Posts Tagged ‘QE4’
Posted: Apr 20 2011
By: Dan Norcini
There is only one way to describe what is occurring to the US Dollar; its future as the global reserve currency is in serious danger of disappearing forever. Under the “leadership” of the US Federal Reserve, and thanks also to the reckless and incredibly short-sighted spending occuring at the Federal level, the Dollar has run out of friends.
It’s decline this morning has opened the door for gold to push past $1500 and silver into what looks to me like the beginning of a “MELT UP” mode. It has also send further speculative money flows into the commodity sector with the result that the CCI, the Continuous Commodity Index, is within a whisker of matching its all time high.
What many of us have feared could happen but were hoping to see avoided, is becoming increasingly likely the further the Dollar descends into this abyss. As a citizen of my nation who cares deeply for its future for the sake of my own children, I am both disgusted and grieved at what those who were charged with preserving the integrity of its currency have done to our birthright.
A pox on these scurrilous men who have sold out our nation for political expediency. Their only loyalty is to their own pocketbooks and their crony pals who could give a rat’s ass what happens to the nation as long as they can profit from it all. This plague of locusts is stripping us bare.
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For further market analysis and commentary, please see Trader Dan’s website at www.traderdan.net
Read the original article HERE.
By Gary Tanashian
While NFTRH was highlighting risk leading into the initial phase of inflationary blow-ups – and surely Egypt, Libya and other strained global situations are symptomatic of chronic and disenfranchising inflation – it is important to understand that headline events do not move markets, beyond the very short term. Indeed, I saw enough last week to nudge the very short-term risk profile toward neutral; and in an age of inflation onDemand one should question a net bearish stance more often than not. Inflation ran the 2003-2007 bull market quite well until ultimately, the soufflé pancaked in 2008.
Bloomberg’s top two headlines at the end of the week: “China’s Wen Targets Inflation as Top Priority to Cut Risk of Social Unrest” and”US Stocks Rise as Economic Optimism Overshadows Increase in Oil Prices”.
I want to spend some time breaking down these headlines, before transitioning to precious metals analysis, where we will take the macro pulse of the sector and review two core gold explorers, from a technical perspective.
Back on message, inflationary policy is what the asset spectrum feeds upon, as the ‘ruling’ class (including you and me ladies and gentlemen, as asset speculators) benefits to the detriment of the non-investor classes, in the US and the world over. People are suffering due to the cheapening of the money used as the medium of exchange for their wages, even as we go forth and speculate on some high potential gold explorers, uranium prospects, emerging, productive and/or resource rich markets, and other areas that offer opportunity in an inflationary world.
Enter, the first Bloomberg headline above. In the article http://tinyurl.com/nftrh126a, [edit: title since changed... hmmm] Premier Wen Jiabao states “We cannot allow price rises to affect the normal lives of low-income people” to which I would answer “Mr. Premier, you have already allowed inflation to affect the normal lives of low income (really low income) people, because you have already promoted and feasted upon an epic and ongoing policy of inflation. You now attempt to stuff the genie back in the bottle because you see some frontier markets blowing up due to global inflation dynamics and perhaps wonder how long it will take for the flames to reach your homeland.”
From my vantage point in the downsized productive (i.e. manufacturing) segment of the US economy, I have watched a myopic and collective greed in the United States work in tacit partnership with China to cheapen the entire concept of free trade. The US, manufacturer of the world’s reserve currency, has been able to leverage and monetize its reputation – built of sweat equity in the earlier parts of the previous century (for ref. see my first ever public article from 2004, Frankemarket Liveshttp://www.biiwii.com/frankenmarket.htm) – in partnership with China, by selling Treasury bonds, printing money and creating a heretofore limitless inflationary drag on the US currency.
Edit: for an unbelievable view of that very different America, see here:http://tinyurl.com/biiwii3811d
China, in pinning its currency to the dollar, and accepting massive volumes of USD denominated instruments in exchange for the work and productivity of its people, has inflated right along with the US. Typical of politicians, the Politburo now tells the people the straight deal after it is too late and presumably upon feeling an implied threat as indicated by the Egypt and Libya uprisings. China’s emerging manufacturing economy has been built by direct, indirect and ongoing inflation.
A robotic talking head sums up the second article http://tinyurl.com/nftrh126b :
“It’s a battle between the negative geopolitical environment versus the very strong economic fundamentals,” said Benjamin Pace, who helps oversee about $420 billion as the New York-based chief investment officer of Deutsche Bank Private Wealth Management. “The economic environment is very equity friendly. The current geopolitical environment and its impact on oil prices, not so much.”
