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1650 and 42

169
Thu, Jul 28, 2011 - 4:25pm

I'm still confident we're headed there as soon as next week. Here's why.

The Turd is no civics professor but, as I understand it, there's a process which must be followed on Capitol Hill. As a refresher, I offer you this:

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IF The Republocrats in The House pass their bill tonight and IF The Republocrats in The Senate approve their's over the weekend, the differences must then be reconciled in a conference committee. Then, IF reconciled, both chambers MUST pass the new, singular version. By Tuesday. Our esteemed, illustrious and supremely qualified President must then sign the bill into law.

Hmmm. When you look at it that way, it sure doesn't seem likely that they're going to get it done. I'd say that the chances are now greater than 50/50 that The Regime raises the debt limit by Executive Order. If O'bottom goes this direction, you can bet your arse that he won't just piddle around with a puny increase. He'll raise that baby by at least $2T, enough to last through the 2012 election. This will result in two things:

1) A complete loss of confidence in the ability and desire of the U.S. government to address their disastrous fiscal "situation".

2) An inevitable downgrade of U.S. debt by the major credit rating agencies to AA+, at a minimum.

Both of these developments are extremely bullish for the PMs. Extremely bullish. They also signify a major signpost on the road to economic disaster. Remember, quantitative easing is, at its core, simply about buying time. The idea was that if, by buying treasuries, The Fed could keep rates down long enough, the economy would recover and tax revenues would increase sufficiently to sustain The Great Ponzi. To no one's surprise, it didn't work, and now Fed/Govt/TBTF Complex faces their end game.

In order to survive, The Fed MUST now continue QE at an even greater pace. The PMs and all commodities will see their multi-year rallies accelerate. Economic conditions will continue to worsen. Tax revenues will remain stagnant or decline. The annual U.S. budget deficit will widen. The dollar index will break down through the March 2008 lows of around 71. The ratings agencies will be forced to downgrade U.S. debt once again. To keep rates on current and past debt low, The Fed will have to engage in even more QE. The entire U.S. ponzi scheme will continue circling the drain faster and faster until the bottom finally falls out.

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And this is all going to happen a lot sooner than what you might think. Some say 2030. Some say 2025. I think we'll be lucky to make it through 2013. Oh, and don't ever forget, the favorite tools of distraction for the Fed/Govt/TPTB Complex are wars and insurrections. Plenty of that on the way, too. As we like to say around here, prepare accordingly.

Onto the charts. Both of our metals ran into a double whammy today. First, there's a general reluctance to bid them higher in that everyone is now convinced that a debt ceiling deal will cause price to drop sharply. Second, The Cartel has clearly decided they'd like to keep a lid on things near 1625 and 41. However, it is very important to note that, even under these conditions, the metals never did truly roll over. Gold rebounded off of firm support below 1610 to close near 1615. Silver held support near 39.50 and is now back just under 40 at 39.80.

For tomorrow, there are more reasons to be long than short over the weekend so I expect an UP day. Ideally, gold will trade up and finish the day near the crucial 1625 level. Silver will rebound and finish somewhere in the neighborhood of 40.50. When the markets re-open Sunday evening and the "deal" has still not been reached, expect both metals to blast through the Cartel-induced resistance levels mentioned above.

paper_7-28pmgold8.jpgpaper_7-28pmgoldh.jpg

paper_7-28pmsilv8.jpgpaper_7-28pmsilvh.jpg

That's all for now. I'd like to end this on a happy, upbeat note but I'm afraid I can't. I can give you this, however. My favorite schoolhouse rock. "Yow! That's unfair! Givin a guy a shot down there!" See you tomorrow. TF

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About the Author

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  169 Comments

Tom L Eric Original · Jul 29, 2011 - 1:18am

Your house is just another depreciating asset. Nothing more, nothing less in financial terms.

Ta,

TheGoodDoctor · Jul 29, 2011 - 2:05am

@SSK I totally agree with you. I'm just saying that in regards to jobs and job security, I think that it will hinder the housing market further. The average amount of weeks for that a person is unemployed is now 40 weeks. Someone posted a chart on here recently and I looked at all of the states. It was about how long unemployment was lasting. Well most states ranged from 25% to 36% of the unemployed had been so for more than a year.

I'll see if I can dig up that chart. Maybe it was ZH.

Jim xxxx · Jul 29, 2011 - 2:07am

I have been in the real estate business since 1974 and currently own a local office with 26 agents. There are many factors pulling prices down and they have been well covered in other posts. The long term black hole will become more apparent as we see that the middle class is broke, existing housing will be filled with two or more families, and grandparents will have to live in the basement. The kids will be living off the grandparents SS check if there is one. The college students will finally see that the cost of the AA,AS,MBA etc., will not give them a job and they will be hoeing potatoes in Idaho. There were thousands of empty building lots all over America at the height of the boom. The banks repoed them and after a time, the big construction companies bought the lots for as low as 15% of the former asking price. It will take years for these lots to be built out, marketed, and sold to qualified buyers. These big companies have the corner on prices and new lots for development will cost five times as much as they have paid. The small builders can not compete and are ruined for years to come. Real estate agents are quitting and looking for any kind of work. The housing issue and jobs through construction will help the economy. So, here is my solution: Allow five million people to come to America each year starting Jan. 1, 2012. To qualify they must learn English, buy a home of at least $400,000 purchase price and pay cash, show evidence that they have funds to support themselves, take classes and become citizens who pay taxes, and pass a background audit. This would begin to dry up the existing housing all across our land and will make millions of new, grateful consumers. P.S. It will never happen. j.m.o.

Jimmy · Jul 29, 2011 - 2:24am
Rui Jim xxxx · Jul 29, 2011 - 2:36am

I have the similar feelings about the housing market. Spending money is like spending one's time. If it's spent foolishly then it's squandered and gone. No way to get it back. A loss is a loss, and it ain't go away on its own and will enforce its consequences.

US economy threw so much money down into the back to back mass Nasdaq and Housing bubbles. Far more than a decade of wealth (b/c of the crazy leverages) was squandered. There's no way a loss of this magnitude could be fixed fast, not to mention people in D.C. are capable of anything but fixing.

Kumanari · Jul 29, 2011 - 2:38am

The Secretary of the Treasury will soon take center stage being the most important and powerful position in the gubment.

duckwomanloulou kliguy38 · Jul 29, 2011 - 3:55am

I'm a nurse by trade not a trader and appreciate that I would be considered one of the sheep. However having accumulated phyzz (& still accumulating) am now learning about the miners. I learn from you turdites and all the other good sites out there. I have no intention of selling as I thought I had bought near the bottom and am indeed waiting for the upswing into the autumn but was just expressing how difficult that this can be in the early days as a newbie and how determined the other side of the trade can be in taking the price down further. It is truly sickening and scandalous when you look at the price action in the metals themselves.

Lou

Kumanari duckwomanloulou · Jul 29, 2011 - 4:29am

 LOU,

MEASURES OF WEALTH

 CONTRACTS,SHARES, OZ,POUNDS,TONS, GALLONS ,BARRELS,CARATS, BUSHELS,ACRES,HEAD,FLOCKS

CHILDREN

FREE YOURSELF FROM MENTAL FIAT SLAVERY THE BANKSTERS LAUGH AT YOUR DEPRESSION AS THEY GIFT YOU WHILE STEALING FROM THE MAJORITY....BOTH SIDES IN TOTAL CONFUSION AS TO WHAT IS GOING ON

IN A FEW MONTHS YOU WILL BE DEPRESSED BECAUSE YOU WON'T BE ABLE TO AFFORD WHAT YOU WISH COST MORE TODAY I SPEAK FROM EXPERIENCE

I NEVER HAVE AND NEVER WILL COMPLAIN ABOUT PRICE........ UP DOWN EITHER WAY I WIN BUT I CHOSE DOWN BECAUSE I COUNT MY WEALTH AS ABOVE

It also feeds right into the scary notion revealed in a famed President Clinton comment that goes something like … "I didn’t realize I wouldn’t be in control here when I became President." … meaning there were far more powerful background forces pulling the strings and on how he must operate.

A HUI HOU MALAMA PONO KAKOU

¤ · Jul 29, 2011 - 6:07am

S&P Key Support Level: 1284; After That It Is Rough Sailing Until 1252

Submitted by Tyler Durden on 07/28/2011 - 23:48 200 DMA Displaced Moving Average Gross Domestic Product

As ES tumbled to 1285, there is a good reason why it was instrumental to halt the drop because should the 200 DMA in the S&P get taken out, at about 1284, then say hello to the next support which is at the March and June swing low trendline of 1258. Then again, in order to get QE3, which by the way is the goal here once all the smoke and pizza boxes clear, the market does need to plunge as has been warned again and again. Alas, it has to drop by another 20% from here. So, all those who traditionally keep buying the dip in advance of anticipated Fed intervention sooner or later will have to eat their losses. And considering that America may be bankrupt as soon as Tuesday unless the Fed sells its gold, it will certainly be sooner. So as Asian dealers scramble, and Europe wakes up (can UniCredit make it a trifecta of trading halts? Why of course), with America to follow thereafter realizing its Q2 GDP was just 1.7% (and to be revised to 1.4% in 2 months), the race for QE3 finally is on with just one month until Jackson Hole.

¤ · Jul 29, 2011 - 6:16am
The World's Biggest Central Bank Has Private Shareholders Submitted by George Washington on 07/29/2011 00:46 -0400

ByWashington’s Blog

As I've pointed out for years, the Bank for International Settlements (BIS) is owned by the world's central banks, which are in turn owned by the big banks. See this and this.

It turns out there may be a very interesting wrinkle to private ownership issue....

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

Just as we have suspected for a long time. There are private names and faces at the very top who actually control the Central Banks and their influence and policies.

Matt Harrington · Jul 29, 2011 - 6:21am

Brilliant and detailed article...

Best one I've read in a while, i love these keep you going for the future style articles.

I was a bit confused where we were, since the predication's article a while back..(can't remember what it was called)

nice to put things into perspective.

just got me some more eagles

¤ · Jul 29, 2011 - 6:29am

It would obviously be very interesting to find out who these private shareholders are.

And to find out if the shareholders enjoy any special benefits. As Spiegel notes:

Formally registered as a stock corporation, it is recognized as an international organization and, therefore, is not subject to any jurisdiction other than international law.

It does not need to pay tax, and its members and employees enjoy extensive immunity. No other institution regulates the BIS, despite the fact that it manages about 4 percent of the world's total currency reserves, or €217 trillion ($304 trillion), as well as 120 tons of gold...

Central bankers are not elected by the people but are appointed by their governments. Nevertheless, they wield power that exceeds that of many political leaders. Their decisions affect entire economies, and a single word from their lips is capable of moving financial markets. They set interest rates, thereby determining the cost of borrowing and the speed of global financial currents.

Could that mean that the private shareholders owning 14% of the world's central bank have somehow been "grandfathered in", and are immune from taxes and other national rules? Wouldn't it be interesting to find out?

Gramp · Jul 29, 2011 - 6:30am

Thank you EVERYONE for keeping this such Informative, Productive, Goal oriented site!yes

I have for a long time been sifting through MSM spoon fed info, so the wide spectrum of opinions here, is of great value!

After thinking what a great resource, I put a few $ in the donation "jar"!

stoneeh · Jul 29, 2011 - 7:29am

"despite the fact that it manages about 4 percent of the world's total currency reserves, or €217 trillion ($304 trillion)"

Pretty sure world currency is less than 100 trillion $. US M3 is around 15 trillion $. Probably they mean derivative exposure.

But yeah, the BIS are crooks.

- Markus

Mikael · Jul 29, 2011 - 7:39am

look at the USD, gonna be a raid today as well :P

thegoldenchild · Jul 29, 2011 - 7:42am

I don't see how it's not going to be bad for PMs in the short term.

Debt ceiling DEAL - selloff on PMs which had been rising on the fear of a default

Debt ceiling NO DEAL - The U.S. actually default?! People are gonna be so shitscared they're gonna go straight into CA$H. No one is gonna be holding anything risky whatsoever.

AFTER the debt ceiling has been raised as people wake up to what's happening then PM's will start gaining traction.

murphy · Jul 29, 2011 - 7:48am

For anyone that want's some background info on the BIS. The bank to all central banks and its beginnings. I saved this from some time ago and the second link may not work. The first is from Nielson.
Subject:
BIS beginning
https://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=12502:the-bis-the-bankers-money-launderer&catid=45:international-commentary&Itemid=133

https://www.augustreview.com/issues/global_banking/global_banking:_the_bank_for_international_settlements_200510147/

EDIT: here's another one from just over a year ago regarding BIS, gold swaps, and SDR's

https://www.zerohedge.com/article/guest-post-gold-swap-signals-roadmap-a...

Ed · Jul 29, 2011 - 7:48am

has in mind for you... This beauty is straight out of the Stasi... Just where did she learn about America anyway? She and DHS are about as un-American as it gets.

https://www.activistpost.com/2011/06/janet-napolitano-visits-nyu-law-school.html

Violent Rhetoric · Jul 29, 2011 - 7:50am

Another ranking House Dem says Obama will go the route of the 14ht if that's what it takes.

https://thehill.com/homenews/house/174283-hoyer-endorses-14th-amendment-as-last-resort

President Obama should invoke the 14th Amendment to hike the debt ceiling unilaterally as a last resort to prevent a government default, House Minority Whip Steny Hoyer (D-Md.) said Thursday.

"It's arguably his power to do so," Hoyer told MSNBC.

"Very frankly, if it came down to his looking default in the eye on Tuesday or taking this action, as President Clinton said, better to take the action and find out later that perhaps he went beyond his authority but at least protected the credibility of the United States of America," he said.

I love that bolded part... we need to violate the constitution to protect America's credibility.



Shill · Jul 29, 2011 - 8:09am

I hear you there Eric, my 3 bedroom home is just that my home nothing more. Just a place to rest my head, keep me the wife and kids dry and warm and a place to store my crap. Value is only what the next guy is willing to pay for it. This whole housing Hubris is and always was ridiculous to me. Thankfully I never bit the forbidden fruit and mortgaged myself into a corner like 90% of our fellow Americans did. I always dollar cost averaged my upgrades.

I remember the days, " Dude your crazy mortgage your house man free money " Ya ok nothing is free in the land of the Free, never was never will be.

Now my Precious metals. that another story lol. No value on those as they are not for sale :)

LaMachinna · Jul 29, 2011 - 8:10am

thanks so much for all the informative posts re: housing/real estate/etc! You guys are awesome. Indeed, it get's more interesting EVERY day! The housing debacle looms for years and years. How Barney Frank and the whole Freddie/Fannie mess is not prosecuted is just another sign of our times. I mean really? They do nothing. Sigh, acceptance is a tough pill to swallow at times. 

What do you guys think....do you think they will yank the charitable contributions tax exemption as well? That will really hurt a lot of the charities and giving. 

aurum argentum · Jul 29, 2011 - 8:15am

All this fear mongering and loss of rights. This countrys government disgusts me.

"Time to re-watch the Twilight Zone episode, "The Monsters Are Due On Maple Street".

Rod Serling's closing narration is as follows:

"The tools of conquest do not necessarily come with bombs and explosions and fallout. There are weapons that are simply thoughts, attitudes, prejudices, to be found only in the minds of men. For the record, prejudices can kill, and suspicion can destroy, and the thoughtless, frightened search for a scapegoat has a fallout all of its own: for the children, and the children yet unborn. And the pity of it is that these things cannot be confined to the Twilight Zone."

murphy · Jul 29, 2011 - 8:32am

Lending Markets Feeling the Strain

By LIZ RAPPAPORT And MATT PHILLIPS

"Rising signs of strain emerged across financial markets on Thursday as investors pulled out billions of cash out of money-market funds, in turn driving the funds to rein in lending in short-term markets.

Financial markets have become increasingly alarmed at the deepening divide in Washington and the potential that the U.S. could be downgraded by credit-rating agencies or, worse, default on its debt.

Banks, meanwhile, are scrambling to design emergency plans to avoid a trading logjam in the huge markets for Treasurys and short-term funding facilities if Congress fails to raise the U.S. borrowing limits by next Tuesday's deadline.

Money funds are now largely restricting their lending to overnight, preferring the safety of stashing cash in banks, one senior trader said. That is reducing the pool of cash available to corporations, banks and investors. Money funds are also selling asset-backed securities and other debt, the trader said.

Investors pulled $9 billion a day out of money funds this week, according Nomura Securities International Inc. The outflows in the past day could be even higher, traders say. Some $62 billion has left money market funds in the past two weeks, according to the Investment Company Institute."

They have to get the market to drop in order for the people to scraem for help, please print more money!

boil_in_the_bag_rice · Jul 29, 2011 - 8:35am

$40

Weeeeeeeeeeeeeeeeeeeeeeeeeeee!

Tesla Tesla · Jul 29, 2011 - 8:49am

LaMachinna Tesla Tesla · Jul 29, 2011 - 8:52am

LaMachinna · Jul 29, 2011 - 8:59am

EVERYTHING, REPEAT, EVERYTHING cannot always be baked in the cake already! ya think? angry

Violent Rhetoric · Jul 29, 2011 - 9:06am
Blight Master · Jul 29, 2011 - 9:08am

Will we trip some breakers today? I wouldnt be surprised.

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Key Economic Events week of 6/11:
6/12 Trump-Kim summit
6/12 8:30 ET CPI
6/13 8:30 ET PPI
6/13 2:00 ET June Fedlines
6/13 2:30 ET CGP presser
6/14 8:00 ET Count Draghi presser
6/14 8:30 ET Retail Sales
6/14 10:00 ET Busi.Inv.
6/15 9:15 ET Ind. Prod

Key Economic Events week of 6/4:
6/4 10:00 ET Factory Orders
6/5 9:45 ET PMI Svcs
6/5 10:00 ET ISM Svcs
6/6 8:30 ET Intl Trade and Productivity
6/8 10:00 ET Wholesale Trade

Key Economic Events week of 5/28:
5/30 8:30 ET Q2 GDP 2nd guess
5/31 8:30 ET Personal Income
5/31 9:45 ET Chicago PMI
5/31 10:00 ET Pending Home Sales
6/1 8:30 ET BLSBS
6/1 9:45 ET PMI Manu Index
6/1 10:00 ET ISM Manu Index
6/1 10:00 ET Const Spend

Key Economic Events week of 5/21:
5/22 10:00 ET Richmond Fed
5/23 9:45 ET PMI Composite
5/23 10:00 ET New Home Sales
5/23 2:00 ET May FOMC minutes
5/24 10:00 ET Existing Home Sales
5/25 8:30 ET Durable Goods
5/25 9:20 ET Chief Goon Powell speech

Key Economic Events week of 5/14:
5/15 8:30 ET Retail Sales and Empire State Fed
5/15 10:00 ET Business Inv.
5/16 8:30 ET Housing Starts
5/16 9:15 ET Industrial Production
5/17 8:30 ET Philly Fed

Key Economic Events week of 5/7:
5/9 8:30 ET PPI
5/9 10:00 ET Wholesale Trade
5/10 8:30 ET CPI
5/11 8:30 ET Import/Export Prices

Key Economic Events week of 4/30:
4/30 9:45 ET Chicago PMI
4/30 10:00 ET Pend Home Sales
5/1 9:45 ET PMI and ISM Mau Idx.
5/1 10:00 ET Const. Spending
5/2 2:00 ET FOMC fedlines
5/3 9:45 ET PMI/ISM Svcs.
5/3 10:00 ET Factory Orders
5/4 8:30 ET BLSBS

Key Economic Events week of 4/16:
4/16 8:30 ET Retail Sales, One Fed Goon speech
4/16 10:00 ET Business Invt.
4/17 9:15 ET Industrial Prod., Four Goon speeches
4/18 Two Goon speeches
4/19 8:30 ET Philly Fed, One Goon speech
4/20 Two Goon speeches

Key Economic Events week of 4/9:
4/10 8:30 ET PPI
4/10 10:00 ET Wholesale Trade
4/11 8:30 ET CPI
4/11 2:00 ET March FOMC minutes
4/12 8:30 ET Imp/Exp Prices
4/13 Fed Goon Speeches...Rosengren 7:30 ET, Bullard 9:00 ET, Kaplan 1:00 ET

Key Economic Events week of 4/2:
4/2 9:45 ET PMI Mfg Idx
4/2 10:00 ET ISM Mfg Idx and Construction Spending
4/4 9:45 ET PMI Svcs Idx
4/4 10:00 ET ISM Svcs Idx and Factory Orders
4/5 8:30 ET Intl Trade
4/6 8:30 ET BLSBS

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