Official Pharmacy Investing (Stocks/Funds) Thread!

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grumps said:
Falling velocity is a prelude to hyperinflation.
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Based on what research or model?

The whole point of QE is to make up for the fall in velocity given the ZLB. We have been below 2% since the crisis- I believe there should have been more QE and I get the feeling Bernanke might too, but has been hesitant due to political threats.
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Like the water receding before a tsunami, there is usually a deflationary scare before a HI episode. HI occurs during depressed economic conditions, not a booming economy. An economy has to be growing in order to pay back future income borrowed (the bong market). If the bond market figures out that a debt-saturated economy won't pay back in real terms then the phase transition may occur. This is why the Fed has to monetize the debt now. There is no market for Treasuries at these low rates. If rates were to reflect free market prices then the risk of default is on the table b/c at 16T every 1% rise is an extra 160B that goes to interest.

The fact that we are in the 5th year of ZIRP should be a blaring red klaxon that our monetary system is dead. There is no way rates can be allowed to rise. The debt service would be too great. And don't forget the OTC interest rate swaps hanging out in cyberspace. If rates rise then they have to perform as insurance against rising rates.

What's so funny is that if Keynes came back from the grave, he would denounce this current policy. He would say it's hopeless, you are debt saturated, you have to devalue the debt, you need a golden enema to purge the system.

You're right about more QE. This talk about taper is nonsense. There is no possible withdrawl of QE w/o collapsing the global markets. The fact that the deepest, most liquid market in the world, the US treasury/GSE debt market, requires 80% of the issuance to be purchased with money not generated by economic means should be a grave concern.
 
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The assumption that the market for treasuries is being made and solely upheld by the Fed is a wrong one. Other institutions are still buying and holding on to treasuries and when the Fed slows its purchases, rates will go up and there will be more demand for treasuries because at the end of the day aside from the goldbugs, there is a lot of confidence in treasuries still. QE is not a means to finance debt, but a means to increase the supply of money. And in that regard, it can be reversed. Rates are at record lows- there is plenty of room to sell those treasuries when the time comes.
 
Does thou not see what the BRICS are doing? What is being set up as an alternative to dollar settlement? There is alot of game theory afoot. Here's one of my posts from another blog:

Grumps LaBastard said...
There is another scenario that may unfold. HI could be put off for awhile. It would not help the creditor nations to have Treasuries tank all at once, even if they have enough gold for an overnite revaluation. They may want their cake and eat it too. They may force the Fed to withhold revaluation to protect Treasury holdings. Keep an eye on the BRIC Development Bank. It may act as a throttle on the liquidation of USTreasuries allowing an orderly as possible absorption of dollars into gold. This would mean a gentler rise in gold and fall in Treasuries.

June 10, 2013 at 6:16 PM



If the Fed were to decide to sell some Treasuries, do you realize what the trade of the century would be? Why, to short Treasuries. If you are a pension manager you will be buying a treasury bond realizing that you are married to it till maturity, for a rising interest environment means that bond prices fall. If he wants to liquidate a bond yielding 5% to get a new bond yielding 6%, he will take a net capital loss on the former. So if you holding bonds to maturity in a rising interest scenario, now you have to consider the purchasing power of the principal at maturity time. Unlike the late 70's-early 80's with rising rates, bondholders not only have to consider purchasing power risk ( is the real yield positive or negative), but whether the counterparty will default via devaluation. Back then there was only 1 trillion in systemic debt and healthy economy, now there is 50T! Debt Saturation.
 
QE to Infinity (The USD At .7000 USDX) or Infamy for Bernanke
Posted June 14th, 2013 at 10:45 AM (CST) by Jim Sinclair & filed under General Editorial.

Dear CIGAs,

A lesson on what interest rates are:

1. Interest rates are the price of federal paper in the federal paper bond market for all the various common periods of time.
2. Interest rates rise if the price of binds fall in the Federal bond market.
3. Interest rates fall if the price of Federal paper rises in the Federal bond market.

That is the total definition.

QE is the act of the Federal Reserve or any similar central banks making bids in the Federal bond market.

If the Fed wishes it can bid forever at any price to keep interest rates low but the unintended consequence is pressure on the US dollar or currency of the country doing QE.

QE is in fact debt monetization but central banks do not want to call it that because the historical and traditional understanding of debt monetization is and will in time be as follows:

Monetization
From Wikipedia, the free encyclopedia

Monetization is the process of converting or establishing something into legal tender. It usually refers to the coining of currency or the printing of banknotes by central banks. Things such as gold, diamonds and emeralds generally do have intrinsic value based on their rarity or quality and thus provide a premium not associated with fiat currency unless that currency is "promissory": That is the currency promises to deliver a given amount of a recognized commodity of a universally (globally) agreed to rarity and value, providing the currency with the foundation of legitimacy or value. Though rarely the case with paper currency, even intrinsically relatively worthless items or commodities can be made into money, so long as they are difficult to make or acquire. Monetization may also refer to exchanging securities for currency, selling a possession, charging for something that used to be free or making money on goods or services that were previously unprofitable.

Monetizing debt

In many countries the government has assigned exclusive power to issue or print its national currency to a central bank. The government treasury must pay off government debt either with money it already holds or by financing it by issuing new bonds which are sold to either the public directly or the central bank, in order to raise the funds required to repay bonds that have come due. The central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may ‘borrow' money without needing to repay it. This process of financing government spending is called ‘monetizing the debt'.[1]

Central banks are usually forbidden by law from purchasing debt directly from the government. For example, the Maastricht Treaty(article 104) expressly forbids EU central banks' direct purchase of debt of EU public bodies such as national governments. Their debt purchases have to be from the secondary markets. Monetizing debt is thus a two-step process where the government issues debt to finance its spending and the central bank purchases the debt, holding it till it comes due, and leaving the system with an increased supply of money.
 
http://www.zerohedge.com/contributed/2013-06-14/can-world-afford-higher-interest-rates

Take home quotes:

"Bond guru Jeff Gundlach has looked at the impact of higher rates on the U.S. and he doesn't like what he sees. He suggests that if interest rates in the U.S. normalise and increase 100 basis points annually over the next five years, the interest expense on government debt would rise from US$360 billion last year to US$1.51 trillion."

"... The trouble with this is that there comes a point where bond investors lose confidence in the ability of the government to repay the money. These investors then refuse to rollover government debt at low rates. When bond markets dry up, they normally do so quickly. The current wobbles in the Japanese bond market can be seen as a prelude to this endgame."
 
Nothing suggests that what you are saying will happen though. All the big players (international and domestic) still don't have issues with UST and USD and they haven't shown any sign of it. Yes, new payment systems that are less reliant on the USD are being implemented in some relatively smaller trade scenarios, but the demand for USD is still there- overall given the less stable state of the Euro, the USD is pretty much still the best choice for a lot of reserves. And a Fed exit would be a taper just as an exit by any large holder would be.

ZeroHedge is hardly a reliable source on this issue- yes, they've had a couple good breaks out there and do have some good sources on the actual data, but the commentary is mostly garbage. How many times a day and for how many days do you keep listening to "the world is about to burn", until it gets old? I'd change the slogan to say "On a long enough timeline, you will eventually be right about anything that you spout day after day, despite how little of it is based on fact for most of that time".
 
Markets are either accelerating or decelerating. Once an alternative is available that allows for true trade settlement then the exorbitant privilege of being the world's reserve currency will no longer be the District of Columbia's and forex reserves will reflect that. It is the goal of the BIS in redesigning Bretton Woods to have gold comprise 15% of forex reserves. Under stress tests 15% was determined to be the most stable configuration.

It doesn't matter if the Fed only tapers. Once the market smells that the biggest buyer is cutting purchases then the market goes the other way. look what has happened with the mere rumor of tapering. Bonds cratered. Imagine if the Fed really did cut back on purchases..Imagine if it sold treasuries from its balance sheet! They are in a box and can't get out.

Remember they won't tell you the big reset is coming. Of course the BRICS will say they have no issues with the dollar and poopoo gold. They are talking their book. They want to dump dollars and buy gold while the former has value and the latter is cheap. Game theory. Art of War. We are at the biggest poker game in the history of the human race, of course, nobody wants to tip their hand.

Check out this blog:

http://twoshortplanksunplugged.blogspot.com/

Cheers.:)
 
grumps said:
It doesn't matter if the Fed only tapers. Once the market smells that the biggest buyer is cutting purchases then the market goes the other way. look what has happened with the mere rumor of tapering. Bonds cratered. Imagine if the Fed really did cut back on purchases..Imagine if it sold treasuries from its balance sheet! They are in a box and can't get out.
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The reversal in price is exactly what would be needed at that point. The Fed can strategize in doing this by simultaneously buying and selling treasuries of varying maturities while also not making it completely clear how much they will sell or buy at any given time (which is what they've done with some of their purchases). Also remember that the Fed can always increase interest rates once we are not stuck at the ZLB- it is the ZLB that was the issue here all along.

grumps said:
Remember they won't tell you the big reset is coming. Of course the BRICS will say they have no issues with the dollar and poopoo gold. They are talking their book. They want to dump dollars and buy gold while the former has value and the latter is cheap. Game theory. Art of War. We are at the biggest poker game in the history of the human race, of course, nobody wants to tip their hand.
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I can turn this around just as easily and say of course the goldbugs are going to say what they are saying. Even if it isn't out of personal gain (which I don't think it is for most goldbugs), it can be out of misunderstanding. I'm not going to take anyone's opinion at face- I'll stick to the data instead and decide based on what we know about monetary economics added in with what I believe to be true (which again is based on the data and studies I have seen) about the more questionable parts of monetary theory ;)
 
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The Fed can't raise rates:

1. Every 1% rise in rates adds 160B to interest expense of federal budget.

2. Hundreds of trillions in interest rate swaps sold as insurance against rising rates will be asked to perform.

3. Raising rates will impair the asset values of the Fed's balance sheet. That's where the gold certificates valued at 11 billion will be used to heal the balance sheet.

4. If rates rise then debt instruments used as collateral will go down in value trigerring collateral calls. This would put further pressure as bonds are liquidated to meet these calls. What's scary is the degree which these assets have been rehypothecated, pledged over and over again as collateral.

You know what they don't teach us in school? How many times the monetary system has changed.
 
grumps said:
1. Every 1% rise in rates adds 160B to interest expense of federal budget.
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Not the Fed's concern as per its mandate. And I don't think it will be an issue for the Treasury either going by what the market thinks of treasuries right now. Again, you can keep saying everyone hates them, but until they actually say or show they hate them on a large scale, it doesn't mean anything. Also, the time when the Fed pulls out would be when inflation is going up- that would likely mean greater economic activity and possibly lower unemployment which counters part of the hit the Federal government might take. But this isn't anything new- the effect of rate changes on treasury markets has always existed and the Fed has raised rates before.

grumps said:
2. Hundreds of trillions in interest rate swaps sold as insurance against rising rates will be asked to perform.
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Where's the hundreds of trillions figure from? Anyway, again nothing new here- rates have gone up before and the Fed isn't going to increase them until it needs to increase them.

grumps said:
3. Raising rates will impair the asset values of the Fed's balance sheet. That's where the gold certificates valued at 11 billion will be used to heal the balance sheet.
Click to expand...

Well the Fed would presumably get out of its UST holdings (or the majority of them) before raising rates. That aside, this shouldn't be much of a concern to rational people considering the Fed has made the Treasury money for a few quarters now. I understand that politicians aren't usually rational though.

grumps said:
4. If rates rise then debt instruments used as collateral will go down in value trigerring collateral calls. This would put further pressure as bonds are liquidated to meet these calls. What's scary is the degree which these assets have been rehypothecated, pledged over and over again as collateral.
Click to expand...
Again nothing new. As for the leverage- it is nothing compared to what we saw in the housing market.

grumps said:
You know what they don't teach us in school? How many times the monetary system has changed.
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Didn't learn most of what I know about this topic in school, but my comments aren't that the status quo will remain forever- of course things will (and have) changed. I just don't buy the doom and gloom given the facts on our monetary situation.
 
Debt saturation is what you are missing. The balance sheets of the federal, state, municipal, non financial corporate, financial institutions and the private citizen can't tolerate higher rates to service the debt loads present. The only ones that pay down debt are private individuals and well-run companies. Everybody else just rolls it over. Nature wants the debt to default, to delever, but financial repression is not letting that happen. The Fed won't let the debt markets clear at a free market price or outright default. There is a way out and Ben mentioned it in his 2002 speech, Making Sure Deflation Doesn't Happen. He spells it out what he is going to do.

