QE To Infinity

432
Thu, Sep 13, 2012 - 1:23pm

Long-rumored and oft-discussed, QE to infinity is finally a reality.

Here are the Bernank Fedlines from ZH:

*FED TO KEEP POLICY STIMULATIVE FOR `CONSIDERABLE TIME'
*FED WILL ADD TO PURCHASES IF LABOR MARKET DOESN'T IMPROVE
*FED DOES NOT SAY WHEN MBS PURCHASE PROGRAM TO END
*FED TO BUY $40B MBS MONTHLY, CONTINUE `OPERATION TWIST'
*FED TO BUY MBS, EXTENDS ZERO-RATE POLICY INTO 2015

Here's the key take-way: This is it. This is open-ended, QE to infinity.

Note the Fedline: FED WILL ADD TO PURCHASES IF WHEN LABOR MARKET DOESN'T IMPROVE

I also saw a headline on CNBS that stated that Operation Twist will end at the end of the year. Of course it will. As noted a few weeks ago, The Fed is nearly out of short-term paper to exchange for long-term paper. The end of Twist will surge new printing from this $40B number to the full $85B number.

Now note this Fedline: FED DOES NOT SAY WHEN MBS PURCHASE PROGRAM TO END

This is QE to infinity. It has begun and it will not end.

The important thing here is patience. Gold and silver will continue surging higher. There will, undoubtedly, be bouts of profit-taking that will last minutes and sometimes hours. Sometimes maybe even days. But these periods will be brief and ALL DIPS MUST BE BOUGHT.

Maintain and build core positions. Add to your stack at every opportunity. The perennial shorts of paper metal are going to be squeezed with ever-increasing intensity even while the "historic" aspects of this rally have still yet to be realized. Cartel banks will be left with no choice but to systematically cover their positions. They will attempt to do this in an orderly fashion but a rush toward physical ownership will likely disrupt their plans.

Gold and silver will both soon trade at new all-time highs. Again, this will not be a straight line up as there will most certainly be dips and pauses along the way. However, everyone reading this must realize that today is the first day of new paradigm.

We haven't even discussed yet the spiraling situation in the MENA or the strikes in South Africa. Maybe we will later today. For now, though, if I were you, I'd head out to my local coin shop or maybe click the HardAssetsAlliance link on the homepage. If you have to ask yourself "do I have enough physical?", you probably don't. Buy some today. Buy some tomorrow. Buy some more next week. The end of The Great Keynesian Experiment is upon us. Prepare accordingly.

TF

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Byzantium
Sep 14, 2012 - 7:31am

@maximillion & @Dracula

and there's the rub, they can ask for a pay rise but will they get it?

Brings us back to Dracula's post of earlier on, regarding the Eastern European model of borrowing on a fixed rate, then paying it back in devalued currency. That model works when there is wage inflation; yesterday's debts just fade in real value. But when wages are stuck (as I suspect they will be for a while to come), then past debts remain stubbornly hostile.

I agree with you Maximillion, that if the wage rises start, then inflation will kick in, and woe betide those on fixed incomes like pensioners. But what I think will happen first is that a few trades in demand, and certain tiers of management, will get rises, and the rest will continue on their journey to 'wage competitiveness' with the former third world. This of course shrinks the consumer market and precipitates a recession, and the vicious circle ensues.

Maximillion
Sep 14, 2012 - 7:23am

@ The Green Manalishi & Byzantium

In my little town most of the pubs are struggling, even the local 12 bed hotel that's been on the market for over 2yrs and has been reduced to £500k still can't find a buyer. Another charity shop is due to open later this month (ie zero rates payable with volunteer staff), so there's no way it's improving locally as I see it. The biggest local employer laid off most of their workforce last year, resulting in an economic extension as the workers had their redundancy payouts to live on, but that monies been mostly spent by many of them. Work wise, speaking to others and for me personally, pay rates have remained flat for the last 4 years, to such an extent now that it's barely financially viable to work. IMO this xmas will be a true financial realization time for many, followed shortly after by serious inflation as people demand more pay.

gearhead_24
Sep 14, 2012 - 7:19am

I'll take a stab....

Fresh new QE money used to short Silver over night. Small market uses less money and easier to hide. The Asians are buying physical and not playing the paper market.Thats my guess Turd. I dunno.

Byzantium
Sep 14, 2012 - 7:13am

@beastly stack

I read your posts.

I agree, this flat-lining in PMs while everything else is in flux, is both frustrating and unnatural.

