Monday, September 17, 2012

What Now?

While the prospects for hyperinflation and the general outlook on the economic and systemic-solvency crises are unchanged, general circumstances have continued to advance towards the ultimate demise of the dollar.  The most recent development was yesterday’s (Septembers 13th) announcement by the Federal Open Market Committee (FOMC) of a new, open-ended round of Federal Reserve quantitative easing (QE3)  -  John Williams, Shadow Statistics

Well, tonight is a big night for the Peyton Manning-led Denver Broncos.  More on that later.  Last week Bernanke set the wheels in motion for QE to infinity.  QE to infinity is really just a flashy metaphor for the concept of competitive global fiat currency devaluation - i.e. the race to see which Central Bank can most quickly devalue its currency to zero.   In a sense, Bernanke just gave the U.S. a commanding lead in that race by making the Fed's new mortgage purchase program "indefinite."

The Fed's actions clearly signal to the world that the real economy is in much worse shape than is being conveyed by overly manipulated Government and industry association economic statistics.  This view is affirmed by this morning's Empire State manufacturing survey.  This widely followed metric released by the NY Fed came in at -10.41 vs an expected reading of -2.  It was the weakest reading in nearly two years.  Especially troubling was the plunge in the new orders index.  Here's the report:  LINK

The action in gold and silver reflected the market's "vote" on the FOMC policy decision.  Technically the metals and mining stocks are a bit "overbought" after starting a big move higher since the last week in July.  I am expecting a period of pullback/consolidation while the market digests its recent gains.  Having said this, the eastern hemisphere physical market buyers have started to ramp up their buying again, as seasonal factors in India come into play and, as is being reported by several European bullion banks, the Chinese have begun to aggressively move into the silver market.

Also, I suggested about a month ago that eventually the Indian rupee would start to reverse its long sell-off and move higher and unleash a torrent of pent-up gold demand.  This appears to be occurring and import premiums in India have gone from being negative for a few months to now being mostly positive.  This means that the Indians are buying again.  This demand is being further boosted by strength from the Indian stock market and a recovery of the crucial Monsoon season, which determines the extent to which Indian farmers will make money which is typically converted into gold.

The seasonal/fundamental factors in India and China could easily curtail the degree and length of market consolidation.  In fact, every intra-day sell-off during Anglo/U.S. trading should be seen as an opportunity to accumulated more metal.  Aggressive traders can try to market time the volatility by buying the dips and selling the spikes, but the real risk at this point is being left out of a market which could easily take gold well over $2,000 and silver well over $50 before the end of the year - and even higher this spring.

Today is a great example, as  post-Comex electronic market, which tends to be relatively illiquid, was used to knock silver below $34 to $33.84, after which silver took less than 15 minutes to rally back over $34 and is trading at $34.20.  Buy all dips.

As for tonight, I am looking forward to a competitive football game between Denver and Atlanta.  As a homer of course I expect the Broncos to win, but win or lose I want to see good game.  Denver has  a better defense than Atlanta and they both have potent offenses.  The Falcons hammered a very bad Kansas City Chiefs team last week, so we don't know how good Atlanta really is.  Denver's tough win over the Steelers speaks for itself, especially if you were betting on Denver and laying the 1 point spread!                                    


  1. There's nothing shocking about the Fed doing QE∞. They've been doing it in one form or another since 2008 (1913 if you really want to be a nitpicker). The only difference now is that they openly acknowledge it.

  2. Hey Dave,

    you've been outkicking the coverage on your commentary lately. thanks again.

    are you adding to AUMN here?


    1. Thanks! I got a lot of AUMN. I wish we could have played the stock deal. The easy money in it has been made. From here it should outperform the sector.

  3. I am so happy that Peyton left Indy for my other team. Both teams seem to be in a good situation, with Denver having an elite quarterback for the first time since Elway retired.


  4. Hi Dave

    Could you tell us what you think of Great Panther (GPL).


    1. I personally think it's an over-hyped stock that is overvalued. The momentum play newsletters love it so it's tradeable. Torrey Hills Capital pimps it which for me raises a big bright red flag on it.

  5. You must be loving the Broncos this year!

    1. AFC Championship, minimum - lol. Tough loss for the Saints yesterday...

  6. » Home to Denver Gold Forum 2012

    Pierre Lassonde

  7. three interceptions in the first quarter by your elite quarterback. Meanwhile the FED and its bullion banks have gold capped with ZIRP for the indefinite future as Au chops sideways and down to $1755. I personally cannot understand the exuberance over Au at that price which amounts to a couple of dimes in the hat compared to what the real price discovery should give us, namely Au /$2000 at least. Come on. As long as the CRIMEX paper pushers are in control we can expect their customary pump and dump for the foreseeable future.

  8. New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages

    Wendell and Margret Brady haven’t paid their mortgage in more than three years, withholding the money amid a foreclosure dispute on the couple’s 11-bedroom house in Morristown, New Jersey.

    The Victorian home, built in 1887 and owned by the retired couple for 38 years, is part of the growing backlog of properties facing repossession in the state, which now has the second-highest serious delinquency rate in the U.S. While shrinking nationwide, the pipeline of distressed real estate, or shadow inventory, is also growing in New York, Connecticut, Maine and Pennsylvania because of state laws that slow the foreclosure process. The Bradys heard nothing from their lender from May 2011, until a letter arrived in the mail last week.

    Shadow Inventory

    “Shadow inventory is falling in much of the country -- except for the Northeast,” said Zandi. “The implication is that house prices will be much weaker in the Northeast in coming years as these distressed properties eventually get sold.”

    1. The Fed Now Owns Your Foreclosed Property Under QE3 Purchases of Toxic Assets
      Heath Wolfe, assistant general for audits at the FHFA, views these victims as schemers who deserve to be punished. Wolf explained: “We are working with Fannie and Freddie to build a mechanism [to identify strategic defaulters].”

      The American public will now be forced to serve time in debtor’s prison for purposefully abandoning a mortgage mess they were coerced into participating in by the very banks that are benefiting from the Fed’s purchase of mortgage-backed securities.

      Between the cost of $650 billion and $1 trillion, the foreclosure crisis has devastated the American landscape like no other scheme invented by the technocrats. The mega-banks JPMorgan Chase, Wells Fargo, Bank of America who serviced the mortgages that resulted in not only the forcing of Americans out of their homes, but an estimated $7,200 in foreclosure fees to the victims adds insult to injury.

      Just in Coon Rapids, Minnesota, there have been more than 3,900 foreclosures with an increase in state and local security costs after having placed many of these homeowners on the streets.

      At a time when 46 million Americans are currently at or below the poverty threshold and the average annual income is $23,200.00, QE3 is touted as the answer to rampant unemployment.

      The plan that is covered by the shock of QE3 and even the exposure of the hidden banker bailout still cloak the real purpose of this move by Bernanke to purchase these toxic assets. As the true controllers of this country, the central bankers are now acquiring massive amounts of land in the US with the purchase through QE3. Not only will Bernanke own a massive amount of American land, he will be able to enforce any and all foreclosures as a recovery effort for the Federal Reserve to collect on their investment.
      The American public has been reduced to serfs, chained to a manufactured debt invented by the techocrats and banking cartels.


      Eliminating the last remnants of fiscal discipline on bankers and politicians in 1971 accomplished the desired result of enriching the top 0.1% while leaving the bottom 90% in debt and desolation. The Wall Street debt peddlers, Military Industrial arms dealers, and job destroying corporate goliaths have reaped the benefits of financialization (money printing) while shoveling the costs, their gambling losses, trillions of consumer debt, and relentless inflation upon the working tax paying middle class. The creation of the Federal Reserve and implementation of the individual income tax in 1913, along with leaving the gold standard has rewarded the cabal of private banking interests who have captured our economic and political systems with obscene levels of wealth, while senior citizens are left with no interest earnings ($400 billion per year has been absconded from savers and doled out to bankers since 2008 by Ben Bernanke) and the middle class has gone decades seeing their earnings stagnate and their purchasing power fall precipitously.
      The facts exposed in the chart above didn’t happen by accident. The system has been rigged by those in power to enrich them, while impoverishing the masses. When you gain control over the issuance of currency, issuance of debt, tax system, political system and legal apparatus, you’ve essentially hijacked the country and can funnel all the benefits to yourself and costs to the math challenged, government educated, brainwashed dupes, known as the masses. But there is a problem for the .01%. Their sociopathic personalities never allow them to stop plundering and preying upon the sheep. They have left nothing but carcasses of the once proud hard working middle class across the country side. There are only so many Lear jets, estates in the Hamptons, Jaguars, and Rolexes the .01% can buy. There are only 152,000 of them. Their sociopathic looting and pillaging of the national wealth has destroyed the host. When 90% of the population can barely subsist, collapse and revolution beckon.

  9. Fiat Justitia? Breuer fires blanks on elite financial frauds

    “Breuer blanc” is the classic white butter sauce served by the increasingly oxymoronic Justice Department to cover up the rot in elite American banksters. Lanny Breuer runs the Criminal Division during the continuing cover up of the greatest and most destructive epidemic of elite white-collar crime in our history. The ingredients of “Breuer blanc” consist of a generous portion of inaction and a large dollop of hypocrisy all emulsified with esters of excuse.
    The last three administrations have found the bouquet of the financial industry’s political contributions so delectable that they have allowed elite financial firms and their senior officers to commit fraud with near impunity. Prosecutions, even serious investigations employing grand juries, of the elite bankers who became wealthy by causing the ongoing crisis have become so rare that Breuer is firing “blancs” at the most elite frauds. The results of Breuer blanc have been catastrophic. The Clinton, Bush, and Obama administrations (and Congress) catered to elite bankers so unctuously that they created the most criminogenic environment for financial fraud in history. The fin de siècle feast that the Clinton and Bush administration served up to produce the crisis exemplified the elite degeneracy that the French have always ascribed to the end of an era. The element of hope, however, that the French also ascribe to the new era was quickly betrayed by the Obama administration. The audacity of hope soon curdled into a spoiled and broken Breuer blanc slathered over the rot of the elite banksters to cover up their frauds.
    Breuer is the very model of the modern chef de cover up so he has deconstructed the criminal justice system to the point that it no longer applies to the banksters who caused the crisis. Breuer and Attorney General Holder specialize in serving the American people tripe and confit de canard. Breuer blanc has been slathered on so many of Holder’s hors d’œuvrethat the Justice Department has been rendered hors de combat when it comes to the banksters.

    Holder and Breuer became wealthy by doing the bidding of the world’s wealthiest and most powerful CEOs when they were at Covington & Burling. The CEOs deploy them as apex predators – and they are famously vicious or charming, whatever is required, in their role as counsel representing the CEO’s interests. Holder and Breuer will soon return formally to that status. It is an odd role, for the lawyer must be reliably tame in serving the CEO’s interests and willing to be reliably vicious if necessary when attacking anyone that stands between the CEO and wealth, ego, and power maximization. It is an extremely lucrative role and such lawyers are considered to be the profession’s elite by their peers.

  10. A Rare Look at Why The Government Won't Fight Wall Street

    Similarly, when Kaufman tried to advocate for rules that would have prevented naked short-selling, Connaughton was warned by a lobbyist that it would be "bad for my career" if he went after the issue and that "Ted and I looked like deranged conspiracy theorists" for asking if naked short-selling had played a role in the final collapse of Lehman Brothers. Naked short-selling is another controversial practice. Essentially, when you short a stock, you're supposed to locate shares of that stock before you go out and sell it short. But what hedge funds and banks have discovered is that the rules provide "leeway" – you can go out and sell shares in a stock without actually having it, provided you have a "reasonable belief" that you can locate the shares.

    Read more: