Tag Archives: NIRP

Negative Rates, Money Printing and Gold

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , , , ,

“As well as being modified by its specific supply and demand conditions, Gold’s time preference is essentially for its moneyness, represented by its use as a medium of exchange and store of value. The moneyness aspect links it to its exchange value for all commodities, and it is this aspect of gold’s qualities that should warn us that a backwardation in gold, emanating from negative dollar interest rates, will herald a general backwardation in commodities as well.” – Alasdair Macleod, Negative Rates and Gold

The “perfect storm” is forming that will push gold to record highs in U.S. dollars. In 2008 a near-perfect storm hit the global financial system that drove the price of gold to record level in just about every currency including dollars. The only missing ingredient back then was negative interest rates. The same financial excesses that caused the previous financial crisis have reformed only now they are much larger in scale. Most of the western hemisphere has already implemented negative interest rates. Now Trump has opened that Pandora’s Box in the U.S.

Chris Marcus of Arcadia Economics invited me onto this podcast to discuss the implications of Trump’s proposal and how it will affect the precious metals sector:

Can Gold Hit $1500 By The End Of September?

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

Gold was taken down $19 from the close of Friday’s post-Comex Globex trading, when it closed at $1301, to $1281 40 minutes into Comex floor trading on Monday, June 20. The apparent catalyst was the polls which surfaced over the weekend that showed the public sentiment in England had shifted heavily in favor of remaining in the EU.

It’s all Kabuki theatre because, at the end of the day, if it looks like the elitist will not get the outcome they want in Thursday’s vote, they’ll rig the outcome to make sure they do get it. Nothing happens by accident and it’s no coincidence that the pro-euro MP was given a dirt nap last week and the polls all of sudden shifted to reflect No-BREXIT outcome.

But gold began to rise steadily during the day, which means that there plenty of other catalysts besides the BREXIT issue which drove the price of gold higher since May 22. At the same time the stock market sold off steadily from its high of the day 30 minutes into the NYSE open. This market action is bullish for gold and quite bearish for stocks.

The big question in everyone’s mind is, “where would the price of gold be without the heavy intervention exerted on the market by the Comex paper gold Ponzi scheme?

Future Money Trends (LINK) invited me on their weekly show to discuss BREXIT, NIRP, negative 10-year German bunds and the precious metals market – LINK:

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Is The Financial System On The Brink Of Collapse Again?

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

Craig “Turd Ferguson” Hemke invited me on his podcast series for a discussion about somewhat hidden developments occurring behind the carefully crafted western propaganda facade.

For those who have at least been able to “blow the Orwellian smoke” away from the war on gold, you’ve noticed that the Fed/bullion banks are having a lot of trouble pushing gold lower.  In fact, the current line of battle is at $1300 and I believe that barrier will soon be breached decisively to the upside.

We also discussed the ongoing “controlled demolition” of Deutsche Bank, which currently poses perhaps the biggest threat to the western financial system.  You listen to our conversation in mp3 format with this LINK or by clicking on the graphic below:

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“Thanks for the heads up on LULU and SHW. Bought the SHW July 15 270 strike puts and did well on exit this morning before market reversal” – “Sal,”  Short Seller’s Journal subscriber

“The comparative pittance you charge for the MSJ has already paid off quite well for me and my younger brother.” – “Bill,”  Mining Stock Journal subscriber

Gold: Welcome To The Weimar Death Spiral

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

For starters, I want to re-emphasize the importance of getting your money OUT of fiat currency and OUT of U.S. banks.  If you read this article and do not come to that conclusion, you will end up getting what you deserve:  Commerzbank To Hoard Euros  The Fed is devaluing the dollar every day.   My solution for day to day cash management is Bitgold.  I am not an “ambassador” or “affiliate.”  But I am convinced that it’s the best viable means of managing money that requires “fungability” – i.e. that you need for daily expenses.  You can sign-up for Bitgold here:   Gold-Backed “Checking” Account.  Bitgold operates OUTSIDE of the global Central Banking system.

Second, a colleague of mine told me he knows why the stock market is up today – because it’s open.   That’s not entirely a joke.  But what is a joke is the underlying cause:  rampant global money printing disguised as “quantitative easing  – or Central Bank asset monetization.”

