This should be a interesting week coming...
Julio
Posts: 2,501 ✭
for the metals. We have had a little time to digest QE forever and it's consequences.
I'm thinking it's good for the metals; bad for the country. Thoughts. Take care. jws
I'm thinking it's good for the metals; bad for the country. Thoughts. Take care. jws
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Comments
hope not, these past few weeks have been good for otc buying.
1) The "president's re-election" theory
2) The "lack of liquidity in the banking system" theory
3) The "stated goal of increasing employment" theory
4) The "preventing a stock market crash" theory
5) The "don't worry, be happy" theory
Dang, this should be a poll.
I knew it would happen.
+1
I get worried when a stock/metal etc. goes only one way, there should be some profit taking.
THERE IS ONLY ONE ANSWER AND THAT IS NUMBER #1
I expect some short term profit taking with PMs before the next leg up.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Enjoy your gains everyone.
What could be somewhat worrisome, even to precious metals holders is that we may be on the cusp of another Lehman liquidity event. I think that is one of the few situations that would make Bernanke jump - his buddies are in trouble again. That's my opinion - that there is more going on behind the scenes than meets the eye.
As if the world needs any more complications than it already has........
I knew it would happen.
<< <i>I'd have to lean in favor of panic buying at this point, rather than panic selling although either is possible - panic buying of gold if inflation rears up, panic selling if lack of liquidity hits the fan. What could be somewhat worrisome, even to precious metals holders is that we may be on the cusp of another Lehman liquidity event. I think that is one of the few situations that would make Bernanke jump - his buddies are in trouble again. That's my opinion - that there is more going on behind the scenes than meets the eye.
As if the world needs any more complications than it already has........ >>
I would agree. With job creation underperforming, the FED can continue to point to that for the reason to keep the stimulus flowing. Unfortunately, this is trickle up liquidity.
Since this will not help the Overall Economy especially that of middle America. It will cause commodity price increases, its just another round of bailing out the banks, and another supply of dollars to be thrown down the shrinking U.S. Money Velocity Tank. Money Velocity is at the lowest point in 50 years.
Bankers derivative's flows and HFT is their measure of "money" or "liquidity" velocity, which is in far better shape than M1 and M2 money velocity. They have their "money" system
and the people have theirs. As long as big bank monetary reserves (M0) are high enough, they can continue to trade and speculate with abandon.
The fundamentals haven't changed. Lots of money printing happening and dollar devaluation. By October, there should be a nice gain in silver price.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Now, why would the dollar ever be going up after the Fed makes a bellweather commitment to (electronically) print more money?
We've arrived on the other side of the looking glass. You have to remember what is real and what is not. As derryb says, "Hold 'em, don't fold 'em."
I knew it would happen.
<< <i>Now, why would the dollar ever be going up after the Fed makes a bellweather commitment to (electronically) print more money? >>
Dollar Index is its value against other currencies, 54% of it with the euro. Weakness in the euro could cause an increase in the dollar index at the same time QExtreme is destroying the dollar's value. One has to be clear on which they are looking at or reading about - index or value.
Here's a look at the index's performance so far today. Looks like it gained strength after 10 a.m., about the same time metals started declining:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Bingo, that is what was going on. I hadn't taken time to reflect on the reason, but you are correct.
I knew it would happen.
<< <i>We have had a little time to digest QE forever and it's consequences. >>
Excellent, plain english review of what went down
"By focusing on MBS purchases, the Fed is trying to re-inflate America’s real estate bubble, in the hope that rising prices will encourage home-owners to spend more by re-mortgaging and getting even deeper into debt. America has done this before, repeatedly, and it always ends in tears. The difference this time is that, rather than just guaranteeing the mortgages, the US government will now own them too, doing even more damage to its precarious credit rating."
