The Golden Truth: Now We See Why The FOMC Policy Vote Was Unanimous...

Thursday, January 27, 2011

Now We See Why The FOMC Policy Vote Was Unanimous...

For all of the absurd agonizing over every syllable of the FOMC policy statement after every meeting, what initially stood out for me with a quick skim of the initial press release was that the vote on the policy decision was unanimous. That's really all you needed to know about the 2-day circus called the FOMC meeting. My comment to colleagues was "the monetary hawks are dead." I'm sure this aspect was why gold and silver moved up sharply after the release of the policy decision.

But today the jobless claims number released was substantially higher than consensus expectation. The reason claimed was weather-related administrative backlog in the southern States due to bad weather. If that is indeed the case, then how come when the claims number was released last week and was much lower than expected, it was never even hinted that there was this claims processing bottleneck? I suppose George Orwell would be able to explain if he were still alive...

And the durables goods orders number came in, not only substantially lower than expected by economists, but quite negative. For sure, this number can be volatile and is influenced by the "lumpiness" of big ticket orders like civilian and military aircraft. But this week the numbers showed weak demand for airplanes, vehicles, computers and machinery. Basically widespread weakness for most industrial production-related durables.

My point here is that true weakness in the economy has been covered up with statistical manipulation and media spin. We are seeing this in the housing numbers already, despite the media spin being put on the latest housing reports. Point in case is that the weekly mortgage purchase applications has been declining for several weeks now and is quite inconsistent with view of home sales being presented by the latest headline numbers. The fact is that new home sales in 2010 were the lowest in 47 years. The data on mortgage purchase applications so far this year is suggesting 2011 will be worse.

It's going to get ugly in many respects this year and the economic reality being felt by the majority of Americans will become impossible to cover-up by the media, politicians and business leaders. Rest assured QE2 will become QE3 in good time and you will want to have as much of your wealth as possible moved into gold and silver before that event becomes a fact. This latest manipulated price correction is one of the better entry points I've seen in the last 10 years...

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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.