Looking Good, Billy Ray!
Oh boy, where do we start? By now, I'm sure nearly everyone has had time to ponder the long-term implications of the FOMC minutes from yesterday. To sum things up from a TFMR perspective: What we got yesterday was the institutionalization of QE to infinity, for the reasons we've covered here at great length. Namely, the Fed cannot allow rates to rise, regardless of the economic circumstances. To do so would be to accelerate the demise of The Great Ponzi and they will never, ever allow that. The amazingly short-sighted nature of this policy is what kills me. TPTB must protect their power, everyone else be damned.
- By suppressing rates and printing money, the Fed and other central banks create significant inflation.
- Significant inflation decreases the demand for low-yielding government debt.
- This causes the Fed and other central banks to print additional money which will be used to purchase low-yielding government debt, thereby keeping rates suppressed.
- Continued low rates and money printing causes even greater inflation and less demand for low-yielding government debt.
- Around and around we go until our proverbial coin finally drops through the funnel.
For more on this death spiral, please go back to the old site and read this:
At any rate, the next few months are, undoubtedly, going to be quite fun around here. I'm glad to be finally "getting back to business" because calling tradable tops and bottoms in a bull market is certainly what I'm best at and it's a heck of a lot more fun than watching The Cartel beat the snot out of us each day. There will, of course, be points of resistance along the way where The Cartel and the EE try to slow things down so that they can cover at lower prices, but the trend is up and the bottoms are in. Let's go get 'em!
First up, here are your PM charts. We look to be good here for a little while. Gold looks like it wants to trade to 1750 or so before slowing. Silver, though it will encounter some challenges around 34, looks to be headed in the general direction of 35-35.50, where it will encounter some reasonably stout resistance.
As we march higher, we'll of course be watching The Pig and DrC for clues. Right now, the POSX is in a definite, down-sloping channel. The channel looks to take it through 79 and toward 78. DrC looks like it still has room to run higher but it will almost certainly run into some selling at 400. Can you envision a scenario where gold rallies to 1755, silver to 35 and copper to 400 before The Pig puts on the brakes by bouncing somewhere between 78 and 79? I can.
Here are a couple of extra charts, for good measure. First, here is a CRB index chart. Note that it, too, looks to have room to run here.
And here's a chart for Mister Hyde, who has found himself battling with UCO for weeks now. (UCO is a 2X long crude oil ETF.) Note that crude has a very strong floor under it near $98. With yesterday's Fed pronouncements, it's doubtful that, in the absence of nirvana and utopia taking over in the MENA, we're going to see crude fall below $98 again anytime soon.
Lastly, a brief note regarding the economic implications of all this. The link below takes you to KWN, where Eric visited with John Williams of ShadowStats yesterday. I'm trying to track down Mr. Williams in the hopes of getting him on a podcast. In the meantime, this will have to do. Please read:
That's all for now. Have a fun day. Try to live your life with joy. TF