in March and this year they were down a high single digit.
“In April and early May, for the parts of the country where spring has arrived, our retailers on average are experiencing double-digit increases in their retail comp store sales.”
Thank you again for the wonderful presentation on Saturday in LA. It was a great event well worth the trip from Chicago to LA. Looking forward to attending the next excursion to Tanzania.
Cheers, CIGA Ric
Dear Jim,
Are we about to see a ‘dismantling’ like never before in history? I believe we are being told; who has ears to hear?
Best Regards, CIGA Gene
Quote from Treasury Secretary Lew, of April 17:
"We are advancing comprehensive regulation of OTC derivatives markets, an orderly liquidation framework, and recovery and resolution plans so that the largest most complex financial institutions can be wound down in an orderly manner without burdening taxpayers."
It is simply impossible where the 1991 to 2007 legacy OTC derivative frauds are concerned.
Jim
Hello Jim,
First I wanted to send this recent story along even though you probably already know about it.
BARRON’S: There Were Two Gigantic, Suspicious Sales Of Gold On Friday That Caused The Price To Plunge Joe Weisenthal | May 19, 2013, 10:34 AM
Gold went down the toilet again on Friday, and is now close to revisiting its April lows.
This gold weakness is causing a lot of consternation to fans of it who don’t understand how the precious metal can keep falling, when central banks around the world continue to press down on the gas pedal.
A lot of gold bugs think the price is being manipulated somehow, or that there’s some divergence between what’s going on in "paper" gold (gold prices that are tied to ETFs) and what’s going on in physical gold (people buying ingots or jewellery).
Second, I just wanted to say thanks for your all your free advice. I don’t care how low the paper price falls, it doesn’t worry me in the least. I am perfectly comfortable knowing I have the safest insurance this world can offer: Gold.
People who worry and whine about the price of gold in my opinion need to learn to be still and calm down. Being still, educating themselves and looking at the fundamentals in my opinion gives clarity and clarity provides an inner strength and calmness which helps a person weather the storms.
Also, for those who just can’t seem to stop whining to you, I always think of a scene from the movie: The Godfather. You can view that on YouTube here:
CIGA Dan Duke
Jim,
Sure he unloaded GLD ETF, but did he unload any of his physical? Makes me wonder. He just may be on the forefront of the thinking you’ve espoused… namely the separation of physical from paper gold and the eventual collapse of the GLD EFT.
The headlines make it APPEAR he is a gold bear, when in reality he may be fearing all that you’ve been saying and teaching us. He’s no dummy. Worldwide currency depreciation takes its toll, as surely as night follows day. If we can see it, he surely can.
CIGA Wolfgang Rech
Gold Bear Bets Reach Record as Soros Cuts Holdings: Commodities By Joe Richter – May 19, 2013 4:00 PM ET
Soros Fund Management LLC lowered its investment in the SPDR Gold Trust, the biggest bullion ETP, by 12 percent to 530,900 shares as of March 31, compared with three months earlier, a Securities and Exchange Commission filing showed May 15. The reduction followed a 55 percent cut in the fourth quarter last year. Paulson & Co., the top investor in the SPDR fund, maintained a stake of 21.8 million shares, now valued at $2.86 billion. Global ETP holdings slid 16 percent to 2,207.1 metric tons this year, valued at $96.5 billion.
Gold premiums in India, the world’s biggest buyer, more than doubled to $40 an ounce May 15 from $17 to $18 a day earlier, according to Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation. China’s bullion demand jumped to a record 294.3 tons in the first quarter, the World Gold Council said in a report May 16.
With the attack, manipulated or not, at the opening of the NY Globex this afternoon I needed a dose of you and your buddies. All the market malevolence is immediately wiped out by your little dogs. Thanks for the picture.
Peace and love to you all.
CIGA Ed
Ed,
If you cannot reach me in a crisis, hug a puppy FAST.
Jim
Dear CIGAs,
Here’s a picture of Jim Sinclair and me at his seminar at the LAX Marriot.
I finally got to meet the man in person.
CIGA JB Slear
Jim,
Like minds think alike. Perhaps that could qualify as a Yogism.
