Macro

520
Fri, Sep 16, 2011 - 9:46am

Gold is recovering today and is actually green on my screen. Wow! How unusual! Let's see if we can rally today and crawl back above 1800 before we call it a week. There's been some very interesting "news" rolling around for the last 24 hours and I wanted to take a minute to give you my non-educated opinion.

The crux of the matter is summarized quite well below:

https://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/china-to-liquidate-us-treasuries-not-dollars/

Between these comments and the wikileaks cables, one can quickly conclude that the Chinese are considering (if not already actively engaging in) further "diversification" of their vast U.S. treasury holdings. In the article above, Mr. Pritchard makes this sound as if there will be some happy and pleasant side effects of these moves. "Don't worry", he seems to say, "those dollars will flow into hard assets like stocks, land and gold". As if it's a zero-sum, no-big-deal event. On this point, he is dreadfully wrong.

As you know, I have long maintained that the real purpose of Quantitative Easing is not to promote economic growth. It is to promote low interest rates. Remember how rates on U.S. treausries are set...through auctions. Simply stated, if you need to borrow $50B and there are no takers at 2%, then you have to try 3%. If no one wants your bonds at 3%, then maybe they'll take them at 4%. Low or no demand means higher interest rates. Period.

With U.S. borrowing needs at all-time high levels, the rest of the world must be induced to buy treasuries. But, rates cannot be allowed to rise. As Mark Steyn points out in his new book, if long-term rates were to return to 5.7% (the average for the period 1990-2010), debt service projections for 2015 would increase from $290B to $850B! Additionally, the only "way out" of our current fiscal disaster is to magically increase tax revenues through economic growth. A return to higher rates would stifle and crush any potential "recovery".

So, what's a Boy Wonder to do? The answer: MORE QE MORE QE MORE QE.

The U.S. has managed to cover its necessary funding needs since June by managing the headlines. Have you noticed that nearly every time a treasury auction arises or the POSX moves down toward critical support, some type of intervention takes place. Whether it's a foreign central bank devaluing their currency or a rash of suddenly scary headlines out of Europe, events seem perfectly timed to keep money flowing into treasuries. This can work in the short-term and it obviously has. The yield on the 10-year note has actually declined since the end of QE2 in June. This won't and can't continue. A recent study from the University of Wisconsin showed that, by 2020, U.S. funding needs will soak up nearly 20% of the total annual global GDP! Do you really think that that is possible? There can be no world GDP when world economic growth is crushed under that type of debt burden.

But, that's in the future. What about the near term? Eventually, rates will rise when buyers (like China) disappear. Faced with an immediate funding crisis, QE will resume with vigor. Left with no other government funding option, the Federal Reserve will be forced into creating trillions of new greenback, simply to keep the social security checks flowing, the doctors paid and the military shooting. The dollar will resume its long-term decline into obscurity.

In the end, all of the central bank intervention in the world will not be able to suppress the global demand for true safe haven financial protection. Gold will rise to heights that even you, my dear reader, may currently think are unattainable. Silver will most certainly come along for the ride. Therefore, do not be fearful. If you use the time left to prepare...mentally, financially and spiritually...you will survive, and even prosper, in the days ahead.

Here are your updated charts. Unfortunately, both have taken on the appearance of range-bound markets. This can be managed as it affords us the clear opportunity to buy at the bottom of the range and sell at the top but it certainly isn't as much fun as runaway efforts to the upside. For today, don't get too excited until/unless either metal is able to firmly trade through the blue trendlines I've drawn inside the ranges.

I'm going to be away and unavailable for most of the day today so, just as John said to Yoko, "looks like you're on your Ono". I will be monitoring things from afar, however, and will attempt to update if conditions warrant. Have a great day and a relaxing weekend! TF

p.s. Another preparatory move for the opening of PAGE:

https://www.reuters.com/article/2011/09/16/cjina-gold-idUSL3E7KG1IG20110916

About the Author

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turd [at] tfmetalsreport [dot] com ()

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MrSteed
Sep 18, 2011 - 11:55am

More info in the infowar...

I have been exploring this site, https://tragedyandhope.com/ , and have found it to contain an interesting number of videos, documents, articles, etc....

It's titled from Carrol Quigley's "Tragedy and Hope" book (the book is in it's entirety linked there), which is in itself a very interesting read. But, the site is less about the content of the book per se, and more about critical thinking in general.

Ferd TorgersonLong John
Sep 18, 2011 - 11:52am

@ Ben Roberts

Although you did not ask my feedback directly, with all due respect, I don't think I've ever seen anything like the Fulford interview throw out so many wild claims in one piece. Just trying to keep up gives me a headache.

About the only thing he didn't posit was the idea of population mind control by the government through the cheap availability of chemically-altered canned hams. I guess that means my little stash of those beauties is safe, for now. We're going to pop open one today for Sunday dinner to see if we think we can rely on those if TSHTF.

cpnscarlet¤
Sep 18, 2011 - 11:35am

The Awakening *1/2

DPH - Watched this and found it to be the same old "New Age" stuff in a YouTube package. Many little truisms surrounded by extrapolated garbage. And along with that, big glaring lies (or unprovable conjecture). Many quotes attributed to great people (Einstein) taken way out of context. Statements about theology, and particularly Christ, are simply not based on anything than some 6-sigma belief system and certainly not palatable to anyone well versed is scripture - "Go screw around with your own god, buddy".

Statements about the physical realm are also wild guesses. The usual argument is "everyone, even the ancients, always knew this", is IMHO a simple BIG LIE that Hitler would have admired. Ancient knowledge about singularities and high technology? Show me the ancient engineering drawings, and you might have my interest.

One thing I will agree with - there is a battle of good and evil going on at all levels of existence (physical and spiritual). But I don't think the people who made this video are on my side of that battle. They are on the enemy's side in a counter-intelligence battalion.

Haole
Sep 18, 2011 - 11:27am

Thanks DPH

For

Philosophy and the Matrix: Return to the Source

Here's one some may not have seen.

https://video.google.com/videoplay?docid=7583894250854515095

Just watched Kubrick's Odyssey: Secrets Hidden in the Films of Stanley Kubrick for the first time this weekend which is very interesting also. Especially for those who find no sense in the notion men went to the Moon numerous times in tin cans with the computing power of Casio wristwatches...

The Doc
Sep 18, 2011 - 11:10am

JPM Telegraphed Silver Prices Smashes Using Fake Trades

Points 8-12 of the JP Morgan class action suit allege that JP Morgan Telegraphed silver price smashes using FAKE TRADES on the Saxo Bank trade platform.

Interested in your take on this Turd- would massive fake trades appearing for seconds on the Saxo Bank platform for several seconds, then being subsequently withdrawn technically be fraudulent?

Also very interesting are points 44-47, which allege that the well known option-expiry day silver smashes were executed for the express purpose of blowing up the "delta" risk of holders of short, far-out-of-the money options, suddenly forcing them to cover their positions, thus handing JPM silver futures positions at prices far below market prices only minutes prior.

Agree that everyone needs to take time to read this in its entirety- it contains much excellent information.

Long John
Sep 18, 2011 - 11:01am
RedRover
Sep 18, 2011 - 11:01am

Street Money (theory)

thoughts? I'm all about being a silver/ gold bull.
I just listened to this theory though & wanted
to see what consensus on here is?

https://www.youtube.com/watch?v=b9nPw6pG8I8&feature=feedu

Gramp
Sep 18, 2011 - 10:19am

I found many of the You tube

I found many of the You tube posts VERY informative.

On a Saturday night, what would be better to post? nothing?

no one is on my ignore list... I am able to filter out the good from the bad, so let it fly.

Outfitter
Sep 18, 2011 - 10:11am

Contest?

Is there a contest for who can post the most YouTube posts on the main thread?

Some people might try creating something real and tangible with some of their time.

Just a thought.

¤
Sep 18, 2011 - 10:08am

lol

Your welcome.

Yeah, just not very well. Caught a rare nap last night at 8:00 or so and woke up at 11:30 p.m. I was wide awake last night at midnight as you can see.

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