What Is The Link Between Gold And QE?

The intuitive response on the question what the link is between gold and QE is that QE (or ‘money printing’) is devaluing money and, consequently, appreciating the value of gold. That correlation became clear during the first two rounds of QE when the gold price more than doubled in dollar and euro terms in some 3 years and silver went three times higher.
However, QE3 resulted in the opposite effect. The chart shows how prices of key assets (stocks, bonds, commodities, gold) evolved between the start of QE3 and the start of tapering.

This post was published at GoldSilverWorlds on October 23, 2014.

Gold Daily and Silver Weekly Charts – Audacious Oligarchy – Ten Tonnes of Gold Taken Out of JPM?

“When, O Catiline, do you mean to cease abusing our patience? How long is that madness of yours still to mock us? When is there to be an end of that unbridled audacity of yours, swaggering about as it does now?
Marcus Tullius Cicero, In Catilinam I
There was little of note in the Comex delivery report but there was a sizable withdrawal of gold reported from storage at the JP Morgan warehouse, about a third of the total at ten tonnes. Let’s see if that turns up anywhere, or is another fat finger. An individual event is of less matter than the significance of the trend. And the trends are apparent.
Wall Street is drawing pictures on the Comex price charts, and there are those who will keep their heads down and continue to read them as if it is business as usual. They will not look at the reports from the new markets in Asia. They will ignore the uncomfortable and the unfamiliar. They are oblivious to the approach of change.
They do not understand what is occurring in the world’s financial and monetary structures. They only know what they have seen in their short lifetimes, and in their familiar places. And naturally they do not respect what they do not understand.
Gold is moving from West to East. And therein lies both risks and opportunity, to those who will have an eye willing to see it.
There is a Comex option expiration next Tuesday the 28th, and an FOMC rate decision on the 29th. It might be a hard week for the metals bulls.
Let’s see what happens.

This post was published at Jesses Crossroads Cafe on 23 OCTOBER 2014.

A Furious Albert Edwards Lashes Out At Central Bankers: “Will These Morons Ever Learn?”

Albert Edwards is angry, and understandably so: almost exactly two weeks after warning readers to “sell everything and run for your lives” and the market was on the verge of its first correction in years, several powerful verbal interventions by central banks from the Fed, to the BOJ to the ECB have staged yet another massive rebound which has nearly wiped out all the October losses.
Central-planning aside (and ask how much the USSR would have wished for central planning to indeed have been “aside”) we share his frustrations, almost to the point where we would reiterate word for word Edwards’ furious outburst, as follows: “Simply put, the central banks for all their huffing and puffing cannot eliminate the business cycle. And they should have realised after the 2008 Great Recession that the longer they suppress volatility, both economic and market, the greater the subsequent crash. Will these morons ever learn?”
Obviously, they will never will because their very entire existence is based on the assumption that what they do can impact the business cycle when all it does is merely delay the inevitable. In this case, a recession whose arrival will be so violent, it will crush not only US stocks, but the overall economy, which has for the past 6 years existed purely on the Fed’s CTRL-P fumes. Fumes, which by the looks of things, will evaporate at just the worst possible moment: just when half of the world’s entire growth in 2015 is expected to come from the US (the other half from China).

This post was published at Zero Hedge on 10/23/2014.