Goodbye Keynes, hello Havenstein.  The Fed and the ECB have resorted to Weimar-style money printing.   The lack of transparency makes it easy for them to impose various forms of disguise to hide the outright money printing.   Today the ECB rolled out its program to buy corporate bonds.  It prints money and buys the bonds of U.S. and European corporations.  The disguised name is “quantitative easing.”

It’s a meaningless description.  It’s printing money and giving that money to banks and corporations to spend.   It may not increase the official tabulation of the money supply, but effectively it balloons the supply of money.   After all, money is spending or lending power.   That money sitting on bank balance sheets translates into “high powered” reserve credit.  It multiplies the spending power by 10.  That’s the real supply of “money” in the system.

The precious metals market understands this truth.  The move in gold is “quantitative price appreciation.”   It’s gold’s response to “quantitative easing.”  For the last five years, the Fed and the ECB – and with help from China, I suspect – has been able to further disguise its money printing by using paper derivative forms of gold – OTC derivatives, Comex futures, LBMA forwards, Central Bank lease agreements and hypothecation – to hold down gold’s quantitative price appreciation.

But that ability to keep a lid on the price of gold may well be measurably fatigued.  The demand for deliverable physical gold and silver is starting to offset the price dilution that has been imposed on the precious metals market with printed derivative forms of gold and silver.  GATA – on the foundation of the research done by Frank Veneroso in the mid-1990s (he visited several Central Banks and discovered that they were leasing gold in large quantities to help hold down the price) – predicted that eventually the physical market would overwhelm the paper market and lead to a huge parabolic move in the price of gold.

It’s taken a lot longer than any of us could have imagined.   But something different is occurring in the gold market right now, because all the technical indicators over the last 15 years that have foreshadowed a massive take-down in the price of gold are betraying their promoters.  While the price-rigging schemes may not have completely run out of energy, as John Embry said yesterday:  “I’d much rather be playing our hand than theirs.”

I took profits (265%) on a call option trade on a high quality mining stock that I presented to the subscribers of the Mining Stock Journal in the debut issue.  It was a low-risk proposition.  I rolled the profits into shares of the stock.   I currently am sitting on a 25% gain in a short term trade idea presented to MSJ subscribers less than two weeks ago (a high quality junior stock).  I am looking to make 30-40% in total within another week and then take the profit.  Again, another low-risk trade idea.  In the next issue published tomorrow, I am presenting a high-risk, high-return junior silver mining stock idea.  You can subscribe and get all the back-issues (email delivery) with this link:   Mining Stock Journal.

One more note:  I presented a brand new silver explorer to subscribers of the Short Seller’s Journal on Jan 10th.  That stock is up 663% since then and still has room to double from here.

Yellen Folds Her Cards – Admits It Was A Bluff

Financial Markets, Housing Market, Market Manipulation, U.S. Economy, , , , , ,

“In the summer of 2011 is when things went insane.”  – Remember this quote

In the process, Yellen is making herself out to be a complete fool or a liar:

“I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.”  Bloomberg News

The economy has been “performing well?”  Seriously?   Let’s have a look.  Here’s year over year percentage change in retail sales:

Graph1 As you can see, there’s been a steady decline in the year over year growth in real retail sales since August 2010. Is this 70% of the economy the part to which Yellen is referencing as “performing well?”

But here’s the kicker:

graph2 THIS graph shows the actual dollar change in retail sales LESS auto sales since August 2010. We know that auto sales have been pumped up by the largest expansion in automobile subprime (junk) debt issuance in history. If you strip away that artificially pumped up area of the economy – pumped up by Yellen and Bernanke – look at the stunning decline in retail sales.

Retail sales represents 70% of the economy.  How can the economy possibly be doing well when the only segment of retail sales showing signs of life is the automobile segment, which has been pumped up by what will be the eventual catastrophic availability of junk loans.   Contacts of mine in the local auto business are in outright shock at the number of 2013-2014 cars hitting the repo market.  I have seen with my own eyes leased land lots along busy commercial boulevards which are overflowing with repo’d vehicles.

Perhaps Yellen was referencing the “low” unemployment rate.  The magical 5.1% rate of unemployment that is conjured up with Government fabrication.  Ya that number may be the unemployment rate if you use the Census Bureau guesstimate of employment based on flimsy population samples and if you ignore the fact that nearly 100 million people in the working age population are not part of or have left the labor force – or if you just make up the numbers (birth-death model):

graph3 We’ve all seen this graph several times but it’s worth seeing again in the context of Janet Yellen making the statement that “the economy is performing well.”

