Waiting on The Fellen

As Keith would say...."I'm not waiting on my lady. I'm just waiting on a Fellen."

The world holds its collective breath. Not at the events in Ukraine. No, not even at the changing alliance in the Middle East. Nope. Today, the world awaits an update from the all-powerful Fellen. Friggin ridiculous.

Just as ridiculous as the notion, put forth now for over five years, that The Fed is going to monetize the debt in order to "stimulate economic growth". That this lie continues to be spewed and believed is a scathing indictment of a number of things:

  • The level of economic education in the US and the world
  • The level of apathy in the US and the world
  • The level to which the financial media is complicit and in the back pocket of The Banks

If quantitative easing was about "growth" and "jobs", shouldn't it be clear to all by now that it is a complete, 100% dismal failure? Should not today's paltry 0.10% Q1 GDP growth be evidence that The Fed should immediately halt all debt monetization and reverse course? Of course! The fact that they won't (CAN'T) is just further evidence that I am correct in my analysis. I'll state it again for anyone with a short attention span:

The Fed cannot and will not EVER eliminate quantitative easing. QE is NOT about economic growth. It is about funding the debt and deficit of the United States and keeping interest rates at extraordinarily low and unnatural levels. Without The Fed, and now the ECB, providing $80-100B/month for US Treasury debt and TBTF Bank subsidies, three things would happen:

  1. The Zombie Banks would fail
  2. Liquidity-dependent paper markets around the world would fail
  3. Interest rates would rise dramatically from the current 2.62% on the 10-year and 3.46% on the 30-year

Frankly, The Fed/US Govt can handle and work around both #1 and #2. It's #3 that they cannot allow, at all costs.

Currently, servicing the already-accumulated debt requires a huge annual budget expense. For fiscal year 2013, the total was $415.6B. (https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm) AND THAT IS AT AN AVERAGE MATURITY OF UNDER FOUR YEARS AND A COUPON OF LESS THAN 3%!! If short term rates were to rise or if maturities were extended, the interest component of the US's budget would begin to grow exponentially. THIS CANNOT BE ALLOWED as the entire Ponzi will quickly unravel and The U.S. Empire will go the way of The Romans, the Ottomans, the French and the Germans...just to name a few. Now, don't get me wrong, THIS WILL HAPPEN EVENTUALLY. IT IS A MATHEMATICAL CERTAINTY. However, The Fed/US Govt will do everything in their power to push back the eventuality. Thus you have:

  • QE to infinity
  • Unlimited manipulation of every paper market, from equities to bonds to currencies to metals
  • SPIN, MOPE and outright falsehoods regarding economic data
  • Endless drumbeat toward war to create a "safe haven" bid for sovereign bonds

I could go on and on with this extraordinarily important subject as this is the basis of this site...The End of The Great Keynesian Experiment. For now, though, it's best to keep moving. The week is only half done and we've got a long way to go until Friday.

First, gold. How many times have we seen this chart now? Black line = bad economic news reaction. Red line = cap and intentionally beat back price. Blue line = Hold price down until The London PM fix. Green line = Let it go

If you think I'm crazy, here are just a couple of other examples for you:

Whatever. Like it even matters. Just watch the chart below and the 200-day MA:

If you're wondering why silver is down so much today, it has everything to do with the May expiration. Why? Recall that we've followed the Comex silver OI down from 165,000+ three weeks ago, 160,000+ one week ago to under 147,000 on Monday. That's a lot of contracts closing, in particular the shorts who do not have silver to deliver. Those spec shorts are being out back on today in the July contract...and...down she goes. These shorts will continue to be added for the next few days or until price breaks out of the triangle below. Taking the other side of these spec shorts are The Commercials, which are gladly buying and fattening their positions. Note how silver once again today failed to drop and stay below $19.20. This is by design. ONLY IF price falls and then closes substantially BELOW $19 would I get nervous and doubt my conclusions/forecast. Instead, I expect price to continue to hold support here and then ultimately break the triangle to the UPside. This resolution will begin to squeeze all these late-coming. momo-chasing shorts and a new rally will be underway.

Two other updates for you. With the lousy GDP number, The Long Bond is rallying again today. With the worsening Ukraine situation, palladium is rallying today, too. Both have once again opened significant gaps versus gold. On the charts below, you can see the clear correlation that gold has had with these two other items...a clear correlation that ended in both at the beginning of April. Since then, The Bond has continued to rally and palladium is up nearly 4%. Gold? Not so much. And so it is when every single market now shows the fingerprints of central planning.