No sir, it is a battle between the geopolitical manifestations of inflation and the seemingly strong economic fundamentals produced by said inflation as grains, clothing materials and energy costs rise right along with precious metals in a not so tacit indictment of these “strong economic fundamentals” that you speak of. During the 2003-2007 cycle, the same thing happened as a result of policy makers’ refusal to allow the economy to purge itself through a hard downturn, which would have eventually set the stage for a new and lasting up cycle. No, in and around 2000, the game became inflation onDemand; inflation as economic stimulant; inflation… it’s what’s for dinner.
Short-term, global and especially US markets are back in the game of blaming oil for the market’s ups and downs. This is similar to the ending stages of the 2003-2007 cycle. Be aware that the majority of ‘Hope 09′ (and ‘Full Hubris 10′, ‘Suck-in 11′, AKA the inflationary cyclical bull born 2008, died… ?) has been attended by a positive correlation to oil, copper, food prices… the stuff that people need; which brings us right back to square one of this segment… the effects of inflation are beginning to erode peoples’ lives and it is becoming obvious. The actual inflation has been ongoing up to now.
Going forward, global policy makers will not be able to merrily inflate their way to bull nirvana. See Wen above; see Trichet last week talking about euro rate hikes. See Ben Bernanke… well, our Fed chief has not quite gotten the memo yet. But even in the US, the winds of change appear to be blowing. Whether our congress puts a stop to it or natural market forces do (I’ll take ‘b’ Alex), the inflation cannot go on uninterrupted forever.
And this, my friends, is where investing and/or speculating becomes tricky. This is where the specter of deflation or more accurately, a deflationary ‘event’ comes into play. At the root of this dynamic is the case for the NFTRH ‘gold stocks above all others’ stance, because it is in gold’s ‘real’ price that the gold mining industry finds its most positive fundamentals, with gold outperforming the things of positive economic correlation, including those that feed into gold mining cost structures.
Read the entire article HERE.
Submitted by Tyler Durden
03/07/2011 19:06 -0500
The last time Charles Biderman appeared on CNBC, he was carted onstage (and promptly off) in the late hours before Christmas Eve, when it was virtually assured nobody would hear the self-evident truths out of his mouth such as this one: “individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don’t really have that much cash to invest. So what nobody’s asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don’t know what is going to happen…When I was on your show a year ago I was saying the same thing: we can’t figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market.” Now that the great muni scare forced retail to take proceeds from muni liquidations and invest in stocks just as the market topped out, CNBC brought Biderman on again, hoping to get something, anything, bullish out of the flow of funds expert. Wrong. “In December of 2009 received a lot of ridicule for saying that the Fed is rigging the market which as everybody is well aware.” As for the “sustainable economic recovery” i.e., what happens to Quantitative Easing: “They probably will end for a while, we think there is going to be a QE3 and 4, or until the market says: “No Mas – we are not going to believe this game the Fed is playing… The Fed is printing over $100 billion a month to buy other assets and pay bills, and economic growth is picking up at a $200 billion annual rate. This is very inefficient method of boosting the economy, and then how do we repay these trillions that have been created out of thing air in the future.” At which point the producer “screams get him off my show.”
Oddly enough, this form of market manipulation by the Fed is precisely what Zero Hedge has been claiming since day one, prompting our legacy media followers to brand us on occasion as “conspiratorial.” Ironically, it is precisely this kind of “conspiracy theorism” that is ultimately proven to be nothing but fact in this bizarro banana republic, now that the wheels of the Ponzi system are finally coming undone (see the recent deranged ramblings of one Bill Gross for more). Yet it hasn’t stopped once upon a time blogger, CNBC regular and now Bloomberg columnist, Paul Kedrosky to declare from atop his status quo-worshipping altar that Zero Hedge is “too conspiratorial and too much of an intellectual monoculture.” That’s ok Paul, we realize that mainstream bashing of Zero Hedge in public, while fervently copying, pasting and/or paraphrasing from it, is all the rage for our less than sophisticated, but admittedly very, very polycultured, imitators. And yes, just like Biderman, we are happy to be called “conspiratorial” if that is the MSM’s codeword for being proven right within 3 to 6 months… and actually having an original thought.
Read the entire article HERE.
Quantitative Easing Explained: