Post-Bernank Post

310
Wed, May 22, 2013 - 4:04pm

Sure. Fine. Whatever. Taper this, you lying sack of MOPE!

I think it's pretty funny that in The Bernank's "prepared remarks", there was language that caused the metals to rally...all the way up to a London PM fix of $1408.50. Then, because of some political posturing Q&A, the metals immediately turned around and headed back to unchanged. And then went lower. And lower still. And when the FOMC minutes were released at 2:00, you'd have thought that The Bernank had personally reneged and decided to in fact sell $85B in bonds every month going forward.

The only "tapering" I saw today was the shiny point on the top of LIESman's head. Other than that, nothing has changed. But, of course, that doesn't matter. What matters is that the HFTs and the EE are in charge and the paper price of metal is all over the place. What's next? Well, as posited yesterday, there remains a possibility for a stop-running drop through the $1320 lows of April 15. IF that can be pulled off, we'll see $1280-1290 real quick. The key level to watch is $1350. Price has rebounded from there several times in the past 5 weeks as it seems to be a level of considerable physical demand. Watch $22 in silver, too. It was support, then resistance and now it is support again. If it falls, we'll see $21 again before you can say "unallocated ponzi scheme".

Providing some hope is copper but, in this age of total reality disconnect, who can say for sure that a rally from DrC really means anything at all?

We have another CoT report due on Friday and we now have the numbers upon which the report will be based. For the reporting week, gold was down $47 and, though open interest fell by 7,000 just yesterday, total OI still managed to grow by about 2,300 contracts. In silver, though price fell about 93¢ for the week, OI also rose by nearly 4,000. It certainly would appear that this week's CoT will once again paint an increasingly bullish picture. We'll see.

Speaking of the CoT, one of our resident experts on the subject is JakeBlues. Jake posted a different sort of comment to the earlier thread and I thought it deserved attention here. Read this and note the very interesting correlation Jake discovered between the yield of the 10-year note and silver prices. https://www.tfmetalsreport.com/comment/200908#comment-200908

Lastly, just a few words about this "tapering" nonsense. First of all, as you know, the Fed cannot and will not end QE. They can't do it without driving interest rates well beyond untenable levels and, by doing so, they would bring about the rapid downfall of the current political/government and banking system. For example, if the current interest on the national debt is $445B/year at 3% interest and a 5-year average maturity, what would be the interest cost at 6%? Or 8%? And how much additional borrowing would be needed to carry these costs and offset the drop in tax revenues that would come with the slowing economy that higher rates would bring?

Furthermore, all of the "tapering" discussion centers upon the overall QE number of $85B/month. It must be noted, however, that the current QE plan is divided into two parts:

  • $40B/month directly funneled to Primary Dealer banks through the 100¢ on the $1 purchase of near-worthless Mortgage Backed Securities, left dying on their balance sheets from the Great Financial Crisis of 2008.
  • $45B/month of direct monetization of U.S. Treasury debt.

What if the "tapering" that is being mentioned only applies to the corporate welfare MBS purchases? What if the Fed were to scale these back a little? They could cut the MBS purchases in half and claim "monetary prudence", all the while the direct monetization effort would continue unabated. Sure, there'd be less money left over each day to pump into the ES but there would still be $65B/month or almost $800B/year to prop up the treasury market. That sure sounds precious metal-negative, doesn't it?

Anyway, the moral of the story is: DON'T FALL FOR THE SPIN AND MOPE. Use your brain and your God-given gift of good sense. The End of The Great Keynesian Experiment continues to unfold in front of us. Keep using this time to prepare accordingly.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  310 Comments

May 22, 2013 - 4:09pm

Riff-Raffle update

We are now up to an impressive list of over 30 prizes, including not one but two 1-ounce gold coins. Pretty cool stuff.

AgNovice
May 22, 2013 - 4:11pm

2nd? or is it 1st

Turd is always first. I'll take the second.

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

Don't forget to stack base metals as well as precious ones.

Libero
May 22, 2013 - 4:15pm

Oh my God Oh my God!!!

I made the top ten. Quick!! I can't believe it! My life is complete.

¤
May 22, 2013 - 4:15pm

Regarding Tapering /TF

Edit: Just posted this in previous thread before this one. (figures)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Couldn't agree more regarding your comments

It wouldn't take much to spin and satisfy the markets/ politicians/ citizens and the MSM with MOPE about billons in reductions in Fed spending even if it wasn't a significant or a vital reduction.

It's all about MOPE.

The flip side of that is the USD will get stronger if the perception is US belt tightening and budget/deficit reduction etc.

They might reduce and gradually taper QE/MBS with one hand while doing something different or unnoticed with the other hand.

Like reducing the MBS by $15-20 Bln yet increase the UST monetization by $5-10 bln for a net overall MOPE reduction of approx $120 annually if the MBS reduction nets out to $10 bln/month.

They'll spin the big number hard one way while giving quiet reasoning on the other hand for the UST purchases.

MOPE magicians.

AlienEyes
May 22, 2013 - 4:16pm

5 ?

#5?

NO!

Four!

The Watchman
May 22, 2013 - 4:16pm
sengfarmer
May 22, 2013 - 4:17pm

top ten!!

Yeah baby.

ag1969
May 22, 2013 - 4:18pm

Libero

It's your lucky day! You might want to consider some raffle tickets!

8th amendment: Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

Howard Roark
May 22, 2013 - 4:22pm

Uuuuppppsss 11th

Just 11th...

Salut,

HR

p.s. - 10th good heavens!!! nice

ctob
May 22, 2013 - 4:23pm

Tell me lies

tell me sweet little lies ...

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Forum Discussion

by sierra skier, 6 hours 48 min ago
by NW VIEW, 6 hours 51 min ago
by Trail Trekker, 8 hours 11 min ago
by Scarecrow, 12 hours 14 min ago