1. Buy US debt and Agency debt ( Fannie mae/Freddie mac) check

2. Operation Twist check

3. Corporate Debt (not yet, but wait til high grade and junk debt starts slipping)

4. Swaps with commercial banks...cash for commercial paper, car loans, mortgages, helocs, perhaps student loans maybe??? (yet to come)

5. Foreign debt ( we are kind of doing this now by proxy with currency swaps and some of the QE money in that a US branch of DeutscheBank is unloading MBS paper unto the Fed and using that money to buy Eurobonds)

6.Affect the exchange value of the dollar ( Gold operations, he references FDR's revaluation of gold) " A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation. "

Oh but wait, here's the best part in the two paragraphs for Fiscal Policy:
" Fiscal Policy
Each of the policy options I have discussed so far involves the Fed's acting on its own. In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.

Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets. "

Did you catch that? Even if the public uses the cash from tax cuts or transfer payments and buys real assets (gold) this will improve their balance sheet. Even if the public doesn't, the Fed will enable the Treasury to do it and conduct gold operations. The Bernank is telling you what to do.
 
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Foreign Holdings of Treasuries went down big in April...70 Billion! Everybody dumped except for UK and Eireland. Singapore dumped nearly 10%.

Gee, I wonder if anybody took advantage of the April takedown. Getting ready for that BRICS Development Bank and gold trade notes?
 
http://marketpendulum.blogspot.com/2013/06/countdown-to-collapse.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketPendulum+%28Market+Pendulum%29

From TraderGarrett:



Countdown to Collapse
The PTB are running out of options to prevent the Titanic’s sinking. Rearranging the deck chairs is having limited beneficial results in calming the passengers.

Numerous sources indicate and current financials demonstrate:

•Living within ones means is a concept thrown overboard long ago
•Debts cannot be repaid from income or assets in the next 100 years
•Current income does not even come close to expenses
•Confidence is waning in the bond markets and the USD

Simple logic, third grade math and an empty piggy bank would clarify the problem for most people. However, the clowns in charge of this circus are in a clear state of bankruptcy. Their answer to these issues is to:


•Print their way to prosperity
•Postpone hard decisions
•Annihilate gold and silver to avoid any alerts as to the real and present danger


Options Already Employed


We have seen bailouts, quantitative easing and a limited form of “bail ins” by way of MF Global, Cyprus, etc”. These all have a short term shelf life of effectiveness because there is not enough money in these entities to do more than postpone the inevitable.

I do not believe any more QE measures will be adopted because its effectiveness is diminishing rapidly in numerous economic metrics. The current programs may be continued for some time since there are few buyers available to replace them without the attraction of higher interest rates, however, they have “been there, done that”. The question is, what is next?

In my view, this whole idea of possibly reducing those programs is actually truthful, but at the same time, a possible camouflage for something much more important.


Another Speculative Option


A survival option not yet employed is official currency devaluation. Given that the USD is still the world’s reserve currency and the state of finances worldwide, particularly in the US, Europe, Britain and Japan, would not a multilateral proportional devaluation by the willing (and unwilling) be logically considered?

This measure provides instant help with exports, balance of payments and economic growth for leading countries but negative for inflation due to higher costs of imported goods. In my view, this option has real possibilities at some point.


Other Possible Options


In the countdown to collapse, logically one would think there were simply no other options left to postpone debt defaults. Are there any others?

In my "Fiscal Falls" article of last December I listed a number of possibilities, some of which have already emerged. Take a look here and see what you think. Am quite sure my list is not complete.

If you have other ideas, let our readers know by comment or by email to me for publication with proper attribution for your contribution.

As analysts, it is our collective duty to consider all possibilities, no matter how improbable.

Thanks.