Even when there is some action, as soon as a trend develops, it tends to reverse without warning.

It's like it is manipulated or something.

Beastly Stack
Sep 14, 2012 - 7:10am

I'm a Trader

If any of you read my posts,I trade gold more than anything.

I have done well these past few weeks but I have had much success in the Aussie,Euro,Yen and Bonds.

After yesterday I went conservative with my account and just went with being short the Yen from just about the top and bought silver again last night at 3474.

Before I went to bed I took a decent profit on the yen and figured if the dollar continues to fall and oil makes it to 100,silver should be 3550 at least by morning.

Oh well,just wanted to vent my frustrations!

It would really suck if these markets pull back today and the metals get hit!It just will feel like I have been cheated and robbed of my hard work.

But then again who is kidding who here,next week we will have a great sale in Gold as well!

Byzantium
Sep 14, 2012 - 7:07am

Euro-strength & currency wars

Euroland needs to regain its currency advantage.

I expect imminently some bad news from Euroland to recalibrate the rate.

I suppose now would be a good time to announce the next in line PIIGS bailout request, or similar crisis.

Beastly Stack
Sep 14, 2012 - 6:58am

Don't Know about YOU

But I am sick to my stomach.I woke up and turn on Bloomberg,all I see is green evrywhere and then Gold and Silver come across the screen.

You have go..t to be kidding!

I don't expect moonshoots everyday,however Silver is performing like shit!

Copper+1200

Oil over 100

Euro 131

Stock=up,up and away

Silver-negative!

This is such a CROC..

Byzantium
Sep 14, 2012 - 6:57am

@ The Green Manalishi

regarding the UK; the signs are there at a discreet level. Pubs are closing, shops are closing; many people are tightening their belts a bit and postponing discretionary expenditure. As in the US, national fuel consumption is way down (and an entire refinery closed down this year due to lack of demand), new car sales are down, the housing market is sluggish.

Rather than unemployment being the current cause, it is consistent with a lack of job security for some, and a wages freeze in light of the rising cost of living for others.

I agree though, that almost nobody seems to be aware of what is coming. I wonder how many people have read or noticed, that their pension fund value is actually shrinking year on year. Wait till it snowballs! The main event though will be unemployment, that is when the big trouble will start. We have a reprieve though; Euroland and the Fed, have given the UK the green light to print. Indeed, they now have to, to keep the pound 'competitive' LOL.

tmosley
Sep 14, 2012 - 6:55am

Well, that wasn't the action

Well, that wasn't the action I was expecting overnight. Just a 40 cent range, and I wake up to find silver and gold basically unchanged from when I went to bed.

I wonder if the buying in reaction to QE3 isn't mostly physical, and is as such shielded from the paper markets, such that it won't show up until dealers re-order.

Sep 14, 2012 - 6:51am

Good Morning and I am unapologetically pleased!

Gold bugs haven’t lost the Midas touch

Commentary: Get ready for the return of the golden age

September 13, 2012|Satyajit Das SYDNEY (MarketWatch) — The Federal Reserve is giving the U.S. economy another injection of financial stimulus, and, on cue, gold buyers cheered. The world now remembers financier J.P. Morgan’s words to Congress in 1912: “Gold is money. Everything else is credit.”

Investors have poured money into exchange traded funds that buy gold. Some central banks are now rebuilding their gold reserves. In Germany, gold is available in airports and train stations from “Gold to Go” vending machines. Shoppers can buy a 1-gram wafer of gold or a larger 10g bar. Gold bugs speculate about a new age of gold....

https://articles.marketwatch.com/2012-09-13/investing/33404122_1_gold-pr...

When something is inevitable, it is inevitable. No fiat currency can resist the printing press, and never has. And the Fed, to beat an old dead horse of mine, does not fail sitting presidents. If being intelligent means being more miserable than others (and studies have clearly shown this - the misery part, not me being intelligent) then can't it at least be satisfying to have that misery pay off a little bit?

I too am worried about my children's future - but it is brighter because we understand what is coming - their future would really suck if we tried to keep the shiny toys front and centre as achievable, desirable goals. We would bankrupt the world far worse if we did not try to avoid the hell of becoming/creating more meat for Pining's meat-grinder.

And as to bias, of course I am pleased I was right. It gets tiring, but I have learned to live with it. (I think that is my first boast here, and it is only because I wanted to rise to the challenge of being biased in my own favour.)

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