In the famous phrase from Macbeth, the employment situation in the United States is “a tale told by an idiot, full of sound and fury, signifying nothing.”

Now here’s another kicker.  Many of you have already seen the outstanding Fed video written and produced by my good friend and colleague, John Titus:   Best Evidence –  Fed Audit Shocker:  They Come From Planet Klepto.    I get previews of his work along the way and he shares a lot of information with me about everything he discovers reading the Fed transcripts, which are released 5 years ex post facto.

The particular transcript John was pouring over for the above video was from the Fed meeting right before QE was introduced.  The information is there for anyone to look at but John actually does the work.

Recall from yesterday that Janet Yellen referenced the unemployment rate as evidence that QE had worked.  I received a text from John last night that said:  “Janet Yellen is such a fucking liar.”   To which I replied: “based on what, this time?”  To which he cited:  “Did you see that shit about the Fed not boosting inequality?  She says QE put people back to work.  Based on what?  Because in the June 2009 Fed transcript she said the unemployment rate b.s.”  As you can see, John is extremely pissed off at Yellen’s blatant dishonesty.

So there you have it.  Yellen is on record stating to her Fed cohorts that the unemployment rates is nonsense.  This was when she was Bernanke’s co-pilot of the FOMC.  From this we can conclude that Yellen is a serial liar.  But we can also conclude that she is an idiot because she has a left a definitive trail of evidence proving that she’s a liar.

This brings me to the “in the summer of 2011 is when things went insane” comment. The very same John Titus attended a conference yesterday put on by Eric Hunsader, of HFT’s Nanex fame.  Titus asked Hunsader when he first noticed that there was no longer Rule of Law in the markets.   Hunsader replied that “I guess it’s always been there but it got worse” [he pondered searching for a reflective answer and compared it the frog in boiling water adage].

But then John said one of Hunsader’s underlings spoke out – the first and only time during the show – and said “the summer of 2011 is when things went insane.”

I would like to tie this back to the two graphs above which show that retail sales began a definitive decline in growth rate in early 2011 AND an outright decline ex-autos in “the summer of 2011.”

By that time the U.S. system had been bombarded with QE for two years and interest rates had been at zero for a bit longer than two years.  Additionally, the Fed and the Government began an undeniably aggressive attempt to reflate all asset markets and pump up housing and auto sales.

graph4 A lot of bad occurrences developed in the summer of 2011. As you can see from this graph to the left, the stock market went on the longest uninterrupted rise in its history without any real correction. 2011 is when it became obvious to most observers willing to admit it that the Fed was controlling the asset markets with QE.  AND, I might add, figured out how to take advantage of HFT trading and the shadow banking system to help serve its objectives.

If we learned one thing yesterday, it’s that the Fed can not and will not raise interest rates. It’s backed into a corner from which it will be impossible to emerge without a full-scale systemic reset or crash. The problem is that, when this cesspool of lies, fraud and corruption starts to really implode, we will all wish we were watching the show from another planet.

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It’s also why have stated in the past, and have increasing confidence in my conviction, that this is leading to world war three and, ultimately, “The Road.” Interestingly, I’ve received emails from some well-known personas in finance that have expressed a similar belief…

ZIRP Is Not Stimulating Home Sales

Financial Markets, Housing Market, U.S. Economy, , , ,

The homebuilders bounced today along with just about everything other financial investment under the sun after the Fed forgot to put the word “patient” in its FOMC policy statement but indicated that it’s no hurry to raised interest rates even a fraction from zero percent.

Perhaps once again the “tell tale” about housing from the market was the fact that lumber – after dead-cat bounce yesterday – was the only commodity besides the U.S. dollar that fell in price.

Even more telling is the fact that Lennar, the biggest homebuilder by market cap, has announced that it is going to try and turn its slower selling inventory into rentals – LINK.

Lennar’s inventory has jumped 54% in the last two years. For it’s fiscal year that ended in November, its operations generated negative $788 million cash flow. Lennar focuses on the “move up” and retirement markets. The move-up market is freezing up because the first-time buyer is becoming a dinosaur and the move-up seller can’t sell to extinct buyers.