6/12/13
 
The "Fiscal Falls" aforementioned lists the following:


"The following 10 methods may postpone, but do not prevent going over the fiscal falls:

Throwing crumbs of interest cake to the peasants and calling it stimulus
Attempting to borrow your way to prosperity from your neighbors and competitors
Adding more debt to existing debt that is unserviceable and calling it a solution
Changing accounting/valuation rules to avoid bankruptcy and calling it progress
Robbing Peter's account to pay Paul's bill and hoping no one will notice
Camouflaging an increase in taxes on the peasants to avoid protests
Extending payment terms on loans to delay the inevitable
Adopting more coordinated central bank QE programs with wild abandon
Employing IMF SDR use on a wider scale, partially backed by gold
And, of course, starting a war
Other more desperate measures in the next 1-3 years might include:

As a new source of funding, requiring IRA, 401k and similar accounts to purchase treasury instruments in exchange for additional "tax benefits"
Declaring a bank/stock trading holiday while surreptitiously "reclassifying" your funds, perhaps in return for another paper certificate of ownership
Creating a windfall profits tax on any personal gains in gold/silver bullion or an outright scheme to confiscate your bullion holdings because of "hoarding"
Implementing currency and transfer controls
Nationalizing US gold and silver mines as "backing" for the dollar
Announcing a two tier dollar use system with different values for domestic and foreign trade "

http://www.gold-eagle.com/editorials_12/tradergarrett121312.html
 
These numbers even from the BIS are low. They changed the model for accounting of derivatives to bring it down from over a quadrillion in notional value. That's right over a thousand trillion in insurance policies to keep the participants from abandoning the dollar system.

saupload_otc_derivatives_00_07_fig3.jpg


OTC%20derivatives%20H1.jpg
 
You need to make your own blog. Tumblr? Forum is not meant to be used this way.
 
From LEAP 2020:

"Another crucial reform advocated (11) in 2009 by LEAP/E2020 was on complete overhaul of the international monetary system. In 40 years of U.S. trade imbalances and sudden changes in its course, the dollar as a pillar of the international monetary system was the transmission belt of all colds in the United States to the world, and this pillar is now destabilizing the heart the global problem because the United States no longer suffering from a cold but bubonic plague. Failing to reform the international monetary system in 2009, a second crisis comes. With it opens a new window of opportunity for reform of the international monetary system in the G20 in September (12) and it comes almost hope that the shock intervene by then to force an agreement about otherwise the top may be too early to win the support of all."

http://www.leap2020.eu/GEAB-N-76-est-disponible--Alerte-second-semestre-2013-Crise-systemique-globale-II-seconde-deflagration-devastatrice_a14264.html
 
Here's the TIC data link:

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt


The significance of this is huge. This isn't a taper---it's a REVERSAL. Typically foreign holdings would go up about 45-50B every month, so this is like a 120B flow in the other direction. I've been thinking wouldn't have rates reacted more than we've seen if such supply hit the secondary market? Especially with the leverage with the of the carry trade? I think rates would have spiked more. It's like these treasuries weren't sold but moved to a different balance sheet.

There's always been the conjecture that the dollar could be bifurcated. A green dollar for domestic use and a blue dollar for external use. Could the ROW be saying "FU Fed, go ahead with your QE, we are pegging our blue dollars to gold"?


Caught wind of this NASA chief's quote from Fraser Cain's AstronomyCast episode 294: "NASA will not take the lead on a human lunar mission," Foust quoted Bolden as saying. "NASA is not going to the moon with a human as a primary project probably in my lifetime."

What painful readjustments lie ahead for the American psyche.

I guess the BRICS will be building my Space Elevator.
 
From the source that tipped off Jim and his wee Willie that Lehman, Fannie, and AIG were going under back in 2008:

"My best German source told me that D-Bank is going into failure very very soon.
A week ago, he said 3 banks were in great danger of failure, likely not to survive, to happen soon
after a certain amount of begging, along with my lame guesses, he gave in
Barclays, Citigroup, Deutsche Bank -- all gonna die in a huge round that will eclipse Lehman & Fannie & AIG
it will be global
watch a Japanese bank join them
post this if you wish."

http://www.tfmetalsreport.com/blog/4783/couple-things
 
Finally got around to watching this Jeffrey Sachs talk in front the Philadelphia Fed back in April. Wow! For those who think that the rest of the world is confident in holding US Treasuries this will be a sobering eye-opener. Dr. Sachs is not fringe blogger or tin foil hat doom and gloomer, he is a Columbia economics professor tied into the American Establishment. He rubs shoulders with Wall Street titans as well as UN ambassadors. And oh boy is he getting an earful from UN ambassadors from around the world.

At the 2 minute mark: "[UN ambassadors] feel a great deal of anger towards the American Financial system."

https://www.youtube.com/watch?feature=player_detailpage&v=hCCr-uiqtAY#t=110s

At 3:45: " Why is it that we are taking advice from people who've mismanaged the financial system so badly?"

https://www.youtube.com/watch?feature=player_detailpage&v=hCCr-uiqtAY#t=216s

At 4:30:"...massive illegality that has been exposed...we have a mountain of fraudulent and criminal behavior."

https://www.youtube.com/watch?feature=player_detailpage&v=hCCr-uiqtAY#t=268s
 
Going into the Fed meeting the propaganda is going to get thick. Whatever comes out of Ben's mouth just keep this image in mind:

Total-Debd-vs.-GDP.png


What can't be paid back, won't be paid back in real terms.
 
Turd Ferguson does a great job here describing how we are trapped and rates can't be allowed to rise:

http://www.tfmetalsreport.com/blog/4786/terminal

" The United States is at the terminal stage of its debt and deficit financing. The only remaining method of maintaining The Great Ponzi is record low interest rates combined with extremely short maturities. If rates were allowed to return to "normal" and if the U.S. were to prudently spread their debt obligations across the yield curve, the budget line item "interest on the national debt" would simply swamp and overwhelm the entire federal budget."

"Therefore, by continually shortening maturities and issuing and refinancing debt at lower and lower interest rates, the "interest on the national debt" has been remarkably stable for nearly two decades.

But here's the problem that Cavuto and Stockman failed to cover: The jig is up. Rates can't go any lower and the average maturity of the outstanding debt can't get much shorter. We've reached the terminal stage and now we have a major problem on our hands."
 
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Don't fret about the taper. That's what they say...watch what they do. It's been the pattern to be neutral at the fed meeting press conference then send out mouthpieces the next 48 hours to temper any hawkish interpretations. Bad cop, good cop. Since rates are at zero, propaganda is their only tool for now. There is other stuff, unconventional stuff they could pull out their buttocks.
 
The time horizon is 7 years out. By 2020 we will have a new monetary system, but the goyim will never figure this out.

Dollar Deterioration Sets Stage for $5000 Gold | McAlvany Commentary .

https://www.youtube.com/watch?v=eVxn7ADe1Bw&feature=player_detailpage

"Gold Will Go to $6,000 - $7,000" - Author Bob Wiedemer of The Aftershock Investor

https://www.youtube.com/watch?v=CLDjPqAf7AQ&feature=player_detailpage

Kyle Bass: "The Next 18 Months Will Redefine Economic Orthodoxy For The West"

https://www.youtube.com/watch?feature=player_detailpage&v=gJfvLADP3HE

06-15-13 Macro Analytics - Gold & Silver - w/ David Chapman, Ty Andros & Gordon T Long .

https://www.youtube.com/watch?feature=player_detailpage&v=IB9AD6QtucI
 
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Ben has messed with the primal forces of nature. This looks like a margin call rolling across the globe. The prices of US Treasuries are falling which means there is great stress in interest rates swaps. I would calmly go to the ATM today. This could get out of control.
 
Ah poor Ben. A gallant central banker whose affairs beat upon high shores. He sought to break the Kondratieff deflation but he reckoned not the movement of infinity as expressed through the market. Yes, Ben, even your empire must fall.
 
Knights, guards, squires prepare for battle....cue the wagner

Gold Has Never Been Easy
Posted June 20th, 2013 at 10:03 AM (CST) by Jim Sinclair & filed under General Editorial.

My Dear Extended Family,

The economic system is failing, and to counter the now publicly perceived failure, central planners are manipulating the symptoms and not the problem.

Gold has never been easy.
Gold is the tell tale of a broken system.
Gold therefore is the barometer of the risk factors of economic conditions.

Therefore central planners must make, via paper gold, every effort to make it say, "All is Ok." For this reason I intend, knowing the system is in collapse, to buy gold with every resource I have at my disposal today and tomorrow.

I suggest those of stout heart do the same.

To the others who are committed to their limit, hunker down one more time knowing that in no more than the summer a brand new and most powerful bull market in gold will be at hand.

Respectfully,
Jim

https://www.youtube.com/watch?v=K1MuvvS_xSw&feature=player_detailpage#t=54s
 
For those fellow Comrades-in-Golden Arms take heed that you are in the lifeboat, but that doesn't mean we won't get knocked around by rough seas. Remember that movie, the Pefect Storm, when the Coast Guard cutter was getting its ass kicked. That's gold. It's the lifeboat. The fact the price is haywire means the financial thermostat is broken, the financial system is broken and we are in the birthing pains of a new system that will emerge from the chaos.
 
Watch what they do, not what they say....the fed's balance sheet in millions

April 4, 2013 ...... 3,259,033
April 11, 2013...... 3,271,458
April 18, 2013 ...... 3,337,082
April 25, 2013 ....... 3,360,754
May 2, 2013 ...... 3,358,835
May 9, 2013 ...... 3,366,277
May 16, 2013 ...... 3,396,059
May 23, 2013 ...... 3,440,615
May 30, 2013 ...... 3,426,619
June 6, 2013 ...... 3,442,333
June 13, 2013 ...... 3,453,003
June 20, 2013 ....... 3,512,791
 
http://www.economicsvoodoo.com/the-kabuki-of-markets-as-history-unfolds/

The Kabuki of ‘Markets' as History UnfoldsPosted by Economics Voodoo, June 8, 2013 at 19:15
Today marks the second day of the United States's expedited meeting with China "as they work out ways for the U.S.-led world order to make room for a China that is fast accruing global influence and military power" (Associated Press. May 21, 2013).

April-May, 2013: Orchestrated plunge in gold, silver. Stock "market" levitated. What the system does not have much of is gold, silver. Growing reports of shortage and major banks refusing to deliver physical gold belonging to clients; extended delivery delays; drainage of gold from London; ABN Ambro defaulted, refused to deliver gold but predicts a gold price collapse.

Consider a hyperinflation not in the traditional ways of the Weimars and Zimbabwes that printed currency with ink and paper, but in derivatives (a portion in above chart). Over $1,000 Trillion unprinted pretend ‘derivatives' dollars that do not exist, mostly interest rate derivatives that hold together the interest rate structure. Inflation subdued? That depends on where asset prices would be (stock market – 401k-IRAs – bank balance sheets…) without suspending FASB's accounting rule and printing money ‘QE' 0-1-2-3∞ + ZIRP and multi-trillion dollar swaps.

Behind this kabuki theatre is history in the making. It is the U.S. dollar's diminishing role as the international settlement currency for world trade (about $18 trillion merchandise trade in 2012) along with its implications. Since at least 2012, bilateral trade agreements among other nations have begun settling in non-U.S. dollars. Over the next few years, China's economy will become the largest in the world, and with India (the people) and Russia lead the world in gold accumulation.

May 7, 2013: China announces aim of convertibility of the yuan in 2013. [Yuan]

May 7-8, 2013: G-20 Meets in Turkey: "Reinventing Bretton Woods" [Reinventing the gold standard…]

Developing and emerging economies led by China, now hold two-thirds of foreign exchange reserves among world central banks.

May 10-11, 2013: Unscheduled Meeting of G-7 (Britain, Canada, France, Germany, Italy, Japan and the United States) over the weekend in London. Federal Reserve Bank Chairman Bernanke absent. " ‘It's very rare for a G-7 to focus on financial regulation,' one of the officials said, speaking on condition of anonymity". Perhaps then, on the G-20's meeting in Turkey which portends the re-entry of gold to anchor the new system. In the previous article, "Yes it is true: ‘Gold is dead.'" reports raise questions about how much gold, if any, is left at Fort Knox, which at its height vaulted about half of the gold holdings in the United States, half belonging to other countries.

May 21, 2013: : China's President Xi to Meet with U.S. President earlier than expected, June rather than September


(AP). "The June 7-8 meeting at a retreat southeast of Los Angeles, announced Monday by the White House, underlines the importance of the relationship between the countries as they work out ways for the U.S.-led world order to make room for a China that is fast accruing global influence and military power.
President Xi has said China wants its rise to be peaceful…"
 
Very plausible scenario:

" Financial markets plunge. Banks inform the Fed their loan books are deteriorating. The Fed triples QE and yet employment rolls continue to drop. The Fed informs Congress and the President that the monetary system must be reset. The public grows angry that, just like in 2008, banks and the government gained funding through newly created money but it, the public, did not. (Civil unrest?). The State Department concurs with the Fed; foreign exporters to the U.S. no longer want US dollars in exchange and the system must be changed. At the urging of the President, Congress directs the Fed to devalue the Dollar to gold, and to reset a fixed exchange rate."--Brodsky of QBAMCO

Either that or the BRICS will do it for them.
 
Drastic New Information From Pastor Williams’ Elite Friend…
Yesterday, June 20, 2013, 8:27:05 PM | Lindsey Williams dot net
Pastor Lindsey Williams received two emails today (20th June 2013) from his elite friend bearing some startling news that could mean collapse.


Email #1
‘A large Chinese bank just last night ran out of liquidity and was bailed out by the government. Furthermore: “The seven-day repo rate, the benchmark rate for funding costs between banks, surged to 12.33% Thursday afternoon from the 8.26% rate at Wednesday’s close. It had averaged around 3.30% this year before the liquidity crunch began at the end of last month.” This is the same phenomenon that occurred globally in September 2008.’

Email #2
‘The U.S. market has DECLINED over the past month, the Japanese stock market has recently dropped 20%, the U.S. bond market sold-off, gold (GLD) is down 20% year-to-date (YTD), Chinese stocks (FXI) have fallen 19.69% YTD, emerging markets stocks (EEM) have depreciated 11.3% IN THE LAST MONTH, copper—a premiere asset considered to indicate growth or contraction, has contracted 18% YTD, etc… Investors should not ignore this massive deflation in global markets and assets.’

Telephone conversation last week
Pastor Williams also spoke with his elite friend last Thursday 13th June 2013 and said “Some very significant things are happening in the Derivative market and with interest rate and gold, at this time.” After pressing the issue he stated “As for gold – J.P. Morgan announced yesterday that their vault gold has dropped by 28.4 % over night. Nations are demanding physical delivery. Within a month and a half JP Morgan estimates their vault will run out (Be empty) Other vaults are probably running out also. WHAT HAPPENS THEN? Startling when supply dries up. This has many of us very concerned. Be sure that everything you own is in your posession. Crash – I don’t know. Be ready for a public reaction. Interest rates are the greatest factor controling the Derivative market. This could be violent”.
 
This is the deflation scare,,the prelude to either gold revaluation or the greatest of helicopter drops.
 
This is probably from subscriber content from the latest GEAB bulletin:

"Historians will certainly consider the 2008 crisis as a warning shot ahead of that of 2013. All the world's regions won't be affected in the same way but all will suffer. According to LEAP/E2020 the stages of this second crisis can be summarised as follows:

– end 2013, financial impact: collapse of financial markets especially in the US and Japan. Banks can no longer be saved by States and bail-ins are put in place;

– end 2013-2014, spreading to the real economy: the financial impasse causes/reveals a major world recession and the reduction of international trade;

– 2014, social impact: the economic deterioration causes unemployment to explode, in the United States the dollar's decline lowers the standard of living, riots mushroom everywhere;

– 2014, political crisis: the governments of the most affected countries are under fire for their handling of the crisis, forced resignations and early elections are expected, if not coups;

– 2014-2015, international management of the crisis: together Euroland and the BRICS impose a new international monetary system and lay down the bases of a new global governance; "

http://www.jsmineset.com/2013/06/24/you-dont-have-time-to-wait/

2015! That close? Oh please,please reset the system. I don't want to be in gold forever.
 
indu-xau.gif


The ultimate target for the Dow:XAU ratio....11

Ponder that and gaze upon the opportunity now with the XAU below 100. Let's see if Dow at 10k that would translate to about 900 XAU a nice ten bagger. If Dow at 3k then still a 270 XAU a three bagger but that Dow won't get to 3k despite all the chicken little crap, not with the dollar getting shredded. We'll probably get a deflationary scary drop this summer so that like Luke stranded in a Hoth blizzard we collectively scream, "Ben, Obi-Wan Bernank, save us! Print! Anything but a deflationary Winter!" More likely a Dow 20k or higher at the peak of the great debt for equity swap.
 
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