QE FAILURE & FOLLY OF PAPER MACHE

The Quantitative Easing initiatives have been declared as stimulus and successful in sustaining the US financial system. While having been able to continue the debt floats, the many market props, providing coverage for USGovt debt securities and mortgage backed securities which nobody wants, the initiative is hardly stimulus. The hyper monetary inflation does what we always learned it did, as in from school for 50 years, dole out its powerful corrosive effect. The inflation lifts the cost structure, leads to elimination of profit margins, and forces businesses to shut down, thus taking equipment out of service. The Jackass prefers to call the QE effect as killing capital, forcing retired capital, putting equipment on mothballs, often liquidated. Neither the USFed nor the Wall Street partners ever refer to the capital destruction effect, because it contradicts their stimulus argument and false message. Theirs is pure propaganda in keeping with the urgent directive to save the banks that are too big to fail. These are the financial crime centers of America.
Many are the interventions taken. Let us peruse the different types, while finishing with the Gold market. The paper mache solutions can continue in a seemingly endless manner, but not in the Gold market. The intervention and suppression in the Gold market is finite. It requires Gold bullion, the physical ingot bars, in order to execute the perpetuated interference and alteration to this financial niche market. The undermine is finite, and it is coming to an end. As the major conflict between East and West is played out between Russia and the United States, bear in mind an important contrast. The Russians have the vast network of natural gas pipelines, which are being fought over in Ukraine. The pipelines supply energy to the many economies, both industry and households. The United States has a vast network of toxic flow in contaminated money, evident in the USTreasury Bond market, the FOREX currency market, and the banking systems. The pipeline for tainted funds contains channels, windows, tubes, side entries, plumbing, and levers just like a giant chemical plant. The trouble is that the US network of liquidity is toxic and leads to destroyed capital and economic ruin. The US will not win this battle. It will earn isolation even from its allies. The US is to become a pariah nation.
BANK FAILURE SKEIN OF SPOT PATCHES
Many have been the bank failures in recent years during the so-called Global Financial Crisis, which the Jackass prefers to call the collapse of Western monetary system and banking system. Hidden was the biggest and most important to date, done in September 2008. The bailout was of Goldman Sachs, but made to look like a Lehman failure and AIG nationalization. Under the USGovt aegis, the venerable GSax was given 100 cents per dollar on derivative payouts, was redeemed in full on mortgage assets, and generally was placed first in line for all window functions. It was the most clever bank bailout in history. The source of the derivative payouts was the usual funny money, where all trails lead to the USFed in its money creation. The good people of the United States talk about the favored 1% Elite, but they really have no idea who the bankers are, what they do, devices they use, controls they exert, or influence they peddle. If only they knew how Goldman and Citibank write Congressional legislation and tap markets for illicit tolls and skims. Their huge penalties and fines for criminal behavior are incorporated into their business models. Crime has a relatively small but growing part in its cost of doing business.
Royal Bank of Scotland was another giant bailout following a failure, or near failure. The UKGovt took a 81% stake in the failed financial institution, not quite buying lock stock and barrel in its many wrecked business segments. The bailout was worth 46 billion British Pounds, completed in 2008 and 2009. It is all gone, all squandered, good (phony) money after bad. The good people of Britain have complained about horrendous treatment by the bank ever since. The RBS bank remains predatory, but protected by the government.

This post was published at GoldSeek on 23 October 2014.

3 Things Worth Thinking About (Vol. 14)

Inflation Goal Elusive For A Decade I have written previously about the Federal Reserve’s real worry which is a rise in deflationary pressures:
“The biggest fear of the Federal Reserve has been the deflationary pressures that have continued to depress the domestic economy. Despite the trillions of dollars of interventions by the Fed, the only real accomplishment has been keeping the economy from slipping back into an outright recession.
Despite many claims to the contrary, the global economy is far from healed which explains the need for ongoing global central bank interventions. However, even these interventions seem to be having a diminished rate of return in spurring real economic activity despite the inflation of asset prices.
Despite the ongoing rhetoric of those fearing inflation due to the Fed’s monetary interventions the reality is that such actions have, so far, failed to overcome the deflationary forces of weak global demand.”
What is quickly being realized on a global basis is that injecting the system with liquidity that flows into asset prices, does not create organic economic demand. Both Japan and the Eurozone’s interventions have failed to spark inflationary pressures as the massive debt burden’s carried by these countries continues to sap the ability to stimulate real growth. The U. S. is facing the same pressures as continued stimulative measures have only succeeded in widening the wealth gap but failed to spark inflation or higher levels ofeconomic prosperity for 90% of Americans.
When interest rates spiked in 2013, and many calls for the “death of the bond bull” were being made, I was one of the few screaming that this would not be the case. The reason for my steadfast belief was simply the lack of the three catalysts required to spark inflation: rising commodity prices, rising wages and increased monetary velocity.

This post was published at StreetTalkLive on 23 October 2014.

SP 500 and NDX Futures Daily Charts – Do HFT Algos Dream of Electronic Sheep?

Stocks were off to the races this morning as the short squeeze gathered some new momentum from the ‘better than expected’ results in global PMI overnight.
Stocks were interrupted in their ascent in the later afternoon on a flash report that a doctor who had been caring for the sick in Africa is being tested for ebola at Bellevue Hospital in NYC.
Stocks lost almost half their gains quickly as the algos saw the headline and triggered selling, and then recovered a bit into the close.
This is a thin, technically traded market. A simple headline such as this was able to knock it back on its heels. Be aware of this and take it into account if you are anything but a daytrader.
After the bell Microsoft posted better than expected earnings and revenues, while Amazon posted a horrendous miss, losing .95 per share versus an expected .74 per share. And their revenues missed badly as well.
It was a nice rally today, and it may continue tomorrow if nothing happens to scare the machine trading. Wall Street has a chance to post its best week in a year, and they may go for the headline if reality does not intrude.