From Marc Faber’s May 1 letter:
"I find it difficult to write and not to be misunderstood"
First, I am discussing capital flows and the general belief among some economists that trade and current account deficits do not matter because the money flows back in the form of investments in equities, bonds, real estate, direct investments, and corporate takeovers.
According to Barron’s Big Money Survey, “74% of large portfolio managers are bullish about stocks, which is the Highest Level Ever.” Time to be a contrarian?
I am reluctantly maintaining an approximately 25% weighting in equities (mostly in Asia and in Europe) and I have not yet shorted any stocks because I have learnt that a bubble can get bigger still and exceed my expectations – before it implodes violently.
I want to make clear that I own equities not because of the belief that they are inexpensive and that they will move up substantially but because I do not trust the banking system and, therefore, I do not wish to be overexposed to bank deposits.
Today King World News is reporting on incredibly important developments taking place in the gold and silver markets. Acclaimed commodity trader Dan Norcini spoke with KWN about the amazing action in both of these key markets and provided four tremendous charts. Below is what Norcini had to say in his interview.
Norcini has been stunningly accurate in his predictions of the movement in the gold and silver markets. Now the acclaimed trader discusses these incredibly important developments in both of these markets: “Gold appears to have successfully retested its former spike low down in that important support level between $1320 – $1340 and held. What is important from a technical analysis perspective is that the volume completely dried up as price worked its way back into that critical support zone noted on the 4 hour price chart.
Bears were hoping to be able to recruit a wave of fresh converts to their side and give them the firepower to pressure the market down through this level, thereby touching off another wave of sell stops and setting up a fresh new leg lower in price. Obviously, there appears to have not been a large contingent of traders interested in selling gold aggressively down at these levels right now. That gave some would-be longs the excuse they were looking for to re-enter the market plus stirred some mild, but not aggressive short covering on the part of the bears. However that all changed rather abruptly!
Mr. Faber’s comment: "You keep your dollars and I’ll keep my gold. Let’s see which goes to zero first."
Jim Sinclair’s Commentary
Here is the best advertisement for the Animal Channel. I always leave it on for the puppies if I am out.
Strange times are these in which we live when old and young are taught in falsehood’s school. And the one man who dares to tell the truth is called at once a lunatic and fool. – Plato (429-347 BC)
Jim Sinclair’s Commentary
Urban defense against banksters returning from a wonderful day of rape, murder and pillage: a 50 cal. hot dog.
Jim Sinclair’s Commentary
Tired of our totally criminal world of finance? Need a smile? Try being covered with puppies.
Gold Bug Hedge Funds Collectively Report Over $183mm In New Call Option Positions On Miners May 18, 2013 | By Tekoa Da Silva
While mainstream news sources continue the war against gold and gold-related investments, three of the world’s top performing hedge fund managers have been busy at work building speculative gold positions during the first quarter.
George Soros, John Paulson, and Steve Cohen, who in aggregate control over $60 billion dollars, have been aggressively buying the most speculative vehicles associated with gold: call options on gold mining stocks.
Starting out with, George Soros, billionaire financier and chairman of Soros Fund Manangement LLC, was the target of bearish gold commentary this week issued by Bloomberg. While Bloomberg journalists correctly reported that he’s been cutting his stake in gold, what they failed to mention (which was articulated here on May 16th), was how he reallocated the proceeds.
Soros indeed cut his stake in the GLD gold fund by about $2.5mm—a paltry sum, especially given the fact that he simultaneously purchased a massive $25mm in call options on the GDXJ Junior Gold Miners Index. This purchase outweighs the physical gold sale by a factor of 10—suggesting he expects much greater gains ahead to be had in the junior mining stocks.
Reported exclusively here on February 19th, was Steve Cohen, founder of SAC Capital Partners LP, purchased a $60mm option “straddle” position on the GLD during Q4 2012, which represented the expectation of an explosive move in gold—either up or down in price. Indeed, that is exactly what occurred, and during Q1, SAC Capital Partners closed out that $60mm straddle position (no doubt at a staggering profit), while at the same time buying $66mm in call options on a major gold & copper producer. The firm also maintained over $76mm in long positions on mining equities during Q1.
The largest of the trio in terms of gold positioning for the quarter, was John Paulson, founder of Paulson & Co., which reported owning over $4.389 billion in total gold holdings. Paulson held firm his $3.3 billion stake in GLD, and further added a shocking $92mm in call options on two major gold mining companies.
