Sack of Nonsense Redux

Thu, Apr 12, 2012 - 4:02pm

It was with increasing incredulity that I file this update today.

I sit here in wonderment, considering how and why all of the current MOPE and SPIN can be so easily digested. Am I (are you) one of the few able to see this crap for what it is? Seriously, how is this not reported upon and/or credibly discussed? One day, the Fed rolls out Fisher or KosherDakota to talk down QE expectations and talk up the dollar. As soon as this causes a breakdown in the nearly perfect S&P advance since November, The Bernank or Evans or Yellen gets trotted out to "reassure" markets that ZIRP will continue indefinitely and/or that QE3 may be just around the corner.

Trader Dan summarized this quite well in a short post from earlier today. Below is the chart I lifted from Dan's site which pretty well explains everything.

So, now there's talk again today of "Sterilized QE". Unfreakingbelievable. Santa chimed in first earlier today:

My Dear Extended Family,
The stock market takes a one day multi-hundred point drop and we hear a new round of sterilized QE is on the table from a Fed governor.
What kind of fools do they take us to be?
QE sterilized is a world class oxymoron similar to Jumbo Shrimp and the Great War.
Consider what will happen here and in Euroland as all of this foolishness hits the fan. The answer is good old debt monetization.
QE to infinity is as sure as death and taxes.

Many of you will recall that yours truly was already pushed to the edge of madness by this concept about a month ago. You can review the entire post by clicking the link but I'll reprint below the primary point.


OK, onto the news and there's really only one thing that I wish to discuss. It's this:

Now, I'm going to warn you. If you are easily offended and do not like the use of profanity, please look away from your screen for a moment.


For the sake of clarity, I'm going to rely again upon my old friend, Mr. Black Dot Chronology:

*All of this...all of the QE, all of the ZIRP, all of the's all about funding government debt.
*The only way The Great Ponzi can now be maintained is through low interest rates. Simple economic growth cannot and will not produce the tax revenue necessary to "grow our way out of it".
*If rates move higher, the economy will slow even further, exacerbating this problem.
*More importantly, if rates move higher, the interest on the accumulated debt will take up an accelerating portion of the U.S. federal budget.
*QE1 and QE2 was the method through which The Fed purchased U.S. bonds outright, thereby creating an artificial demand for U.S. government paper and keeping rates low.
*ZIRP and Operation Twist is the method through which the Fed continues to suppress long-term rates. It's been estimated that the Fed is currently soaking up as much as 90% of the 10-30 year auctions.
*ZIRP and Operation Twist require regular, "traditional" demand for short-term U.S. debt. This demand is managed through the creation of uncertainty regarding Europe, Iran, etc.
So, now, here we sit. Three years of this centrally-planned fiasco and The Fed is pressed back against the wall again. Their Primary Dealers have balance sheets that are completely chock-full of treasuries and a PD cannot raise funds to continue buying even more without a) selling some of their current holdings, OR, b) getting some fresh, new cash from The Fed to use. Option "A" is off the table because selling holdings will push down price and, as you know, lower prices means higher rates and, as you know, higher rates cannot be allowed. But Option "B" doesn't look too good, either. Calling something overt Quantitative Easing isn't going to fly in an election year and, additionally, much time and energy has been spent convincing The Sheep that the U.S. banks are completely healthy and recovered. Giving them billions of dollars to spend on treasuries might dispel that myth.

So, The Fed rolls out this idea yesterday. In this new program, The Fed is going to buy bonds directly from the PDs. In return, the PDs will get "digital credits"...CASH. The PDs will then use this CASH to buy more U.S. government bonds and we are supposed to believe that because these are "digital credits" and not CASH, none of this NEWLY-CREATED MONEY will ever make it into the system. WHAT?!?!?!?!?!?!?!? Let me see if I've got this straight. The PDs will take this new money and loan it to the U.S. government which will, in turn, use the funds to cover their deficit spending on items like transfer payments, social programs and military hardware. This NEW MONEY will move directly into the U.S. economy, further devaluing the U.S. dollar and create even more cost-push inflation. Period. End of story. Done deal.

But that's not what The Wall Street Journal and CNBS would have you believe. The Fed told them that this was a "sterile" process, a zero-sum event. The Fed will exchange "digital credits" for existing bonds and that's it. Move along, please. Nothing else to see here. Again, and I apologize for the profanity:


But don't just take my word for it. I've searched for other opinions on this. Let's try these two:

Anyway, it's quite clear that the lies, obfuscation, manipulation and MOPE will never, ever end. You must continue to buy and hold physical precious metal. It is your only financial protection and against the certain, impending disaster that your "leaders" have created.


There's not much more to say than what I said last month. QE is QE is money creation is currency debasement. The Fed can MOPE and SPIN all they want but it is what it is. Perhaps the knowledge of this impending program is what has awakened gold over the past five days. After the $58 drop last Tuesday (which led to a bit of Turd capitulation:, gold has rallied five consecutive days for a cumulative total of $67. Within that rally, we've seen at least two, massive surges which squeezed some shorts and popped price even further. Is this a sign that another QE announcement is actually coming later this month? Maybe, we'll see. For now, however, it is a sign that gold is continuing to firm and bottom here. We can't get overly excited until gold closes above 1685 and is once again back above its 200-day moving average...but...things are definitely looking better than they were last week. Tomorrow is a big day. To close the week over 1685 and the 200-day would be huge and would seem certain to trip the WOPRs back into "BUY" mode. Keep your fingers crossed.

Silver is looking better, too, of course. It's still too early to get carried away but, if price can be sustained above $32.50 and $32.60, the stage will be set for another assault on $33. Like gold, though today's move is fun, no one should get too carried away until silver is solidly back above $33.

Here are a couple of other charts I've been meaning to unload on you and today seems like as good a time as any. First, this doozy. This chart shows the total return of buying and holding gold over the past 11 years (the red line) and it also shows what your return would have been if you had been consistently able to buy on the Comex close, hold long until the next Comex open, go short at the Comex open and then cover and go long again at the next Comex close (the blue line). Quite a difference in return! And it goes to show you how horribly the Comex manipulates prices downward and the deleterious effect it has over time.

I lifted the next chart from a Forbes article I read this morning. Here's the link:

This chart shows the average monthly returns of gold since this current bull market began in 2000. Note that April and May are usually pretty good months.

And did anyone notice the Goldcore story yesterday about China's gold imports for February? 40 metric tonnes? Are you kidding me? And they only imported 3 tonnes in February of last year? Nah! Nothing to see here! I'm sure they're simply buying up the barbarous relic so that they can unload it on their gullible citizens at a profit. China couldn't possibly be executing a long-term plan to accumulate gold in order to use it to back the renminbi. And of course, a gold-backed renminbi would never be considered a possible reserve currency replacement after the demise of the dollar. Nah. No way. Again, nothing to see here. Move along, please.–-pboc-likely-buying-dip-again

Just a couple of other items. First, crude is rebounding after finding a solid floor near $101. The main level to watch now is $105. "What was support becomes resistance" is always going to be true and is the case again here in crude.

And The Pig has rather quietly reached another moment of significance. It once again finds itself perched upon the long-term trendline that has supported it since the advent of "Operation Twist" last summer. A breakdown here would turn the chart decidedly bearish so watch the next few days of action very closely.

Lastly, today is the 70th anniversary of the birth of The Turd's mother-in-law. To mark this blessed event, I thought I would include below a picture of her, in all her glory:

(Good thing she has such a fine sense of humor )

That's all for today. Keep your fingers and toes crossed overnight. Tomorrow could be great fun. TF

About the Author

turd [at] tfmetalsreport [dot] com ()


Apr 12, 2012 - 4:04pm



baby yoda
Apr 12, 2012 - 4:06pm


new registered for 3 minutes, already on the thurd list

Whiff Head
Apr 12, 2012 - 4:07pm

Turd!! I have zero idea why

Turd!! I have zero idea why people do this, new to the site, gotta say it..

Apr 12, 2012 - 4:07pm

Canada Wants Electronic Money

'cause its oh-so easy to use, "and completely anonymous"

- truly a sign of the end of the current currency....just not an improvement!


Whiff Head
Apr 12, 2012 - 4:10pm

Turd! Why does it feel good

Turd! Why does it feel good to say this ? I am new to this site, no idea, but here it goes: TØØØØRD

Apr 12, 2012 - 4:11pm

Exactly my scenario-Biderman video

Surprise! I have been advocating this since last October. Gold will rise faster in EUR than USD (as EUR/USD drops already during 2012) but rise it will in both. So going long gold (silver) in Eur is as safe as it can be, and profitable especially as I earn/borrow euros.

Starts in May 2012 - as in my charts.

Let us see if this coincidence of opinions matter.

Apr 12, 2012 - 4:17pm



Apr 12, 2012 - 4:19pm


I have no idea what this means, can someone help me out?

Island Guy
Apr 12, 2012 - 4:24pm

China and India Gold Imports

Since Turd mentioned the large amount of physical gold being imported into China, this seems like a good time to raise a question that has been in the back of my mind.

Andy's Army is trying to take down the Cartel by having traders use their earnings to take actual, physical possession of gold and silver. The thought is that this will put added pressure on the manipulators and eventually bring an end to their game.

However, for some time now both China and India have been taking possession of physical metal on a much vaster scale than anything Andy and his Army could ever hope to duplicate. In fact, as pointed out by Turd, simply massive amounts of gold and silver are being physically delivered to China and India.

If that has not had the desired effect of ending the manipulation, then what hope do a small handful of traders have of being able to take down the cartel? Is Andy's Army simply an exercise in futility?

Apr 12, 2012 - 4:31pm

sorry to repost - interesting and everyone is being random

Sorry if the following is a bit long - I stumbled upon it and found it fascinating. They discovered that gold should be used at bullion value and that silver works as gold for the poor - the history was written in 1808, but I am not sure when the following discussion occurred. I have added the bold.

The debased and mutilated state of the gold coin had now become a theme of general complaint. The importation of light foreign coins from Great Britain and America was carried to an alarming extent by strangers who having no interest in tbe colony felt no scruples of conscience at a practice so repugnant to religion and morality while the clippers were industriously employed in diminishing those which were of standard weight. Urged by the magnitude of the evil the governor pressed the matter on the attention of the assembly and earnestly called for their assistance in suggesting some legislative measures proportioned to the exigency of the case The house readily took the subject into consideration and a law was enacted to punish all persons convicted of clipping counterfeiting or filing the current gold coin with death and the importers of all diminished or debased coin besides forfeiture of the coin imported were made liable to a penalty of five hundred pounds. This law was soon found to be inefficacious. Offences privately committed could not be punished for the want of legal evidence to convict the offenders. Prevention is better than remedy. The most certain and infallible way of keeping men honest is to make it their interest to be so. Had the gold coin been made current by weight the most incorrigible mutilator and importer would have been more effectually restrained from their irifamous practices than by their most sanguinary laws. The subject was most ably and perspicuously treated by the masterly pen of Mr Gibbes W Jordan the present valuable agent for the colony whose superior intelligence penetrates with facility into the most difficult and abstruse branches of human knowledge. From the soundest principles Mr Jordan deduced this just conclusion that the only effectual remedy for the existing evil was the establishment of a legal currency of the gold coins by weight at a rate proportioned to the real value of the bullion excluding the expense of coinage. With this principle partly in view Judge Gittens one of the committee appointed to take the June subject into consideration introduced a bill to remedy the inconvenience but by a strange inconsistency it was proposed to reduce the standard of all foreign gold coins in circulation about ten per cent below their real value. The pernicious tendency of the bill was clearly developed and ably combated by Mr Husbands and Doctor Hinds. They demonstrated by an irresistible chain of reasoning that the value of the mutilated coin would be increased in proportion to its mutilation hence the villain it was said would be encouraged in his fraudulent practices and rewarded for his nefarious industry that as no regulation nor change was made in the value of silver all coins of the latter metal would be sent out of the country in change for debased or depreciated gold to the great injury of the inferior classes of society who deprived of a convenient circulating medium would starve like Midas in the midst of gold. The obvious tendency of the measure to enhance the price of every species of merchandise was elucidated with great force and perspicuity and the proposed innovation in the value of the coin it was insisted would operate like a two edged sword to the injury of both debtor and creditor. In all insular contracts the fair honest creditor would be the party injured as he would be compelled to receive money at a greater value than it was known to possess. On the other hand to the debtor who had remittances to make either to Europe or to America it would prove no less detrimental by enhancing the prices of our staple products and increasing the rate of exchange....

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