Speaking of "Central Planning Fingerprints", I must close today by revisiting crude oil. Just yesterday, I printed a chart of crude at $102 and shouted that support had held. WRONG! Why has it reversed and what happens next?

Recall that the last time crude hit $105 before crashing to $98, The Woody Administration intervened by announcing a five million barrel release from the US Strategic Petroleum Reserve. This was done with the blatant intent of smashing price and "hurting Putin in his pocketbook". A funny thing happened along the way, though. Price fell to $98 but could not drop further. Over a period of five days in mid-March, The Evildoers tried and tried and huffed and puffed but couldn't break $98. Price then recovered back to $105. And now here we are again with The Central Planners jamming price back down. My hunch is that they will fail again near $98. Let's just see if I'm right.

LOTS of other stuff going on today...so much so that I hardly know where to start. To save time, I'll just give you these:

OK. Expect a full podcast later today, post-Fedlines. Enjoy the show.

TF

76 Comments

silver66's picture

First

I should really get productive and work as opposed to checking TF on a regular basis. But on a FOMC day it is hard to resist

As Buzz lightyear would say...to infinity and beyond!!

Silver66

CPE's picture

2 saggy bags

to tell us the future.

Wow Turd, those Palladium and Long Bond circles are now $100 Golden dollas wide!

metalsbyamile's picture

3 bags full

sir!

Nana's picture

Think Iceland

And if the Congress would uphold the oath they took to the Constitution they would coin Constitutional money instead of borrowing fiat from the privately owned Federal Reserve at interest.

4th Amendment:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

metalsbyamile's picture

Article worthy of praise

Must concur with all you have said Craig.

I think the writing is clearly on the wall for the American dream. The empire is on its last legs without reforming and overhauling, the bankers are firmly at the helm and the FED will do anything to keep them alive. The common man is going to get crushed, when they lose it the feds will use all the stockpiled ammo they have to crush dissent by extreme force. They pretend to want to take the guns back and destroy the 2nd ammend, but they don't really. They want to to shoot first, so that they can shoot back. The world will turn to America and question their morales, America will turn back with more aggressive foreign policies. The empire is becoming isolated and desperate and unless mass, peaceful stacke outs take place (and by mass I mean millions) then the common American will fall into bondage more severe than ever before. Those that survive will become slaves. 

Why do Americans stay put ? Alan Alda, Mike Farrell, Harry Morgan, Loretta Swit all left. As Colonel Potter would say "BUG OUT"

Must say i preferred Colonel Henry Blake. Colonel Angus would bug out if Harvey Korman will.

glenno321's picture

I averaged down to average

I averaged down to average down my original average down but I do not feel like because I bought at YY and than XX and than ZZ that I am now at an average of MM.

I feel like I am in the hole until it gets back to YY and XX  and ZZ.

Come on all ready !! when is DD DAY?

Pining 4 the Fjords's picture

Crucial pre-podcast info: The many hairstyles of NNL

Most Turdites know that internationally renowned metals expert Ned Naylor-Leyland has been a friend of TFMR since the very beginning.  What many newer contributors here may not realize is that Ned, who appears regularly on CNBC Europe, RT, PM documentaries, etc., is also a subtle master of communicating to his audience via his chosen hairstyle.

To help inform newer members, I have created this helpful guide to the many hairstyles of NNL.

1.  The"Nietzschean World-Weary" look:  Characterized by a single shock across the forehead, this look is used when market manipulation threatens to wholly undermine market structure, OR when Ned is appearing in a German art-house film portraying the existential alienation of modern man.

2.  The "I knew the hosts would be morons" look:  Middle-right part, utilized when Ned knows before an interview even begins that he will be asked the most asinine, ill-informed, and gold-negative questions possible from a host whose I.Q. may or may not exceed room temperature. Unfortunately, this look usually signals a pullback in the metals.

3. The "Max Keiser held me hostage for 5 days" look:  Used when Max kidnaps Ned and holds him hostage in his underground victim pit somewhere in London until Ned agrees to do an interview on his show.  Strangely, this often portends a rise in the metals, after Ned has been released and is allowed food and water.

4. The "Yes, I could kill you with this paperclip" death stare look:  Used when Ned wishes to subtly remind his interviewer that yes, he was indeed once an agent for MI-6, and is a profoundly dangerous man.  Often used when the interviewer cherry-picks timeframes that emphasize PM's recent pullback rather than their longer-term gains. Signals a good time to accumulate physical.

5.  The "Why are you asking me how my career has been going since the Harry Potter films?" look: Used when confused hosts (often Americans) think Ned is actually Daniel Radcliff.  This look has no known correlation to metals prices.

OK, that should cover it!  Now we all just have to wait until Thursday 3:00 EST for the interview to start so we can see what Ned's hair portends for metals prices!

What?  This is a podcast so we can't actually see him?  Oh.  Nevermind...

CPE's picture

lol Pining

Hysterical

Does anyone else show Palladium down $505?  I'm looking at the May contract via Thompson Reuters.  Last at 302.90 per ounce.  I guess that's what you get with open interest at "2"

Obviously a misprint, but it's interesting to see nonetheless...  Will be more interesting when it says 1,534,344.03 per ounce.

Well nevermind, another trade went off and back at 812

question's picture

Pining,

how do you do it? Your teachers-and parents-must have had their hands full.

Thank you so much.

Maybe Turd can ask him about his "do" during the 'cast?
 

Turd Ferguson's picture

New daily high in gold

MODERATOR

A little Fedline leakage??

Swineflogger's picture

@Pining - Ned Ned Ned

There just aren't any words Pining.  You are one dangerous guy.

metalsbyamile's picture

Many say "when TSHTF

I say TSHAHTF...the shit has already hit the fan.

Do we need a nose job? Smeller not working.

johnchew's picture

Caught short

Dear Turd,

I am short the June futures contract in gold at 1285 from a few days ago. Any hope for a smash-down, cram down or vicious sell-off by the bullion banks?  Please?!  I am hurting. 

If gold goes over $1500 then God is calling me home!

CPE's picture

Turd Please

I seem to think in pictures, and the idea of Fellon having a lil' "leakage" is just too much!

Thank you again for this pic Pining!

SS121's picture

SITREP

stock charts high (so the millions of retired people and gov workers feel secure in their ?wealth?, and are bought in to whatever it takes to preserve the "system"/WFCS)

silver chart low (so real money looks to be a terrible alternative to any WFCS offering)

Together the masses stay herded into the WFCS/equities pen.  In reality, and in their perception of reality.

-

Fed announcement

-according to TPTB objective of killing the USD as the reserve currency, the Fed announcement will be more unwatchable blundering (overall U.S. and USD negative in the global arena, but nothing to spook the masses out of the WFCS markets)

-not likely the trigger for running the metals charts to new highs (to show USD 'failing' and need for new reserve currency)  But, having ran the silver chart down to what has been it's functional lower limit, there will probably be an obligatory spike in the silver and gold chart.   Enough to show Fed/USD weakness but not enough to make metals appeal to the masseszzzz.

just some pre-theater speculation  

SilverSurfers's picture

waiting

Gold still pushing 1300, need a break out, waiting on a friend.

silver66's picture

Netdania data going crazy

like a yo yo

Silver66

Turd Ferguson's picture

Good luck

MODERATOR

That 100-day should continue to provide support as it did last week.

Response to: Caught short
metalsbyamile's picture

They really want to hold usd $.7950

But the water falls have  began the annual cleanse.

If you need to sit back and just relax, check out this waterfall sequence. This lasts a long time, it's for meditation and cooling off  after the rat race. These waterfalls are found in the Smoky Mountain National Park in Tennessee. Enjoy.

Turd Ferguson's picture

Apparently not

MODERATOR

Back to 1291

Turd Ferguson's picture

I've watched more CNBS today

MODERATOR

I've watched more CNBS today than I have the past 90 days combined. 

Brutal. Just brutal.

ggnewmex's picture

But. if Belgium

is back-stopping the US economy, what with their purchases our money in excess of their GDP, why can't the FED taper...

really not hard to figure out. Especially with the MSM in the back pocket and no  one thinking of that question.

rl999's picture

silver looking for 18 handle

cnbc did amuse me putting up a graphic that the markets have declined 23 times after fomc announcements. Now that they have admitted it does it mean they aren't stupid, just evil?

Null's picture

Who TF is Keith?

Good post Turd.

SilverRunNW's picture

Mad5Hatter/SS121

Why post under two separate identities?

rl999's picture

real amount of QE monthly?

I still haven't seen a single article or discussion questioning the amount of QE that is actually being used monthly? I hardly think that constitutes consensus that the amount is truly $55B.

unwired's picture

CNBS panel.... unreal

No response in the PIG to the shell game taper. Of course gold and silver have NO TROUBLE sinking.

And stocks flat.

Still.... 'tapering' is not negative for stocks... but sure it is for metals.

Wonder if we'll get another giant to step in a help Belgium.... Monaco? Nauru? Tuvalu?

What a friggin joke this all is.

Wizdum's picture

Keith Richards

...the guitarist

Null's picture

..madfivehatter/ss121...

...what? clarify or feck off.

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