"For all the market euphoria, QE3 will do far more harm than good. By undermining the dollar and fuelling future inflation, it will discourage household spending by further debasing wages and pensions. By putting upward pressure on the cost of living, QE3 will eat further into real disposable incomes, forcing American consumers to retrench even more. "
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>derryb; one has to wonder why. Desperate experiment by a desperate central bank. All outcomes are depressing. Take care. jws >>
No central bank desperation involved. Banks feed on debt, without it they starve. The FED, on behalf of its masters (the banks) is trying to stimulate borrowing from a population that is literally tapped out.
"See, in order to create money out of nothing - which the Fed does - they need an act of Congress to authorize it. So that's when their buddies in Congress say: "Okay, we vote another trillion dollars to help the poor people of this country because we want them to have jobs, we want to give them work. We'll create a big employment machine, so we'll need another trillion dollars." But nobody asks, "Well, where does the money come from?" The politicians raise their hands - they vote for the money. They don't have the money, of course, but they vote for the trillion dollars, because "we're gonna create jobs for people." And so they get elected; they're big heroes. But people don't realize that then the Federal Reserve says, "Okay, Congress has just demanded another trillion dollars. It doesn't have it, so we will create this trillion dollars, because that's our part of the partnership. And we will give it to the government to spend on jobs."
"Where did the money come from? Well, that's a big mystery, isn't it? It comes out of thin air, which means it floods into the economy, and it pushes down the purchasing power of all the other dollars that are already out there - which means inflation. That's where it comes from. So all of the people who are supposedly being benefitted by jobs, or whatever, are paying for this thing out of one pocket. They pull $10 out of this pocket, and they get $1.50 back, and they think, "Oh, we've been saved by our great politicians and our bankers." That's the game." - G Edward Griffin
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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<< <i>We have had a little time to digest QE forever and it's consequences. >>
Excellent, plain english review of what went down
"By focusing on MBS purchases, the Fed is trying to re-inflate America’s real estate bubble, in the hope that rising prices will encourage home-owners to spend more by re-mortgaging and getting even deeper into debt. America has done this before, repeatedly, and it always ends in tears. The difference this time is that, rather than just guaranteeing the mortgages, the US government will now own them too, doing even more damage to its precarious credit rating."
"For all the market euphoria, QE3 will do far more harm than good. By undermining the dollar and fuelling future inflation, it will discourage household spending by further debasing wages and pensions. By putting upward pressure on the cost of living, QE3 will eat further into real disposable incomes, forcing American consumers to retrench even more. " >>
What if this still doesnt spark inflation?
Knowledge is the enemy of fear
<< <i>What if this still doesnt spark inflation? >>
then 1 + 1 = 1
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>HONG KONG (MarkeWatch) — The Bank of Japan Wednesday said it will provide more monetary stimulus in response to a slowing in domestic economic activity, increasing the size of its asset purchases by 10 trillion yen ($126.7 billion) to about ¥80 trillion. Take care. jws >>
China (Japan's largest buyer of bonds) is threatening to dump Japanese bonds over dispute of ownership of the islands. Tensions tightening between the two countries.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The new math.
<< <i>Probably off topic but fits with the interesting week theme , what effect if any will this new printing of the prophet mohammed adult cartoons have if any on the market ? I had a look at the cartoons and the translations and without question they go way way beyond the pale and anything that's been printed previously.To a layman like me they appear to be nothing more than serious provocation and i'd expect a very serious consequence of them worldwide. >>
Social unrest can escalate to serious events that can easily create uncertainty. This can generally drives gold prices up. If and when Iran is attacked, watch what it does to the price of gold.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>HONG KONG (MarkeWatch) — The Bank of Japan Wednesday said it will provide more monetary stimulus in response to a slowing in domestic economic activity, increasing the size of its asset purchases by 10 trillion yen ($126.7 billion) to about ¥80 trillion. Take care. jws >>
$127 Billion---sounds like a lot of money doesnt it? People spend that much at Wal-Mart (just Wal-Mart) every 100 days.
