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.

paper_9-16amgold.jpgpaper_9-16amsilv.jpg

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

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

  520 Comments

Shill · Sep 18, 2011 - 6:56pm

Wow SJ...Interesting, ( must

Wow SJ...Interesting, ( must resist FOREX account )

atarangi · Sep 18, 2011 - 6:59pm

Haoles boner

Henceforth the technical terminology for " Hubbert's erectile projection " should be referred to as" Haole's boner, " for the sake of simplicity and common decency.

cpnscarlet atarangi · Sep 18, 2011 - 7:09pm

Careful, Careful

ScottJ already scolded me about the picture of the vending machine...so watch all that "boner" talk! 

atlee · Sep 18, 2011 - 7:10pm

take that juvenile

@ Gadsen

Take that juvenile crap somewhere else. Grow up. What are you 12. Who cares?

¤ · Sep 18, 2011 - 7:13pm
¤ · Sep 18, 2011 - 7:15pm

Here ya' go Atlee...

...figured you would be into this

Video unavailable
silverstool · Sep 18, 2011 - 7:16pm

Education

I thought the valedictory speech was brilliant and Sir Ken Robinson would have been proud of it. For those that haven't seen this clip from the TED lectures, particularly if you have children, it really is worth 20 minutes of your day.

Do schools kill creativity? | Sir Ken Robinson
Chris P. Bacon · Sep 18, 2011 - 7:18pm

@atlee

fully grown thank you. And yep that's her. That's all I wanted to know. Have what I need. won't go further on this board.

have a splendid day, dad.

¤ · Sep 18, 2011 - 7:19pm

Sept. 21st ought to be a doozy

Is September 20 Greek Default Day? Tyler Durden's picture Submitted by Tyler Durden on 09/17/2011 14:52 -0400

https://www.zerohedge.com/news/september-20-greek-default-day

Shill · Sep 18, 2011 - 7:22pm

I just had Boner myself. Good

I just had Boner myself. Good stuff.

https://www.shot-cocktail-recipe.com/cocktail-recipes/a_boner.html

Na just having a few beers. Spent the better half of 4 hours doing this decal transfer I bought off this site called Etsy.com for my soon to be Grand son . Took 2 weeks to get here, Incredible work and great detail but a job doing the transfer.

This is it here, but with a Baby Blue back ground, looks sharp.

Amazing how we get older, we get wiser, and we gain more Patience.

( Drinks are on the house )

atlee Chris P. Bacon · Sep 18, 2011 - 7:25pm

if that is

@ Gadsen

if that is the best you have to contribute to this community, please consider returning to lurker status. We are not interested in publishing personal info here. Your wasting my time son. Oh wait, I found the ignore button.

@ DPH

Thanks man that is my one of my favs.

¤ · Sep 18, 2011 - 7:26pm

Super G'pa

Way to go shill. It's all about effort.

I couldn't even imagine becoming a G'pa at this point. It must be very exciting/nerve wracking.

Chris P. Bacon · Sep 18, 2011 - 7:38pm

simply asked a question which

simply asked a question which was answered. published no personal information. no intent to publish personal info.

Now, by your leave I shall slither back under my rock.....

Good day.

Edit. Just wanted to add that I have great respect for the contributions that you make to this site, but that being said your ability to psychically read my intentions is over-rated but is more than off-set by your ability to jump to a conclusion.

Strongsidejedi · Sep 18, 2011 - 7:39pm

@atlee - where you been buddy?

ATLEE!

You're back!

Yes!

Welcome back and glad to see you posting again.

There was a rumor on a thread here one week ago that you were Wynter Benton.

LOL

Shill · Sep 18, 2011 - 7:43pm

Way to go shill. It's all

Way to go shill. It's all about effort.

I couldn't even imagine becoming a G'pa at this point. It must be very exciting/nerve wracking.

Cloud 9 DPH, but fearful all at the same time. Life is not getting easier its getting harder. This is why I have mumbled to myself many times, we here in this room, are blessed.

Yes times are tough for many, but if your here and your obviously holding PM's as both and investment as well as a SHTF scenario, you have already arrived.

So yes I am fearful for anyone bringing a new life into this world today including my own, but I have also gotten to the point where I figured this ( Life ) is a one time Journey.

Screw it enjoy it, and I finally got my Best bud. ( I pray for good Health nothing more )

¤ · Sep 18, 2011 - 7:50pm

"..then gold is a good safe haven.."

Hedge Fund Heavyweight Says Gold Bet Not Over

Q By Chanyaporn Chanjaroen - Sep 18, 2011 1:48 PM ETSun Sep 18 17:48:04 GMT 2011

Hedge Fund Heavyweight Boxer Says Gold Bet Not Over

Paul Taggart/Bloomberg

Gold bars are arranged for a photograph at Bullion Trading LLC in New York, U.S

Gold, platinum and Brent oil will lead gains in commodities as investors seek to protect their assets and shortages emerge, according to Tony Hall, the hedge-fund manager who earned 33 percent for his clients this year.

Gold may climb 21 percent to a record $2,200 an ounce by the end of 2011, platinum may gain 10 percent and Brent could rise 25 percent to $140 a barrel in six months, said the London-based chief investment officer of Duet Commodities Fund Ltd., which manages more than $100 million of assets. Its eight-month gain compares with a mean return of 0.6 percent across commodity hedge funds tracked by HedgeFund.net and beat larger rivals such as Clive Capital LLP and Fortress Commodities Offshore Fund Ltd.

“The fear of recession, the fear of worse economic numbers is weighing on commodities and stopping gains from fundamentals from coming through,” said Hall, 31, who spars as a heavyweight boxer. “We still believe in the gold story. If you believe the world is in trouble or in further economic growth disruption, then gold is a good safe haven. If you believe that the world is going to...

https://www.bloomberg.com/news/2011-09-18/hedge-fund-heavyweight-boxer-s...

Shill · Sep 18, 2011 - 7:54pm

Someone sure hates $40.80

Someone sure hates $40.80 silver.

ginger · Sep 18, 2011 - 8:02pm

Hey All,I am not on the blog

Hey All,

I am not on the blog so much right now ..just alot of really important things going on that I want to attend to. I wanted to just say to everyone that I so much appreciate all of the helpful advice, kind words, good friends here. ....I don't have the time to catch up on the past days comments but strangely.. my eyes did catch a post by HAVEFAITH back in this thread and I just wanted to say.. HAVEFAITH, YOU ROCK! :) ......and I absolutely was reaching for those tissues.

Take care everyone ..Remember to take care of the really really important things in life which honestly ..has very little to do with money. ...I will check in from time to time and see how everybody is doing. Thanks TF for everything and as God provides the blessings over the coming months that I am praying for and working towards.. who knows.. I'll stop in here and shout it out to the roof tops.

May God Bless All.. ..and I know I have a home here if and when I come back!

¤ · Sep 18, 2011 - 8:05pm

Get ready to drool

Gold - How its made
Tesla · Sep 18, 2011 - 8:06pm

Hey Ginger

We love you girl, God bless you too =]

¤ · Sep 18, 2011 - 8:09pm

Timeless Art of Gold Extraction

Produced by the Cripple Creek District Museum in Colorado, this video shows the process of assaying gold today and how it was done one hundred years ago.

The Timeless Art of Gold Extraction
¤ · Sep 18, 2011 - 8:10pm

How gold is produced

This video was produced by Newmont Mining Corporation and gives a general overview of gold mining in Nevada from extraction to reclamation

How gold is produced
¤ · Sep 18, 2011 - 8:12pm

Take care ginger

Positive thoughts directed towards you angel

Shill · Sep 18, 2011 - 8:13pm

DPH love those mining vids,

DPH love those mining vids, good stuff.

Eric Original · Sep 18, 2011 - 8:14pm

Take care Ging.  We know you

Take care Ging. We know you are out there, taking care of business, and we hope to see you back whenever it suits you. "/

¤ · Sep 18, 2011 - 8:16pm

Here's a curve ball entering this week

Sept. 18, 2011, 7:46 p.m. EDT

More warnings on China’s debt

Commentary: Shadow banking sparks new worries

By Craig Stephen

HONG KONG (MarketWatch) — Three years ago, China’s banks were widely applauded as they lent their way out of the last financial crisis, hauling much of the world with them. But now with these loans coming due and interest rates on the rise, officials and analysts are increasingly sounding the alarm.

Throw into the mix new revelations about the escalation of shadow banking, and it’s little surprise “China” and “subprime” are increasingly talked about in the same breath.

So far, the loans causing most unease are with local-government investment vehicles, estimated at up to $1.7 trillion. Cheng Siwei, a former vice-chairman of the standing committee of the National People’s Congress told the World Economic Forum last week in Dalian: “Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults.”...

https://www.marketwatch.com/story/more-warnings-on-chinas-debt-2011-09-1...

Maryann · Sep 18, 2011 - 8:18pm

How Ginger has changed lives...

I posted this a little while back on the Faith thread, but in light of Ginger's post I wanted to say it again here. We are often wondering if/how we can make a positive difference in others' lives in these crazy times. Well, I believe God uses all kinds of things, even "little" blog posts.

Ginger happened to mention her church's community garden, which got me inspired to encourage a few others at my church, and now we have a community garden in the works which will hopefully bless people in my community. All because of a sweet soul who posted on a blog started by a "dope with a Macbook." 

So Ginger, I am so grateful for your time here and hope you can return when you catch your breath. I understand and will pray God blesses you and provides for you beyond your imagination!

seadocks · Sep 18, 2011 - 8:29pm

chickens

This morning, there was a comment about encouraging people to get a few free range chickens. I would whole heartedly endorse that thought. To add to the discussion, I would also encourage whoever does it to buy/build a chicken tractor. (Google it)

It allows you to have all the advantages of free range chickens AND yet protect them from predators AND also (if used properly) to build fertility in your garden with no extra labor.

If you have chickens or want to get chickens, you should investigate a chicken tractor.

Strongsidejedi ginger · Sep 18, 2011 - 8:30pm

MSG to Ginger

Follow - up to the discussion during Irene.

Thank you for your prayers and your thoughts.

Your brother and his family are in my prayers as well.

My friends and family in the MD, VA, and DC area are well.

Thank you for your prayers.

Thank you also for your thoughts and postings.

They have been encouraging and you are real light in our Lord's eyes.

Well done good and faithful servant!

Notice: If you do not see your new comment immediately, do not be alarmed. We are currently refreshing new comments approximately every 2 minutes to better manage performance while working on other issues. Thank you for your patience.

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