Thursday, September 29, 2011

Bernanke Is Setting Up QE3

Under the cover of that continuous ping pong game of "will Greece default or will it not default," the Fed has slipped in its first real pre-QE3 trial balloon:  "If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to [with more QE] because we do not want deflation"

Here's the LINK 

THAT is why our interventionist Government/Fed has taken a wrecking-ball to the prices of commodities and gold/silver.  Now we can expect to see "reduced" indications of inflation in the next Government-manipulated Producer Price and Consumer Price Index releases.

Make no mistake about it, although the current fundamental underpinnings are much worse than in 2008, the appearance of a financial and economic crisis - and subsequent policy response - is nearly identical.  In order to make a big expansion in money supply politically palatable in 2008, the markets had to be set up so that Hank Paulson could scare the shit out of Congress, which left them begging for Fed stimulus.  Per Mark Twain, history doesn't repeat but often rhymes, right?  Expect another massive attempt to "shock and awe" the economy back to life.

Where this is "rhyming" with 2008 is that they took a serious wrecking ball to commodities and metals - especially gold and silver - back then, which was succeeded a few months later by the shock and awe monetary and fiscal stimulus that helped drive the metals back to their recent peak this year.  Don't make the mistake of thinking that the Fed will do the right thing and let the system very painfully start self-correcting.  Once inflation "expectations" have manipulated lower now that another wrecking ball was applied to gold and silver,  the Fed will soon be begged by Congress and Geithner to crank the printing presses back up to full speed.

In case you missed these, here's a couple articles on data points that should help along the Fed's next move: In the latest poll, CEO's are less confident about hiring and the economy:  LINK; and consumer confidence is near an all-time low:  LINK.  So the "expectations about a much weaker economy ahead are already in place.

And make no mistake about this, the Asian/Indian/Middle Eastern physical metal buyers are treating this latest price hit as a gift from the gods: 
Physical demand right now is not just decent, it is exceptionally strong, said UBS in a research note, after observing strong buying from India and elsewhere in Asia, as well as robust retail demand for coins in Europe
Here's the LINK  The one mistake you can make right now is to assume that the bull market in the metals is over.  In fact, based on the variables that are driving this bull market, it has long way to go.


  1. classical economics doesn't work with silver...hmmm...wonder why? good demand/supply dynamics of industry

    Ross Beaty: Silver Demand Defies Conventional Economic Logic; Bullish on Silver

    On Financial Sense Newshour this week Jim is joined by Ross Beaty,
    Chairman of Pan American Silver and CEO of Alterra Power Corp. Ross is
    bullish on the prospects for silver, as well as those for Pan
    American. He believes the 2009 acquisition of Aquiline Resources will
    double silver production for PAAS by 2014.

  2. Michael Krieger: Rebellion Has Arrived in America

    While carefully observing those areas are always important to a macro investor such as myself, when you are smack in the middle of a Fourth Turning they take on an increased level of importance. What has shielded the U.S. from a lot of the social strife sweeping the rest of the globe at the moment has been the U.S. dollar’s reserve status since this allows us to print seemingly infinite amounts of paper dollars and shove them down the throats of the rest of the world for their resources. This keeps the populace fat, happy and most importantly asleep and apathetic. Well I am pleased to announce that those days are OVER. The American populace is now in the very beginnings of a state of open peaceful rebellion against the criminal oligarchic mafia that runs the nation through fraud and corruption. The status quo is likely to become increasingly defensive as a result and may lash out aggressively like a cornered rat, but they cannot and will not win.

  3. Crony Capitalism: $737 Million Green Jobs Loan Given to Nancy Pelosi's Brother-In-Law

    On SolarReserve's website is a list of "investment partners," including the "PCG Clean Energy & Technology Fund (East) LLC." As blogger American Glob quickly discovered, PCG's number two is none other than "Ronald Pelosi, a San Francisco political insider and financial industry polymath who happens to be the brother-in-law of Nancy Pelosi, the Minority Leader of the United States House of Representatives."

  4. Dave,
    I was wondering if you could speak to any ideas you may have for the individual metals investor, as both gold and silver inventories begin to dry up. I, for instance, have bought from Tulving on larger purchases, and Gainesville, Craiglist, etc. on smaller purchases. But as supplies run dry, does that mean a little guy like me is going to be run over as shipments become available to only so-called "Whales", who won't care what the premiums will be? I guess what I'm asking is how are you currently positioning yourself with the metal vendors? Realistically, once inventories dry up, that's going to leave us with the scenario of "when the shit hit's the fan, it will not be evenly distributed." I'm guessing it's going to be about impossible to get your hands on any metal, especially us relatively small precious metals investors.

  5. (Dave)

    What you just described is why everyone, big and small, should be buying as much metal as they can now. It's not evenly distributed now. The people who get "it" are the ones buying. There will be plenty of fiat money millionaires who go bust when the dollar collapses. Be thankful that you are one of the less than 2 or 3% who are buying physical now.

    On the other hand, in the book "The Road," which I recommend everyone read and DO NOT discount th scenario in there as "not possible," there's a scene where the father and son find a survival bunker. They go down into it looking for anything useful to their survival. They find a jar full of kugerrands, look at it, then put it back on the shelf and continue searching for canned food, propane and bullets. Let's hope it doesn't collapse into that...