Knowledge is the enemy of fear
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<< <i>What if this still doesnt spark inflation? >>
then 1 + 1 = 1 >>
I was hoping for a better answer.
Knowledge is the enemy of fear
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<< <i>
<< <i>What if this still doesnt spark inflation? >>
then 1 + 1 = 1 >>
I was hoping for a better answer.
My answer says that if it doesn't spark inflation then the laws of mathmatics go out the window.
If it doesn't spark inflation it means the FED really has lost control. If that's the case who knows what is next?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I just thought it meant that the Fed was creating money to beef up the banks' balance sheets by buying toxic mortgage paper. It might not cause inflation until the toxic paper all resides on the Treasury's balance sheet.
With leverage being used on all sides, it's almost impossible to know where the shell game begins & stops. All I know is that it will.
I knew it would happen.
<< <i>
<< <i>Probably off topic but fits with the interesting week theme , what effect if any will this new printing of the prophet mohammed adult cartoons have if any on the market ? I had a look at the cartoons and the translations and without question they go way way beyond the pale and anything that's been printed previously.To a layman like me they appear to be nothing more than serious provocation and i'd expect a very serious consequence of them worldwide. >>
Social unrest can escalate to serious events that can easily create uncertainty. This can generally drives gold prices up. If and when Iran is attacked, watch what it does to the price of gold. >>
Thank you Derryb , i guess i know how i'll spend the day then.
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<< <i>What if this still doesnt spark inflation? >>
then 1 + 1 = 1 >>
I was hoping for a better answer.
My answer says that if it doesn't spark inflation then the laws of mathmatics go out the window.
If it doesn't spark inflation it means the FED really has lost control. If that's the case who knows what is next? >>
I guess they threw the book away then since a lot of money has been printed yet there is very little inflation to show for it. Prices for most things when taken on balance are still about where they were 4 years ago.
Knowledge is the enemy of fear
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<< <i>
<< <i>
<< <i>
<< <i>What if this still doesnt spark inflation? >>
then 1 + 1 = 1 >>
I was hoping for a better answer.
My answer says that if it doesn't spark inflation then the laws of mathmatics go out the window.
If it doesn't spark inflation it means the FED really has lost control. If that's the case who knows what is next? >>
I guess they threw the book away then since a lot of money has been printed yet there is very little inflation to show for it. Prices for most things when taken on balance are still about where they were 4 years ago. >>
Most of us know that the banks are not yet lending out all of the new, additional reserves. When they get a better return lending to main street than they do keeping them on deposit, buying T bonds or speculating with equities and commodities consumer prices will rise (price inflation) just like equities and commodities have been rising with each new round of QE. Look for the FED to be creative in forcing the money to main street if and when the FED thinks the time is right.
QUESTION FOR YOU: Is QE action devaluing the currency?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Can inflation exist if people are unwilling to buy anything? Hm ... >>
No, but consumers consume, they have very little choice when it comes to necessities. Most American consumers will spend what they have and then some.
Inflation cannot exist if people are unable to buy anything. Demand is half of the price equlibrium equation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I think that is yet to be determined. I am still seeing more dollars destroyed than created and the dollar still buys more of many things than it did 4 years ago.
Knowledge is the enemy of fear
<< <i>QUESTION FOR YOU: Is QE action devaluing the currency?
I think that is yet to be determined. I am still seeing more dollars destroyed than created and the dollar still buys more of many things than it did 4 years ago. >>
By destroyed do you mean devalued? If so are you saying devaluation is outpacing the increase in the money supply?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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<< <i>QUESTION FOR YOU: Is QE action devaluing the currency?
I think that is yet to be determined. I am still seeing more dollars destroyed than created and the dollar still buys more of many things than it did 4 years ago. >>
By destroyed do you mean devalued? If so are you saying devaluation is outpacing the increase in the money supply? >>
No, I mean I see money being destroyed. Money to me is not just a $20 bill you hold in your hand, but the value of assets, financial and otherwise. Are there really more $20 bills in circulation today than 4 years ago?
Knowledge is the enemy of fear
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<< <i>
<< <i>QUESTION FOR YOU: Is QE action devaluing the currency?
I think that is yet to be determined. I am still seeing more dollars destroyed than created and the dollar still buys more of many things than it did 4 years ago. >>
By destroyed do you mean devalued? If so are you saying devaluation is outpacing the increase in the money supply? >>
No, I mean I see money being destroyed. Money to me is not just a $20 bill you hold in your hand, but the value of assets, financial and otherwise. Are there really more $20 bills in circulation today than 4 years ago? >>
Are you saying asset value destruction is dollar destruction and the money supply number should include the value of everything in existence? What about unfunded liabilities, derivatives and promises to pay, are they money?
I have to disagree - destruction of value does not reduce the money supply just as increases in value do not increase the money supply. Also, promises for money are not money. Wealth and debt are not money, they are measured in terms of money.
QE action is devaluing the currency by inflating the money supply. A devalued currency eventually requires more of the that currency to buy the same good or service. The end result of inflating the money supply is price inflation. FED is using this tool to counter current, temporary deflationary forces, resulting in minimal price reductions and minimal price increases. Their balancing act is working. When deflationary forces exit the economy the increase in money supply will remain. This is when you will see price inflation and the FED will have a whole new problem to deal with. To avoid serious price inflation the money will have to be sucked from the system, maybe they will come up with QT - quantative tightening.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You know, I try and keep up. I read a lot, stay up with the financial/metal news, try and keep my head in the game, try and become familiar with the vocabulary. There seems to be some kind of disconnect regarding currency and money. To me currency is M 1 type stuff (checkable demand deposits) but people talk about money and it seems like they are including digibuks which isn't really currency. I mean, think about it, there is no way there are 16 trillion cash Benjamins in existence and we've recently discussed the actual number of buks in circulation.
So, there's cash money Bens and there are digital monies that really don't exist except in the cyberworld. What's money? How do you gurus decide what you're talking about because when I see folks talk about currency I don't know how to deal with it...do you include digibuks, do you figure folk actually have access to those digibuks or do they just exist in a parallel universe that has been set up by gov entities and their banking buddies? Should there be better terms? When we talk about devalued currency, are we including digibuks or are we talking about actual money? When we talk about money supply, it seems we are talking about imaginary digibuks which essentially are unlimited, there can be as many of those as any gov may wish to have so why even quantify them. Confused.
A $20 bill is still a Jackson and that has no relation to digibuks so what you gonna do?
Money supply and its measurements explained
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Unfunded liabilities and promises are not money. They can disappear without any financial impact. Why are you guys so caught up thinking these will have to be paid. The city of Stockton has already shown that they will not be paid.
A mortgage however is money. So is your house, your jet ski, your wifes diamond ring, and even a cow or tree.
Read up on the current economy in Spain. They are going on 4 years of 20+% unemployment and Armagheddon has not broken out. Why?
Knowledge is the enemy of fear
<< <i>I fully understand Money Supply. But money supply does not contain all asset that can be exchanged for goods or services.
Unfunded liabilities and promises are not money. They can disappear without any financial impact. Why are you guys so caught up thinking these will have to be paid. The city of Stockton has already shown that they will not be paid.
A mortgage however is money. So is your house, your jet ski, your wifes diamond ring, and even a cow or tree. >>
I can exchange sea shells for goods and services to someone who will accept them. That does not make sea shells money in terms of determining money supply. Money is any object or record that is generally accepted as payment for goods and services and repayment of debts. Without a generally accepted definition of money, one is unable to track and compare money statistics.
<< <i>Read up on the current economy in Spain. They are going on 4 years of 20+% unemployment and Armagheddon has not broken out. Why? >>
Same reason it hasn't broken out here - someone else is funding their needs.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey