I had an article in the start of this month titled, "A Long April" in respect to precious metal prices not surging even though the world's Central Banks continue to keep rates low, and currencie flying out of the presses. One thing about watching trends is that it is important to readjust one's views as to where the trend is going in the future. Since that is the case, I am going to readjust my projections for May and June, and I am going to really slow the roll of precious metals, until a big move up, which I now see happening in July.
In "A Long April" I thought gold would get to $1735 by the end of the month and silver would be at $35. Not only do I not think these two will get there in May, it will take June to reach these numbers. May should finish at $1680, and silver at $33. I think this because I see stocks having a bad May, and I don't think there will be much investment made into anything; I think all markets will stay in somewhet of a holding pattern as I think that trading is pretty much dead. I don't think people will move to cash in this environment, as people want something for their investment, but I do think stocks will move down (DJ to 12,225), so maybe cash drips into bonds.
During May, I think JPM et al will continue to suppress the metals. The PTB have a fresh $430B thanks to LaGarde to maintain "stability", yet this really isn't much,and should only kick the can about two months. It appears that suppressing PMs is one of the most important things for the PTB. Maybe because they want to shake out the weak hands so they can accumulate as much as possible. Maybe there are other reasons. Who knows what is in the minds of these mad men.
As for July, I think we break this range we have been trapped in for nearly a year, but we will have to see when we get there. I still see all CBs printing, but even if they don't gold is the best hedge, for if rates rise, what will be the best investment? Not bonds; why hold cash? Stocks? Gold is going to continue to be the best investment for the foreseeable future, as it has for the last decade.
Monday, April 23, 2012
Saturday, April 14, 2012
The Fed's Loans
This week was a very telling week, literally. Bernanke gave two press conferences where he discussed the Federal Reserve's ability to make loans. The first time he mentioned it he cited a rule in the Fed Charter, 13-3 I think I heard, that allows the Fed to make loans to sovereign states without Congressional approval, even considering the new regulations of the Dodd-Frank Act and the Volker Rule. The other speech he made various points that if there is any more systemic risk, the Fed can make loans to mitigate the problems. This is telling because we know they Fed makes loans to States such as Libya and corporations such as Caterpillar, but from what he said this week we should expect more of it.
What does the Fed loan? They make currencie swaps, and this loan gives them a 1:1 loan with interest. This cash is loaned from their reserves, but cash is not the only reserves the Fed has. In congressional testimony a month ago Bernanke was asked if he owns gold. After acting like he did not know we remarked that he did have gold, on reserve, in the form of "gold certificates", on loan from the Treasurie. This gold is loaned, and will be loaned. When it is loaned the currencie that comes from the loan can be fractionally reserved, and the loan is magnified. This and gold not only maintains value, its price apreciates compared to fiat (which is depreciating ad infenum due to inflation). This is why gold is still the crux of the financial system: it is the loan of first recourse, it is the proprietray trade for banks, central and private, because it has a maximum leverage.
Demand is high for these loans, too, as other Central Banks want to and are trying to hedge and diversify from dollars. The loan makes sense for the PBoC and other CBs because they buy the loan at $1650 (if the loan was made today) and the hope is that when the loan comes due the price is higher, and the PBoC will get paid that amount. This interestingly makes gold manipulation very profitable of the Fed's side.
If the Fed has a large amount of gold loans coming due, they can orchestrate bearish news on the economy, and have their proxie banking houses (JPM et al) flush the precious metal complex at the same time, making the Fed have to pay the loanee a lower amount than the loan was made for. Add on a premium and interest, and the Fed's gold loans can turn a hefty profit.
What does the Fed loan? They make currencie swaps, and this loan gives them a 1:1 loan with interest. This cash is loaned from their reserves, but cash is not the only reserves the Fed has. In congressional testimony a month ago Bernanke was asked if he owns gold. After acting like he did not know we remarked that he did have gold, on reserve, in the form of "gold certificates", on loan from the Treasurie. This gold is loaned, and will be loaned. When it is loaned the currencie that comes from the loan can be fractionally reserved, and the loan is magnified. This and gold not only maintains value, its price apreciates compared to fiat (which is depreciating ad infenum due to inflation). This is why gold is still the crux of the financial system: it is the loan of first recourse, it is the proprietray trade for banks, central and private, because it has a maximum leverage.
Demand is high for these loans, too, as other Central Banks want to and are trying to hedge and diversify from dollars. The loan makes sense for the PBoC and other CBs because they buy the loan at $1650 (if the loan was made today) and the hope is that when the loan comes due the price is higher, and the PBoC will get paid that amount. This interestingly makes gold manipulation very profitable of the Fed's side.
If the Fed has a large amount of gold loans coming due, they can orchestrate bearish news on the economy, and have their proxie banking houses (JPM et al) flush the precious metal complex at the same time, making the Fed have to pay the loanee a lower amount than the loan was made for. Add on a premium and interest, and the Fed's gold loans can turn a hefty profit.
Wednesday, April 11, 2012
Gold's Ominous Move
Yesterday was a special day. Yesterday we once again saw a glimpse into the inside of the financial system, where current economic policy is dying a slow death, where people such as Ben Bernanke catch their books on fire after dragging them through the gates of Hell.
In the midst if this recent downturn we once again see a flat dollar - the dollar, the reserve currencie, the end all liquidity crutch of the Fiat Ponzi - we saw the continuation of a bond market propped up by the Fed buying Treasurie debt from Private Dealers (in the form of another multi billion dollar auction), and we saw stocks lose their luster around the world. Yet the kicker was that gold's price shut up like water from a whale's spout in the middle of it all, just as it did right before the US had its debt downgraded last summer. Right before a grand equity collapse; gold seems strong once again.
If gold relishes in these moments, what is the true safe haven play? What does really store wealth? These questions are easily answered when considering golds half life of hundreds of thousands of years, as well as its price action during recent times of financial turmoil, as well as during the last decade in general, due to supply constraints.
Gold is the safe haven for cash to move now, and it stands along side only the other precious metals silver and platinum. This because these three items define the term monie, and it is money that is needed in this time of economic uncertainty.
In the midst if this recent downturn we once again see a flat dollar - the dollar, the reserve currencie, the end all liquidity crutch of the Fiat Ponzi - we saw the continuation of a bond market propped up by the Fed buying Treasurie debt from Private Dealers (in the form of another multi billion dollar auction), and we saw stocks lose their luster around the world. Yet the kicker was that gold's price shut up like water from a whale's spout in the middle of it all, just as it did right before the US had its debt downgraded last summer. Right before a grand equity collapse; gold seems strong once again.
If gold relishes in these moments, what is the true safe haven play? What does really store wealth? These questions are easily answered when considering golds half life of hundreds of thousands of years, as well as its price action during recent times of financial turmoil, as well as during the last decade in general, due to supply constraints.
Gold is the safe haven for cash to move now, and it stands along side only the other precious metals silver and platinum. This because these three items define the term monie, and it is money that is needed in this time of economic uncertainty.
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