Tag Archives: QE

QE To Infinity Leads To A Systemic Reset Involving Gold And Silver

Scott Pelley, “60 Minutes:” “Where does it [money] come from?” Do you just print it?”

Jay Powell: “We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply…No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.”

I almost fell off my chair after I reading Powell’s comments on “60 Minutes” public relations stunt on behalf of the Fed. There’s two important points that stand out like like silent screams in Powell’s words: 1) 99% of the currency – not money – printed by the Fed goes directly to the banks or funds Government debt; a small trickle might get to Main Street to “support the economy;” 2) the Fed is willing to print an infinite amount of currency to keep the financial system propped up. In other words, the Fed is indeed printing helicopter money but it’s dropping it on the banks and not the economy at large.

This is why gold soared during and after Powell’s interview and it’s why the gold/silver price management team (Fed, ECB, BoE, BIS) has been working overtime in an effort to prevent gold and silver from going parabolic. That effort is doomed to fail.

Chris Marcus from Arcadia Economics and I discuss the Fed’s money printing and the likelihood that it will lead to an eventual reset of the global monetary system:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

As The Fed Goes “Weimar,” Gold, Silver, Miners Will Go Parabolic

The chart above speaks for itself. You could not find a more bullish chart set-up in the stock market. Note that the HUI/Dow ration bottomed out in late 2019 at the same level where it bottomed in late 2000. Most investors in this sector were not around for the beginning of the precious metals bull market in late 2000. But you can see the big move that started in 2008 – for which many of you were around – actually began 8 years early at a much lower level. I believe there’s a good possibility, because of the amount of money that has been printed by Central Banks globally, but especially by the Fed, that the scale of the next bull move in this sector will be larger than the 2000-2011 move.

The precious metals sector continues to be glaringly ignored by the mainstream financial media and most “alternative” forms of media. This is a “loud” indicator that the fattest part of the bull move is yet to come. YTD gold is up 15.4%, GDX is up 25% while the SPX is down 6.5%. If the SPX were up 25% YTD, they’d be doing naked cartwheels on CNBC.

M&A activity kicked up again in the mining stocks over the past two weeks. But the deal that caught my attention was the acquisition of TMAC Resources by China’s Shandong Gold Mining Co. for C$207.4 million. TMAC operates the Doris gold mine in Hope Bay. Shandong is 47% owned by the Chinese Government.

China has been aggressively buying gold mines in Africa and South America. It was just a matter of time before it turned its sights on North American mining companies. I will be interested to see if Chinese mining companies ramp up their M&A activities in Canada, Mexico and the U.S. Most of these junior mining companies that have highly prospective projects, transitioning into production or currently produce, especially the smaller ones, are extraordinarily cheap relative to the price of gold/silver and especially relative to where gold/silver are going. It’s also another way for China to convert US dollars into gold.

A new subscriber wanted to know if he should start buying mining stocks now or wait a few weeks for a possible pullback. Here’s my response: “Regarding market timing, it’s impossible to time peaks, valleys, ebbs and flows. The key is to find ideas you like and start building positions. Always always always leave plenty of cash to take advantage of sell-offs, pullbacks, corrections. And it’s usually a good idea to sell part of your position if/when the stock runs up sharply in a short period.

If you are not invested in the sector yet, start wading in with maybe 10%-15% of what you plan to allocate to mining stocks. Yes they’ve had a big run up since mid-March but they could work off the “overbought” technical condition by going sideways for a bit and then head higher again. A lot of cash is starting to flow into the sector and you don’t want to be left standing at the station when the train pulls away. It’s not a good feeling chasing stocks which I had hoped would pullback – been there, done that.

The above commentary is from the latest issue of the Mining Stock Journal.  I focus on lesser followed “venture capital” junior exploration companies but include ideas for my favorite large cap stocks, along with options ideas for those. Several of my junior mining stock picks have doubled or tripled since mid-March.  You can learn more about this mining stock newsletter here:   Mining Stock Journal information

Fed Lies And Money Printing: Rocket Fuel For Gold

For central banks, monetary inflation is everywhere the solution. Bank rescues, payment chain failures, the furloughing of millions of employees, helicopter money to bail out whole populations, money to bail out governments, money to support all categories of financial assets: the list is endless in scope and infinite in quantity. The survival of the global financial system is at stake. If it survives, state-issued money will have been destroyed. But then what is the point of owning financial assets valued in valueless currency?

While this process of monetary destruction would have reasonably been expected to evolve over time, the coronavirus has accelerated it. The fate of the $640 trillion derivative mountain recorded by the Bank for International Settlements is sealed and will be settled through bank bankruptcies and state-directed elimination. – Alasdair Macleod, The Looming Derivatives Crisis

Phil/John Kennedy hosted John Titus and me to try and untangle The Big Lie that is the Federal Reserve and the real reasons behind the Fed’s massive money printing program:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Virus Crisis Used To Transfer Trillion$ To Wall Street

“We have previously called Wall Street an institutionalized wealth transfer system from the 99 percent to the 1 percent. The CARES Act puts the wealth transfer system on steroids by letting the fat cats on Wall Street keep their decade-long obscene compensation which was made by hiding their risks off their balance sheets (privatizing the profits) and now forces taxpayers to pick up the tab for the losses on the toxic debt (socializing the losses). Treasury Secretary Steve Mnuchin has said this is nothing like the 2008 financial crisis – and yet, it is everything like the 2008 financial crisis except that it’s an even more brazen money grab.”  – Wall St On Parade

The taxpayer squeeze is on. Shut down the economy for a few months, open up the Fed’s money fire hose and give Wall Street a good spraying of digital dollars to monetize its bad casino bets and enable the players to continue getting huge bonuses. Wall Street On Parade has the details in this must-read:  How $4.5 Trillion Was Outsource To Wall Street.

Physical Gold And Silver Continue To Disappear

I was watching one of the Fed Governors who made the assertion that “low interest rates would be here for a long time” and I thought to myself this guy must be on drugs because the U.S. has had low interest rates for 12 years now, which is already a long time.

The current shortage in physical gold and silver was developing many months before anyone ever heard of “coronavirus.”  In fact, what’s happening now as Central Banks print trillions of paper currency further validates Gresham Law. Bad money drives out good money – physical gold and silver will be hoarded and fiat paper Central Bank money will be used for transactions.

Rob Kreinz of GoldSilverPros invited me onto his podcast to discuss the ramifications of rampant money printing and the rush into physical gold and silver:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

The Fed – Kicking People When They’re Down

“You [the public] are the sucker. Your role in the Federal Reserve System is to absorb losses [on the crappy assets the Fed buys off of bank and hedge fund balance sheets]…The Fed is there to facilitate your absorption of those losses and that’s going on right now…the taxpayer is going to eat the losses – not the bankers who will have already been paid to help the Fed collect the bad assets.”

My good friend and colleague, John Titus of Best Evidence productions, uses source documents from the Fed to explain how the Fed and the member banks are going to shift the enormous losses on bad credit market products to the taxpayer while the banks make huge fees assisting the Fed.

The Financial System Was FUBAR Before The Virus Crisis

“If you infuse Keynes’ economic and monetary theories with LSD you end up with MMT (Mondern Monetary Theory)”

While the coronavirus to be sure is the “black swan” that pricked the stock bubble, market forces eventually would have accomplished the same result. The Fed started bailing out the banking system in September, printing half a trillion dollars to save the banks well before anyone had ever heard of coronavirus or Covid-19. It knew back in September that a massive credit problem was starting to bubble up.

The Prepared Mind invited myself and TFMetals’ Craig Hemke to discuss the Catch-22 global debt problem facilitated by the Central Banks, the eventual monetary system reset and, of course, gold and silver:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

 

Helicopter Money Will Send Gold Soaring…

Fiat justitia ruat caelum – Let justice be done though the heavens fall

…and the current gold/silver ratio indicates silver will soar even more.

Central Banks and sovereign Governments have been given a free pass to print money and bail out the banking, hedge fund and corporate interests from catastrophically hopeless loan, bond, subprime asset and derivative positions. The coronavirus crisis will be fingered as the culprit but market forces would have forced a financial collapse eventually anyway (see 2008 for the playbook). While the helicopter money will bail out the real perpetrators, it will also effect insidious currency devaluation aka inflation.

Chris Powell at GATA posted a must-read essay on the systemic effect of the impending acceleration of Central Bank printing presses:

“The success of a system of infinite money requires infinite commodity price suppression to defend government currencies. Gold price suppression has been Central Bank policy since the London Gold Pool of the 1960s.  But not only are government currencies becoming harder to defend amid the dislocations caused by the virus epidemic, governments no longer may want to defend their currencies so much.  They want to reflate asset valuations. But even before the virus epidemic, equities and bonds already were highly overvalued by traditional measures, and how can they be worth as much as they were now that world production is declining? Only devaluation of currencies can accomplish reflation.”

You can read the entire essay here: “As infinite money chases collapsing production, gold is on call

Stocks, Bonds, Paper Gold – What The Hell Is Happening?

Make no mistake, the financial system is collapsing under one giant margin call being issued to banks and hedge funds. How big?  No one knows. The Fed obviously was preparing for something when it commenced its money printing in September. But it had no idea of the scale of the underlying systemic problems.  Coronavirus is not the cause of what’s unfolding in the markets – it merely served as the pin that pricked the biggest financial asset bubble in history.

The $1.5 trillion “repo” QE announced by the Fed today did a complete belly flop, as the Dow closed 400 points lower than where it was trading when the QE was announced.  This will take the Fed’s balance sheet well above its peak level during QE1-3.

Craig “Turd Ferguson” Hemke and I had a short discussion about the devastation in the stock and credit markets, including trying to make sense of the action in the precious metals sector – Use this link to access the podcast and TF Metals or click on the image below:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Coronavirus Is Not The Cause Of Stock Market Turmoil

“The coronavirus could be the proverbial Black Swan event. No one saw that coming. We’ve seen everything else [up to this point] that’s coming. The Fed saw something coming in September and it wasn’t coronavirus.”

All it took was a 10% sell-off in the S&P 500. On Tuesday the Federal Reserve cut its benchmark interest rate by 50 basis points to a target range between 1% and 1.25% over fears the coronavirus will have a negative impact on the U.S. economy. I am confident that the rate cut was targeting the stock market because that’s all the Fed, the White House and Wall Street have as “evidence” the economy is fine. The bond market is suggesting otherwise, the yield curve has compressed to record low yields.

David Stockman perfectly describes the scenario facing the country: “The coronavirus is now exposing a far more deadly disease: Namely, the poisonous brew of easy money, cheap debt, sweeping financialization and unbridled speculation that has been injected into the American economy by the Fed and Washington politicians.” (LINK)

Chris Marcus of Arcadia Economics and I discuss the market forces causing the stock and bond market chaos of the last few weeks: