What Next?

What lies in store for the Fiat Ponzi?  Last week saw an official Greek default, which the media spun as a good thing because it means insurance contracts are still paying off, the second LTRO auction, which is like the Europonzi's TARP, and as Europe careens over the cliff the rest of the globe does no better.  Japan is not only still radiating itself to death, but they are making Zimbabwe look good.  The US is still pulling the same string they have pulled for three years, and China watches as all paper markets crumble before them as they sit on trillions of dollar denominated paper.

So what next?  PMs look to consolidate, gold right under $1730, and silver around $34.  The charts look like an up move could happen any day, and that would take gold to $1900, but I can't put it past the Ponzinators to raise margins or release the SPR or whatever else they would do.  This is a very interesting point in the markets because everyone wants more QE, and by QE I mean unsterilized, but the Fed can't go out and do it unless stocks pull back.  But if stocks pull back then it shows the last three years for what they have been, window dressing.  The Fed is caught between a rock and a printing press.

This is why I think they will continue with OT2, ZIRP, and they may likely continue with FX swaps to Europe; we know Europe needs it.  All the while inflation stays high, but so does deflation.  Housing is getting flattened, and the foreclosure market may open up and see millions of homes put on the market for the first time.  Look for house prices to get cut in half over the next few years.

Really anything can happen this week.  If nothing big happens, then the market will stay flat, as the PPT will want a trigger to move lower, and they will keep a floor under the market.  There is the thought that Europe's LTRO could trigger the final push into an even higher inflated market.  I think we are around 10% now for necessary goods (oil/PMs/food).  With all the fiat sloshing around, we could move to 15% in the coming months, and after that it could move quickly to 20% where it would get out of hand and possibly unmitigatable.  Fiat is the weakest link in the investing world, and when the SHTF, anyone holding fiat denominated assets will lose, but especially if they are sitting on the currency itself.

Bernanke's Testimony

A couple things struck me by Bernanke's testimony this week.  The first was that he mentioned the "President's Working Group".  I wasn't paying attention when he did, so I am not sure of the context, but he did say the words "President's Working Group".  He didn't go on about it.  The second was the audacity that he had when bringing up the Federal Reserve's gold holdings.

Let's first remember that last year he referred to the Federal Reserve's gold holdings as "Tradition", yet somehow this year he doesn't know if the Federal Reserve holds any gold.  Then he had to be coached as to what they hold (gold certificates) and where they lie on the balance sheet (they are held as reserves).

Think about his capitulation:  Either he is so dumb that he can't remember his balance sheet, or he lied.  Considering he is eloquent enough to have written the texts used across the University system, and he can coherently talk about how Neo-Keynesian economics is implemented, I am quite sure he was lying.  There goes the whole "He is a useful dupe" plausible deniability theory.  He is an evil, lying, bastard.

And that solidifies my feelings for politicians, bankers, and everyone else in the system at the top of the pyramid.  They know what they are doing.

Big Waves

Precious metals are getting volatile again, and this is a sign for a big up move coming.  Bernanke obviously leased some of his mentioned gold reserves during yesterday's speech, which quelled demand.  Of course in the long run this will decrease supply which will force the price to pop.  During the speech Bernanke acted like he didn't know anything about the gold market.  True or not his actions make waves.

We saw silver break a key price point of $36 with authority.  After it broke silver went straight to $37.  It took Bernanke's jawboning and the Federal Reserve's gold reserves to bring the price down to where it was days before.  So now that we saw what can happen, and knowing the value of precious metals, we can assume there is a big up move on its way.

Silver may test $34, and gold may test $1680, and whatever lies in store PMs will consolidate for a few days, but in the next week or so, there will be a huge move that takes silver to $42 and gold to $1900.  It will be quick and painless and will be over before most people know it happened.