I’ll have more to say about Lennar down the road. But today’s dead-cat bounce in the homebuilders – which was not confirmed by the action in lumber – is a great opportunity to start shorting the sector. My homebuilder reports will help you get started: Homebuilder Research.

ZIRP has not stimulated home sales. The dead-cat bounce in the sector was primarily fueled by the big investment buyers. They are now looking to unload their unleased holdings. Lennar is late to a game (single family rentals) that is quickly becoming overloaded with inventory. SFR is a relatively popular investment that property owners like to make as it has a lot of benefits for both owners and tenants. For tenants, it allows them the added privacy that they desire and for owners, it produces more cash flow. That is why many people prefer to invest in sfr real estate so they can get the most out of their investment.

P.S.: the big institutions and hedge funds have already placed their bets in the homebuilding sector. Just like the big funds that are long homes and are looking for buyers, there will be nothing but sellers when the first couple of big hedge funds pull the rip-chord on their positions. You want to be positioned ahead of this dynamic. Any investment manager who does not take a serious look at reducing exposure to this sector – in the face of all the evidence I have been presenting – is breaching its fiduciary duty to its investors.

 

“OH NO!” – The FOMC Forgot The Word “Patient”

Financial Markets, Gold, Market Manipulation, U.S. Economy, , , , , ,

Reader response:  “Dave, you are right. I just turned on Bloomberg TV and every 2nd word is “patient”. What a joke! (Michael P);    “This whole market is embarrassing”(Chris G)

I wonder if Grandma Yellen forgot her Depends today (play on an old undergrad economics class joke that the favorite phrase of economists in response to a question is, “well it depends”).

If measured in terms of manpower dollars/hour, the word “patient” is probably the most expensive word in history.   Think about – in terms of dollars paid per hour – all the extraordinarily overpaid Wall Street analysts and buy-side fund managers who spent the better part of the last month talking about the word “patient.”  How about the amount advertising dollars spent during the time used while idiots on financial tv blew hot air discussing the word “patient.”

And then there’s this (source: Marketwatch, edits are mine) – click to enlarge:

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The above pic shows the 12 FOMC voting plus other sundry Fed “Einsteins.”  Perhaps collectively they might have the brainpower of Shakespeare.   21 Fed officials – probably about $10 million combined in annual compensation.   Think about, from a cost allocation standpoint, how many hours were spent by this brain trust determining whether or not to include the word “patient” in today’s FOMC policy statement and, if not, how to leave it out in a way which implies that we won’t raise rates any time soon.

And now the poor saps who have nothing better to do than watch CNBC, Bloomberg or Fox Business all day long are going to be subjected to another couple weeks of incessant squawking about what the removal of the word “patient” means and to grotesquely foolish forecasts for when the Fed might ever so slight nudge interest rates up one-quarter of one percent.

Here’s your answer – for free:  NEVER.   Not until the market forces the issue and by then the entire U.S. financial and political system will have collapsed.

The “Patient” Insanity

Financial Markets, Housing Market, Market Manipulation, U.S. Economy, , , , ,

Here’s a prediction, highly educated/paid analysts and “economists” will spend more time debating whether or not the FOMC will remove the word “patient” this week than they spend collectively in an entire year researching and analyzing the actual data and fundamentals underpinning our entire Ponzi system.

Whether or not the FOMC removes one word from its “policy” statement is completely irrelevant to the discussion that should be occurring about whether or not our financial and economic system is collapsing  Which it is.

In fact, the issue of whether or not the Fed raises its Fed rate to .25 from zero – and it’s effectively a negative rate after real inflation is accounted for – is complete lunacy.  Zero-percent interest rates are not stimulating real economic growth.  Raising rates an insignificant amount after 72 months of ZIRP will not have a significant affect on the economy.   The Fed could take rates nominally negative and it won’t stimulate growth.  It will stimulate a bigger financial bubble, which seems to be all the Fed cares about.

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Here’s my prediction:   Our system is at the beginning of a  massive collapse.  The early stages of Mises’ “crack-up boom.”   The Fed is entirely irrelevant anymore except to the extent that it enables the big banks and elitists to loot our system.   That’s why they put a useless piece flesh like Grandma Yellen at the helm.  She knows how to follow orders.