Muddled Israeli-US policies on Assad set stage for Golan offensive against Israel
Four days after a “senior Israeli official” warned Assad through The New York Times of Wednesday, May 15 that he risks forfeiting power if he retaliates for Israeli attacks on weapons supplies to terrorists, “Israeli officials” were telling the London Times of Saturday, May 18 something quite different: “An intact, but weakened, Assad regime would be preferable,” they said. “Better the devil we know than the demons we can only imagine if… extremists from across the Arab world gain a foothold there.”
The night before this report, Fox News aired footage appearing to show Israeli commandos inside Syria racing back on foot to Israeli territory. Without going into whether the two sets of “Israeli officials” were one and the same, their utterances are clearly making Israel’s policy-makers and defense leaders look muddled and uncertain – or, worse, unable to think clearly – about how to cope with the menace building up on the Syrian Golan. This could take the form of a Syrian war of attrition and/or a Hizballah offensive against Upper and Western Galilee. At all events, the Syrian civil conflict appears poised ready to spill over to one or more of its neighbors, starting with Israel as a result of six factors:
1. President Barack Obama’s inability to make up his mind on whether the US should intervene militarily in Syria – even in a limited way, such as the imposition of no-fly zones or finding a way to supply non-Islamist Syrian rebel groups with sorely needed weapons.
2. The US president’s refusal to recognize that chemical weapons have already been used in Syria. His reaction to the file put before him in the White House Friday, May 17, by Turkish Prime Minister Tayyip Erdogan – with evidence from physicians treating wounded Syrians – remained dismissive. “The US has seen evidence of chemical weapons being used in Syria,” he said, adding however, “it is important to get more specific details about alleged chemical attacks.”
This comment was interpreted as the US president’s acceptance of the use of chemical weapons in the Syrian war so long as it was on a limited scale. Obama, like Prime Minister Binyamin Netanyahu, has therefore waved away another red line for military intervention in the Syria conflict, by closing his eyes to the evidence.
Former Israeli defense minister Binyamin Ben-Eliezer was more realistic last week when he brusquely brushed aside a radio interviewer’s query by saying: Of course, Assad has used chemical weapons and isn’t it obvious that he has already transferred to Hizballah both chemical substances and other advanced weapons?
Reputation of management is important to the valuation of a security. The US dollar is the security of the country, USA. Therefore reputation of management will factor into the dollar price regardless of short term shenanigans.
This Is No Ordinary Scandal Political abuse of the IRS threatens the basic integrity of our government. By PEGGY NOONAN
We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous. No one likes what they’re seeing. The Justice Department assault on the Associated Press and the ugly politicization of the Internal Revenue Service have left the administration’s credibility deeply, probably irretrievably damaged. They don’t look jerky now, they look dirty. The patina of high-mindedness the president enjoyed is gone.
Something big has shifted. The standing of the administration has changed.
As always it comes down to trust. Do you trust the president’s answers when he’s pressed on an uncomfortable story? Do you trust his people to be sober and fair-minded as they go about their work? Do you trust the IRS and the Justice Department? You do not.
The president, as usual, acts as if all of this is totally unconnected to him. He’s shocked, it’s unacceptable, he’ll get to the bottom of it. He read about it in the papers, just like you.
But he is not unconnected, he is not a bystander. This is his administration. Those are his executive agencies. He runs the IRS and the Justice Department.
A president sets a mood, a tone. He establishes an atmosphere. If he is arrogant, arrogance spreads. If he is too partisan, too disrespecting of political adversaries, that spreads too. Presidents always undo themselves and then blame it on the third guy in the last row in the sleepy agency across town.
The physical market for gold will drain the warehouses of the futures exchange resulting in the physical market taking over the price setting mechanism of gold.
China’s Gold hunger to continue in 2013
BEIJING (Scrap Register): World’s second biggest gold buyer China’s gold hunger to continue this year, according to the latest reports.
As per latest reports, China’s gold imports from Hong Kong reached a record high in March and country’s yellow metal consumption rose by 26% in the first quarter of this year.
China’s Gold imports from Hong Kong As per latest figures released by Hong Kong Census and Statistics Department, Mainland China’s gold imports from Hong Kong more than doubled to a record high level in March.
China boosted their gold purchases from Hong Kong by 223,519 kilograms in March including scrap, an increase of 130% compared with 97,106 kilograms a month earlier.
According to Bloomberg, China’s net gold imports reached 130,038 kilograms in March compared with 60,947 kilograms a month earlier.
China’s Gold consumption The world’s second-largest economy China’s consumption advanced sharply by 26% year-on-year in the first three month of this year mainly due to the strong bullion sales and rising jewelry demand, as per China Gold Association.
According to the Association, China’s gold usage hit 320.54 metric tons in the first quarter of this year. Purchases of gold bars surged 49 percent to 120.39 tons, while jewelry gained 16 percent to 178.59 tons.
Where your money goes. Hear that sucking sound? Listen carefully because it’s hard for the poor and the middle class to hear it. But the wealthy? Well, they can hear it clearly. It’s almost as if they have an app on their phone to promote the transfer of wealth.
CIGA Wolfgang
The Empire’s Next Effort to Extract Your Wealth Addison Wiggin · May 15, 2013
Since before the tech bust, we’ve been suggesting that while Americans “think” they’re getting richer… they’re actually heading in the other direction. They’re getting poorer.
This proposition has been easier for folks to entertain since housing busted and the financial crisis reversed the “wealth effect” in 2008. With that in mind, let’s take a look at the logic of the American Empire and what you can expect in the year(s) ahead.
“Great empires, such as the Roman and British, were extractive,” economist Paul Craig Roberts observed recently. “The empires succeeded because the value of the resources and wealth extracted from conquered lands exceeded the value of conquest and governance.”
Undermine the recovery is the understatement of the millennium
Exiting QE could ‘undermine the recovery’, IMF warns Raising interest rates to get the economy back onto a normal setting could prove so complicated it “undermines the recovery”, the International Monetary Fund has warned. By Philip Aldrick, Economics Editor 4:00PM BST 16 May 2013
Central banks, including the Bank of England, strayed into “unchartered waters” by cutting interest rates to near-zero and launching billions of pounds of quantitative easing, and they will find the exit “difficult to control”, the IMF said. “The market response [to a rise in interest rates] will be less predictable … possibly for several months or even years.”
Long-term interest rates could spike as investors dump over-priced bonds and banks could face a fresh round of losses on both their gilt portfolios and loan books as borrowers struggle to meet higher monthly payments, it added.
“This risk makes it very important that any necessary bank restructuring and recapitalisation is completed as soon as possible,” IMF financial stability deputy chief Erik Oppers said. “Credit risk for banks may increase. Higher interest rates make it harder for bank customers to pay back their loans.”
The IMF’s analysis followed a warning earlier this week from two former members of the Bank’s Monetary Policy Committee that rate rises would result in an economic "shock" to the UK. Early signs of growth have raised the prospect of an earlier return to normal interst rate policy than the markets currently believe.
Sir Mervyn King, the Bank’s Governor, said this week that "it may be possible to raise rates faster than current market expectations" of no increase until late 2016.
The IMF also confirmed earlier work by the Bank that warned of large losses on central bank balance sheets. In a shock scenario, under which rates would need to rise by six percentage points, losses on the current £375bn QE programme in the UK could reach 4.5pc of GDP – or £70bn. Even under a “likely case” scenario where rates rose by four percentage points, the loss would be £50bn.
The Bank has previously calculated that the interest income on the £375bn of QE would more than offset the exit losses in all but the most extreme case, when the taxpayer could end up £8bn out of pocket. The IMF analysis excluded “the income from asset holdings”.
A Bank official said: "As the IMF report acknowledges, this analysis ignores capital gains and coupon income from bondholdings. That makes the results very misleading."
For the economy more broadly, though, the IMF said the risks were considerable. “The risk is interest rate volatility and overshooting in the adjustment of long-term rates. The potential sharp rise in long-term interest rates could prove difficult to control, and might undermine the recovery (including through effects on financial stability and investment),” it wrote in a policy paper.
It also argued that there was clear evidence of “diminishing returns” in continuing with existing policies like QE. The most effective policy now, it suggested, was “conditional guidance” of the sort used by the US Federal Reserve and under review by the Bank. It has also been championed by incoming Governor Mark Carney.
The IMF paper said guidance was “preferable” to “price-level or nominal-GDP targeting”.
“A possibly more promising approach may be to explicitly characterize the conditions or ‘thresholds’ leading to an interest rate lift-off. While avoiding the pitfalls of the above rules, guidance based on thresholds continues to offer an automatic stabilizer, in the sense that as the economy weakens, expectations will automatically shift to a later lift-off date,” it said.
If legacy OTC derivatives on the books of US financial institutions were properly valued, the money on depositors statements in the US financial institutions would be severely reduced or eliminated.
Demand for gold at record high in Q1 Updated: 2013-05-17 03:05 By Cai Xiao ( China Daily)
China’s gold demand jumped to a record high in the first quarter despite a global drop of 13 percent, according to a report released by the World Gold Council on Thursday.
Gold jewelry demand in China surged to a record quarterly value of 60.3 billion yuan ($9.8 billion), the council said.
Traditional Spring Festival-related gold buying and gifting was augmented by a rebound in sentiment regarding the strength of the domestic economy.
China and India accounted for a combined 62 percent of global jewelry demand in the first quarter.
China posted a new record for quarterly investment in gold bars and coins as positive seasonal factors worked in tandem with gold’s enduring investment appeal. Demand grew to 109.5 metric tons, compared with a five-year quarterly average of 43.8 tons.
The Spring Festival period fueled buying in January, but demand was supported throughout the rest of the quarter as Chinese investors, discouraged by the weak domestic stock market, increasingly relied on gold to fulfill their investment needs.
Russia sends Syria upgraded anti-ship cruise missiles DEBKAfile May 17, 2013, 8:55 AM (GMT+02:00)
US officials report the delivery to the Syrian government of Yakhont anti-ship cruise missile updated with advanced radar for extending its range and accuracy. It is designed to counter any effort by international forces to supply Syrian rebels from the sea, impose a naval embargo, establish a no-fly zone or carry out limited strikes. DEBKAfile adds: The improved Yakhont enables Syria to keep Israeli missile ships far from its coast and block troop landings.
Four Russian S-300 batteries shipped to Syria DEBKAfile May 17, 2013, 9:00 AM (GMT+02:00)
Moscow reports that four batteries of S-300 systems with 100-150 simultaneously deployable, guided anti-aircraft missiles have already been shipped to Syria complete with Russian military “adviser” crews. DEBKAfile: An Israeli strike to smash this weapon in Syria could not avoid hitting its Russian crews.
The World’s Central Banks Added To Their Gold Stockpiles Even As Prices Tumbled Mamta Badkar | May 16, 2013, 10:47 AM
Gold prices are down about 12.5% since the start of April. But global central banks have been increasing their reserves of the yellow metal.
A new report from the World Gold Council shows that central banks bout 109 tonnes of gold in the first quarter.
This was the seventh straight quarter in which they purchased over 100 tonnes of gold.
Central banks held 31,735.4 tonnes of gold as of May 2013. This was up from 31,694.8 tonnes as of April 2013.
Gold entered a bear market during that quarter. In the current quarter, gold has gone from $1,603 on April 1 to below $1,400 today.
According to the WGC, Russia and South Korea were among the biggest buyers of gold.
“The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries," said Marcus Grubb managing director at World Gold Council in a press release. "Putting this into context, sales of bars and coins, jewelery and consumption in the technology sector still make up 81% of the market.
Congressman: Department of Justice Tapped Congressional Rooms as Well as Reporters’ Offices
Has the Obama Department of Justice Violated the Separation of Powers?
California Congressman Devin Nunes (R-CA) says that the Department Of Justice tapped phones in the rooms where Congress members speak informally and off the record, eat, sleep and socialize when they’re not on the floor of the House of Representatives or in their individual offices.
These rooms are known as “cloak rooms”, which are the spaces in which a lot of informal conversations occur … both between Congress members, and Congress members and reporters.
Congressman Nunes told Hugh Hewitt:
[Congressman Nunes]: I don’t think people are focusing on the right thing when they talk about going after the AP reporters. The big problem that I see is that they actually tapped right where I’m sitting right now, the Cloak Room.
[Interviewer]: Wait a minute, this is news to me.
Congressman Nunes: The Cloak Room in the House of Representatives.
[Interviewer]: I have no idea what you’re talking about.
Swiss Party Puts Gold Repatriation, Protection on Ballot May 9, 2013
The Swiss People’s Party, a nationalist political party in Switzerland, has succeeded in getting the required number of signatures to put a gold referendum on the national ballot. The “Save Our Swiss Gold” initiative, if passed by voters, would require the Swiss central bank to double its gold reserves from 10% to 20% and repatriate all gold reserves held abroad. The measure would also forbid the sale of any gold reserves.
This would make the gold reserves worthless to the bank, according to Thomas Jordan, chairman of the governing board of the Swiss National Bank. He explained that if the gold was unsellable, it could not be counted as an asset at all, while still tying up 20% of the central bank’s reserves. He warned that the bank would have to issue treasury bills and pay interest on them in order to manage the money supply, and would lead to printing more money.
Jordan also revealed for the first time where Switzerland’s gold reserves are held – another demand by the Swiss People’s Party. Switzerland has a total of 1,040 tonnes of gold, with 70% in Switzerland, 20% in the Bank of England, and 10% in the Bank of Canada. Jordan said that keeping a portion of the nation’s gold reserves abroad was necessary for “adequate regional diversification and good market access.” Central banks will keep reserves in foreign central banks for use as collateral when buying foreign currencies.
The one and one only real present flow of money into the dollar. It is a product of the broad discussion of what is certainly coming in finance. Bail-in is a strategy that confiscates major funds that are on the statement of large depositors to fund a bankrupt bank. Most of the public conversation about this has centered on Euroland. It would be natural for large depositors to flee Euroland for other places like the USA. That is of course falling from the frying pan into the fire.
If you shift deposits it should be to other than entities outside the Western financial system. Holding cash is quite sane when all you get on it is 1% interest and you take all the risk of the solvency of the institution.
Physical Gold:
The argument that modern wealth is so large that it is immobile and therefore will not move en masse to physical gold.
To this point I first pose a question. Where has all the physical gold gone? Central banks have gold on their books but a major percentage, maybe a shocking percentage, is leased out with counter party risk. Simply stated, if the lease is not renewed the central banks must drop the gold from their assets therefore the leases are renewed constantly knowing full well the gold is gone. The theft of gold is the second largest crime in world history, second in size to the fraudulent legacy of OTC derivatives that caused the entire mess.
The paper gold market is in its death throws right now due to the downside manipulation and the knuckle draggers do not even appreciate that. With the automatic and forthcoming elimination of paper gold as the price setting mechanism, physical gold will seek much higher prices than anyone can conceive of.
I mentioned that a price of $50,000 an ounce was possible when physical gold is emancipated from paper gold. To that a popular previous gold writer turned Trojan Horse simply dismissed it as Jim being extreme rather than argue the subject.
- Inflation Remains Very Much a Threat - April Year-to-Year Inflation: 1.1% (CPI-U), 0.9% (CPI-W), 8.7% (ShadowStats) - CPI Decline Boosted Real Retail Sales, Re-Intensifying Recession Still Signaled - April Housing Starts Showed Statistically-Significant Plunge
Of course the Federal Reserve can do whatever the pleases to do, but the consequences will be immediate and severe. To slow or cease QE would kick the support of the equity market and US dollar right out from under both.
Since the day QE started all we have heard is stopping it while it continued to grow. This article is nothing new, but rather a statement as old as QE itself.
Fed blame game leads to QE end game May 15, 2013, 12:01 p.m. EDT By John Nyaradi
The Federal Reserve’s controversial quantitative-easing (QE) program has generated a new round in the "blame game," and the Fed itself is now forecasting the end game for QE.
The Federal Reserve’s quantitative-easing program has been controversial ever since it began in 2008. Over the years, the program has drawn increasing criticism from many corners, but recently, the criticism has reached deafening levels as a series of high-profile commentators chime in to voice opposition to the program.
The chief complaint is that the program punishes those who prefer savings accounts, while the program benefits investors, big banks and institutional investors. The conclusion reached in these arguments is that QE benefits the investing class at the expense of those who rely on passbook savings accounts, thus making the program an act of class warfare. Paul Singer of Elliott Management often makes this argument, emphasizing that quantitative easing has caused a "distorted recovery" which brings great benefits to investors, while doing nothing for the middle class.
Ron Paul’s views regarding the Federal Reserve are well known, (abolish it), however, even a fellow central banker, European Central Bank President Mario Draghi, took a poke at Bernanke during a May 2 press conference in Bratislava. When questioned about the ECB’s approach to the euro-zone economic crisis (which involves imposition of an austerity mandate on countries requesting bailout funds from the ECB) Draghi distinguished the ECB approach from that of the Federal Reserve in the United States. In an obvious reference to Dr. Bernanke’s now-infamous "Helicopter Ben" speech, Draghi remarked that one does not "go around with helicopter money, throwing money."
Dissension also exists within the Fed, itself. On Thursday, May 9, Dallas Federal Reserve President Richard Fisher pointed out that the lack of job creation is a result of poor fiscal policy rather than monetary policy. Fisher explained that monetary policy had accomplished all it could in stimulating the economy and that ongoing bond buying by the Fed amounts to "overkill." Fisher’s suggestion that quantitative easing should be scaled back was the first "trial balloon" to test public reaction to the idea of weaning the economy (and more importantly, the stock market) from the liquidity pump.
CIGA Bruce posted: “For any serious investor, I can say with over 35 years experience to keep the faith. I have lost a great percentage of my retirement nest egg recently. Yes, I am concerned; however I still can sleep at night. I would be more concerned if my money were invested in any other instruments.”
I have a sharp friend that once told me, “Unless you are ready to sell your 401K the current stock price doesn’t mean anything”. I would suggest the same holds for gold and silver. It’s the FUNDAMENTALS that keep me in precious metals. Further I have sold most all of my 401K converting it to physical precious metals. The 401K only offers me fiat investment opportunities with no stock voting rights… (as if voting makes a difference). What happens if the markets or fiat crashes? What happens if the Government decides to help me with my investment decisions with my 401K? (I couldn’t sleep at night with my entire savings tied up in a fiat 401K so I did something about it! Hope my fellow CIGAs are doing the same! Get out of the system!
Sure the recent crash got me excited to buy more. I did! Just wish I had more fiat available for conversion to precious metal at the newly discounted prices! Supplies are dwindling. The East is buying like crazy. What can I sell to get more physical? However you may have to sign up for delayed delivery….Time is running out for physical delivery.
CIGAs, the recent irrational crash in gold and silver means something big is brewing. It’s both exciting and scary just make sure you are properly positioned. Nasty things are happening rapidly. Fundamentals will put you on the correct side of the trade if you can get the trade done while there is still physical to be had and your time frame is not tomorrow.
Technical analysis is awesome but it assumes the market is a free market, not rigged, and we all know the technical precious metals markets are rigged and painted by our government (what should be true north based on the big dipper and the North star { FUNDAMENTALS} appears to be south based on painted technical analysis. As an old Eagle Scout I recommend you be prepared with hold in your hand physical. A lot of water, a nice store of food and fuel would be great as well.
Regards, CIGA the other James
Dear Jim,
As you have noted, thou must not embarrass the dollar. It did not take very long for DHS to whip up a technicality.
…with the Chinese essentially consuming ALL of the world’s production – as has been the case for the past year…
…Miles Franklin enjoyed its most profitable month EVER -40% more than its second most profitable month; which, ironically, was September 2011, when "DOLLAR-PRICED GOLD" reached its ALL-TIME HIGH of $1,920/oz…
Thus, when you see this chart of exploding physical demand against "plunging" paper demand, who are you going to believe – truth-telling "shadow worlders" like me; or lying government, Wall Street, and MSM shills?
THE 7 BERNANKE YEARS
DEBT AND GOLD WILL RISE EXPONENTIALLY
Jim,
I came across this chart just now. Interesting correlation and I expect brings back memories for you of the 70s.
CIGA Peter
Dear Jim,
Here they come for the pensions…
Regards, CIGA Mark
Mark,
We geezers are directly in the cross hairs. God help the elderly from the tyrants of money.
Jim
Public sector pensions face big hit, claims report 17 May 2013 Last updated at 08:09 ET
Four million public sector workers will see a dramatic reduction in the value of their pension schemes, according to a new report.
The Pensions Policy Institute (PPI) said members will see a one-third cut in the value of their pensions, as a result of forthcoming changes.
Teachers, civil servants, NHS and local government workers will be affected.
The PPI said the average pension’s value will reduce from 23% of a person’s salary to 15%.
The figures reflect what the promise of a pension is worth to workers as a perk on top of their salary, not the actual level of pay-outs.
The changes were made by the government, in an attempt to save money.
I just want you to know that I will never sell my physical gold, ever! How uninformed and economically illiterate the masses are!
In my estimation, the sheer stupidity of the stock market zombies has a reached a fever pitch. How many bubbles must pop before people wake up? From a cratering Baltic Dry Index to endless money printing, there is NO economic activity anywhere in the world to justify the DOW.
Those weak hands who regret buying gold and silver every time an April12th/15th event takes place have no business whatsoever in the hard asset sector. My advice to them would be to get back into the USD and watch what happens to their purchasing power in the long run.
By the way: GEAB has been a must have website for me for 2 years now.
Thank you for everything you do for humanity
All the best, CIGA Scott
Jim,
This is amazing. Look at the 1976 gold chart laid over what is going on today.
Today a legend in the business told King World News there is a continued massive run on physical gold and silver as premiums in Shanghai have now soared to a stunning level (see below) for physical gold. Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also spoke about extraordinary situations unfolding at gold, silver, and art auctions in New York and Zurich, and what this means for investors. Below is what Barron had to say in this remarkable interview.
Barron: “I’m at an auction today in Zurich (Switzerland) of ancient Greek and Roman coins. The most expensive item so far has gone for 800,000 Swiss francs. The auction is shattering all of the previous records. I think this is very significant.
Also, today in New York Christie’s had a contemporary art auction and they sold $495 million of art. That’s the highest total in auction history. They established 16 new world auction records. Nine works sold for more than $10 million, and twenty-three for more than $5 million….
“This is very symptomatic of what’s going on. We see a lot of manipulation taking place in the gold and silver markets, but the big money is going for portable wealth, and they are doing that in the form of buying hard assets. They are getting it out of dollars and other paper currencies, and they are putting it into tangibles, especially portable wealth.
I’m not talking about real estate, although if you try to buy an apartment facing Central Park it will cost you a great deal of money, and the same thing is true if you want to buy a flat in Mayfair, in London. But what is happening is high end people are looking to protect their wealth.
At this auction today I am seeing a lot of Europeans and a lot of Russians buying up these ancient coins that are for sale. This isn’t the sort of auction that attracts Asian collectors, but I would note that Chinese coin prices are going through the roof right now.
Today whistleblower Andrew Maguire told King World News that massive global physical demand reveals that gold is in fact in a full-fledged bull market. Maguire, who recently appeared in the extraordinary CBC production titled, “The Secret World of Gold,” also spoke with KWN about what’s happening with GLD, bullion banks and the LBMA. Here is what Maguire had to say in part I of an extraordinary series of interviews to be released today.
Maguire: “Let’s take a minute now and take the blinkers off of this so-called ‘bear market’ in gold. You cannot have a bear market when even the officially reported demand is surging to its highest levels in 18 months.
On top of this official data we also know that wholesale demand is exponentially larger. We see this by monitoring the less transparent daily wholesale market, and those outflows are not even recorded in this data….
“You can’t call it a ‘bear market’ when we see consistent $30 premiums in Shanghai, India, and the Middle-Eastern markets. You can’t call it a bear market when we see extended and increasing delivery bottlenecks and backlogs at the refiners.
You can’t call it a bear market when bullion banks are actively defaulting on an increasing number of clients who have the audacity to ask for the delivery of their bullion from these LBMA bullion bank vaults. If we were in a bear market they would be trying to rid themselves of this bullion.
We have a fractional reserve LBMA bullion bank system, and they were being drained of immediately deliverable, allocated supply. Bear in mind that this was happening before the April 12th paper market smash. So in March, when we spoke, we saw the beginning of the official intervention in the paper gold market. I remember speaking to you at the time about how we were threatening to trip extremely large, margined naked short stops above the $1,620 level.
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