Additional Covert QE On The Way?

Wed, May 16, 2012 - 3:59pm

An alert Turdite sent me an email last evening where he connected some dots about additional quantitative easing. I've been thinking about it off and on today and I've concluded that it deserves a discussion here.

Before we get started and, as background, please take a few minutes to watch this video:

Video unavailable

"IMHO, QE3 is presently being implemented via the Chartering of NEW Bank Holding Companies in the United States which will utilize Chinese held U.S. Treasuries as their BASE Capital.
-The Chinese held US Treasuries will be utilized as BASE CAPITAL upon which to create TRILLIONS of digital FRN via fractional reserve.
While these Treasuries were held outside of the U.S. Banking System FRN could not be created via fractional reserve; -but, now these Treasuries WILL be used as a basis to generate digital FRN out of thin air.
IF China holds $1.2 Trillion of U.S. Treasuries....
...THEN $1.2 Trillion in U.S. Treasuries = the possible creation of $10.8 Trillion new digital FRN via fractional reserve banking.
Sounds kinda like a money printing scheme doesn't it?
-NO 'Dollar of Capital' rule as Our Host would say...
Sounds a tad inflationary doesn't it?
THIS is exactly how the U.S. Banks Counterfeited FRN and ramped up inflation during the housing bubble.
-It is going to be done again with the help of the Chinese.
The Chinese ARE NOT going to 'dump' their Treasuries: the Chinese are going to print Trillions of digital FRN and go on an unprecedented .GOV/FED sponsored Leveraged Domestic Buying Binge!"

This rather interesting idea seems to have been generated by this little-noticed story from last week.

The banks in question are: (from the article)

  • China Investment Corp., or CIC, and other Chinese entities were permitted to acquire an 80% stake in New York's Bank of East Asia (U.S.A.) NA. CIC manages a portion of China's huge foreign exchange reserves.
  • Separately Wednesday, the Fed also allowed the Agricultural Bank of China Ltd. to establish a branch in New York and the Bank of China Ltd. to have a branch in Chicago.

Now, for those of you unfamiliar with fractional reserve banking, I suggest you watch this:

Fractional Reserve Banking

Whether it's overt or covert QE, growth of the money supply equals growth of debt and vice versa. And, as you can plainly see on this chart, rising debt causes equally rising gold prices.

Put it all together and what do ya do? BTFD and keep stacking.


About the Author

turd [at] tfmetalsreport [dot] com ()


HeNateMe · May 17, 2012 - 11:00am


Dr. G - A rally is a rally.


DeltaCharlie Dr G · May 17, 2012 - 11:23am

False Rally?

Really, and what thesis do you have that it will fade into the day? Please share. 

Basil DeltaCharlie · May 17, 2012 - 11:41am

False Rally ?? Genuine rally ??

Let's just be honest about this.

None of us has the FAINTEST IDEA  whether this is a genuine rally or not, and anyone pretending to have this knowledge is just making it up.

We all have our hopes and aspirations, and probably the majority of this board would LIKE IT to be a genuine rally, and I would suggest that Dr G would like it to be a false rally. No problem with that.

Only time itself will tell you which way it will go, rather than a blogger who thinks he has some special "insight".

Eric Original · May 17, 2012 - 11:41am


Wasn't it just yesterday that CNBC declared gold to be in an official bear market? Yesterday! Nice Call, douchebags!

Sometimes I think maybe CNBC doesn't really have my interests at heart, just sayin....

Torpedo Fish · May 17, 2012 - 11:42am

eur & pms

I think we are starting to witness decoupling of EUR & PMs 
It looks like IVARS was 100% right about that.

· May 17, 2012 - 11:47am

Say what you want

But clearly we've been anticipating this short squeeze. Now watch for it to end and then a fallback. With a higher low that then extends into a higher high (than today or tomorrow), your bottom call officially be called.

GoldMania3000 · May 17, 2012 - 11:49am

say what you want

So you are saying that we will get a little pull back. higher low. ill take it and buy more.

turdi, do you think we are going back up from here or going to stay in this zone for a while..

DeltaCharlie Eric Original · May 17, 2012 - 11:49am

@ Eric O

Douchebags = Munger, Gates, Buffett, Gartman. We were all treated to days and days of their gold bashing and the mocking of those who own it. But it didn't shake me. I held on. 

Bull markets are just that: they take the least number of people with them. 

Now we have a rally, I've stopped stacking. Waiting for the next drop as a buying op. 

So far, so good with this strategy!

Number 47 · May 17, 2012 - 11:50am

It would be nice...

To get back to those heady days when purchase premiums were wiped out in a day or two.

Dr G · May 17, 2012 - 11:55am

EUR and PMs: we've seen that

EUR and PMs: we've seen that decoupling before. This isn't the first time and it won't be the last.

All it takes is a flight from the Euro and a portion of money that would go to the USD to go into the metals. A portion raises the metals and raises the USD. These things always shift over time.

Dr G Basil · May 17, 2012 - 11:56am

I suggest it is a false rally

I suggest it is a false rally because straight upticks in the metals never stick. They just don't. Call it manipulation or buying the rumor followed by selling the news or whatever, but it just doesn't work. As much as I want it to it doesn't. I'm not claiming any special insight. I'm just looking at the chart. Death cross is still intact. Chart says we should test the bottom of the trendline (26.25 ish?), so that is probably what we will do. Maybe we don't. I dunno.

Maybe "false rally" isn't the proper term. Maybe "rally that won't stick" is the proper term. Turd says he is looking for a pullback. I'm looking for a big one. Seems this move is from the Philly Fed saying we need to print. Once Bernank denies that the metals go down again.

And you are right, I don't want a rally. I haven't purchased enough. Higher gold and silver don't make me happy in any way.

DeltaCharlie · May 17, 2012 - 11:57am

@ Dr. G

Fair enough. But gold is a tad oversold, so a really isn't all the surprising. Thought that by averaging in over the past weeks would be a good way to accumulate metal, no? 

Besides, no-one knows if we're back to resuming a bull trend.... but there's enough things going on in Europe, US and Japan that would suggest money printing (it has to be in a debt based economy). 


· May 17, 2012 - 11:59am

Greetings o' splendiferous leader!

Is it time for all of us cult members to join hands and sing the sacred songs celebrating a rise in the metals? 'Cause my TFMR pajamas are in the wash, dude- I may have to go commando if you give ring the celebratory bell... just sayin'.

GoldMania3000 · May 17, 2012 - 12:02pm

Well, we'll see

But as noted here quite frequently over the past few days, this first sharp rally squeezes the shorts. Then there's a pullback where the shorts are reestablished. However, without a lower low, the next rally will dramtically increase the pressure on them. Very confident at this point that 1528 low of yesterday was triple bottom with Sept and Dec lows.

zman · May 17, 2012 - 12:03pm

This is how new

This is how new rallies start, even bulls don't believe in them, they have been so battered that they expect the worst. 

What is the headline reason for the move today? There is none. We all know the fundamentals point to higher prices, yet when it happens, the beaten down bulls don't believe it, that is bullish!!

· May 17, 2012 - 12:04pm


With all the shit I've taken over the past 3-5 days, I'm not retracting now.

¤ · May 17, 2012 - 12:06pm

Credit where credit is due

TF has been talking about this for at least 3 days, and here it is. Good call despite the strong prevailing head winds saying otherwiseyes

This might also be the start of the brief respite I spoke of before the Greek elections. 

I give it 2 weeks or so until that whole election process starts the fear machine up again. They need to let markets breath a little bit because they're not going to cut off their nose to spite their face if they prevent it somewhat. Apparently they have that ability, no?

¤ · May 17, 2012 - 12:08pm


See how that just worked?

 You spoke the exact same sentiment as I typed it. Viola! wink

GoldMania3000 · May 17, 2012 - 12:08pm


I haven't given you any shit. ive been watching for the most part. Although ill give you a little shit on mining stocks:)

koan · May 17, 2012 - 12:08pm

Stocks staying down...

...while PMs head the other way - divergence for real this time?

GoldMania3000 · May 17, 2012 - 12:10pm

Im always of the opinion

We dont know what's going to happen next. Stay strong and don't sell. hold and by more if necessary 

Gold Five · May 17, 2012 - 12:10pm


I just got a marketing email from Provident for their "24 hour bullion blitz." Does this mean they don't think the bottom's in yet? Perhaps we can come up with an Advertisement Index of Dealer Sentiment (A.I.D.S.) that takes the frequency/magnitude of promotions into account. That way if T.I.T.S. gets you excited, perhaps a positive A.I.D.S. test will give you pause.

On a side note, the Perth Mint Koala that's on sale reminds me of something:

GoldMania3000 · May 17, 2012 - 12:13pm


I was hoping a fall back to 1474 so i could buy more. i was going to use all my cash. that was my hope, that was my dream, i wished for a wash out. All i ever wanted was a wash out.

GoldMania3000 · May 17, 2012 - 12:16pm

Options Edge Alert Volume

Options Edge Alert

Volume 18, Number 13 May 17, 2012

Buy Silver Now

It’s been a long, hard road for silver bulls, but today’s price action could be the sign of a turnaround. The poor man’s gold tested the bottom of its trading range at $27 per ounce late in the US session yesterday and is bouncing impressively from this critical level as we write this. More importantly, silver (and gold) is soaring despite more weakness in the euro.

You can toss all the supply/ demand data out the window when it comes to silver. Investment demand will ultimately determine the fate of the poor man’s gold. Without investment demand, silver slips back into the teens. With it, the sky is the limit. The key to investment demand is silver’s standing as an alternate currency. Will investors see the shiny, white metal as a port in the storm that is roiling the euro, the US dollar and the Japanese yen? Or will it be viewed as just another commodity? Until today it was just another commodity.

This morning’s price action is the first time in this cycle that we’ve seen both silver and gold decouple themselves from EUR / USD currency pair. Both metals are up strongly despite the surging dollar and sagging euro. This is bullish enough for OE to recommend a relatively low cost 6-month bet that silver will retest the upper edge of its trading range (see chart below) prior to option expiration in late November. Silver is oversold and overdue for a bounce

Suggested Action – new trade: consider placing an order to buy December $35 silver calls while simultaneously selling an equal number of December $37 silver calls for a net cost of 23 cents ($1,150) or less, looking for the underlying market to test the top of its trading range at $37 per ounce prior to option expiration on November 27, 2012.

If filled at 23 cents, your maximum risk is $1,150 plus transaction costs. You can make as much as $8,850 on the trade. Cancel the order if not filled by next Friday’s close.

PM Believer · May 17, 2012 - 12:17pm

Pension Fund Gold Purchases


You posted a link yesterday showing a large Gold purchase by one of the biggest Japanese pension funds. Would that news not be part of this rally also? 

ClinkinKY · May 17, 2012 - 12:18pm

Hmm, ...(Apologies if already posted)

Gold & Silver Decline: George Soros Nearly Quadrupled Gold Stake in Q1

On Wednesday, gold (NYSEARCA:GLD) futures for June delivery declined $20.50 to settle at $1,536.60 per ounce, its lowest level since July. Meanwhile, silver (NYSEARCA:SLV) futures fell 88 cents to close at $27.20.

Both precious metals finished lower as the U.S. dollar marched higher for the 13th consecutive day. Euro zone central bank sources said the European Central Bank has stopped monetary policy operations with some Greek banks due to recapitalization concerns. The announcement comes a day after President Karolos Papoulia’s website said Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since May 6.

Read more:

tmosley · May 17, 2012 - 12:18pm

You learn faster by being

You learn faster by being wrong than you do by being right, as long as you are open to it.

zman · May 17, 2012 - 12:19pm


Dollar slightly up today? Interesting to say the least, I like the action.

Bobbejaan Brimstone · May 17, 2012 - 12:21pm

A better Question ...

Submitted by rocoach on May 16, 2012 - 10:21pm.

Let's say your child has somehow managed to run up a balance of $10 million on your credit card. The two of you earn a combined income of $60,000 per year. You can cut back as much as you possibly can, you can sell all your assets and live in cardboard boxes and eat dog ends for dinner. But if push came to shove, would you? No, because no matter how much you cut back, you'll NEVER be able to pay off that debt.

More importantly (IF my kid did indeed do that) ... IF I buried his soon-to-be-deceased body in a deep enough hole in the garden, and then told my credit card company that he had used my credit card without authorisation and the thieving brat had now run off to Outer Mongolia without leaving a forwarding address ... WOULD I have a better than 50-50 chance of getting away with it ? devil wink 


Groaner · May 17, 2012 - 12:25pm

I need some input on this

Just got off the phone with Lear Capital to buy.

He said you know when you go to sell bullion you will have pay capital gains 

The dealers all send out 1099.s and the IRS will come after you !!

he said buy official us coins legal tender like Kennedy 1/2 dollars 

or mint state coins since they are considered money no tax reporting is done??

so do we sell bullion without the crooks finding out??

help on this one please??

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