This post was published at Jesses Crossroads Cafe on 23 OCTOBER 2014.

Cargo Hijacking is on the Rise: 44,000 lbs of Beer Stolen From Truck Stop in Florida

Earlier this week, a big rig was stolen in Pompano Beach, Florida, after the driver left it parked at a truck stop overnight. According to an interview with the local news, this was actually one of several thefts that had occurred in the same location that month. Unlike most cargo thefts, the thieves not only took the trailer, but the cab as well.
What makes the story more interesting, is the load that the truck was carrying. A whopping 44,000 lbs of Miller High Life. While that says everything you need to know about the poor taste of the thieves, it says quite a bit more about the state of the U. S. economy. I mean, whatever happened to robbing banks? I know there’s always been cargo thefts, but what drives someone to steal cargo, and more importantly, how do they sell it?
Cargo theft tells you two very important things about the society it occurs in. It tells you how bad the economy is, and it tells you how corrupt that nation is. When you look at the nations with the highest number of cargo thefts, third world countries account for majority of these incidents, with Brazil, Mexico, and South Africa topping the list. All three of those nations are known for their rampant poverty, and their widespread corruption.
With that kind of poverty, everyday goods become extremely expensive. After a while the banks stop stop being easy targets. It’s far more risky, and the money just isn’t worth it, especially if that country is suffering from inflation. Cargo however, is a relatively easy target. You can score goods that are worth, hundreds of thousands of dollars, sometimes millions if you get an electronics or pharmaceutical load.
That’s why a shipment of Miller isn’t so surprising.

This post was published at The Daily Sheeple on October 22nd, 2014.

What is this secret repatriation of Gold about?

We have heard from one very reliable source that repatriation of gold is secretly taking place at this moment from the USA to Europe. This is October 2014!
The information contains details about transported quantities by one of the global security firms being much higher than usual, as well as country of destination.
This leads us to believe that some central banks in Europe may be feeling tension and their boards see that the ‘whatever it takes’ QE, LTRO or OMT policy, or whatever they call this monetary financing, can and probably will have serious repercussions.
The Swiss National Bank (SNB) started selling gold in 2000 near the lows of the market. At that same time, many years ago, the movement to stop this selling started in Switzerland which, on November 30, will lead to a definitive choice by Swiss voters whether to a) Stop selling gold, b) repatriate all foreign held gold, and c)maintain 20% gold backing of SNB assets, or alternatively risk being dictated to by the European Union and the ECB.

This post was published at GoldSwitzerland on October 23rd, 2014.

Ebola Fears Take Shine Off Panic-Buying Surge In Stocks

Note the regularly spaced volume spikes that took the eMini down $ES_F pic.twitter.com/zakCP4UzsZ
— Eric Scott Hunsader (@nanexllc) October 23, 2014

Buyback-manipulated earnings produced the low-volume opening face-ripper everyone wanted and stocks took off, recovering yesterday’s late losses and not looking back. Trannies were the big winners, led by a resurgence in Airlines (as Ebola in US is fixed) and, despite drastically lower than average volume, stocks kept lifting after EU close on a bed of AUDJPY and USDJPY… until 1450ET (when NYC Ebola headlines hit). Airlines were hit hard, S&P futures dumped back to VWAP, VIX was whacked back above 17, and the exuberant day transformed into merely a great day for stocks. Weakness in Treasuries and the HY bond ETF (despite notable compression in HY spreads) had the smell of a lot of HY issuance being hedged and unhedged but TSYs ended the day up 6-7bps (off their highs post-NYC-Ebola headlines). The USD rose for the 3rd day in a row taking gold lower. Copper (China) and Oil (Saudi) rose on the day (oil unch on the week).

This post was published at Zero Hedge on 10/23/2014.

The Market Says Markit Is Full Of It: Global PMIs Are Painting An Unrealistically Rosy Picture

Markit (not to be confused with the centrally-planned market) is best known for providing its monthly survey of national (seasonally-adjusted) manufacturing and service industry coincident businesses (whose results just may be released milliseconds early to select, highly paying HFT clients). Surveys which, such as today, are released after extensive adjustments and revisions, at key inflection points designed to achieve one simple thing: restore confidence in the Ponzi, usually when “hard data” indicates a collapse or recession is nigh. Such as last week:

This post was published at Zero Hedge on 10/23/2014.

French Private Sector Output Falls at Sharpest Rate in Eight Months; Tale of Two Europes

France
Looking for growth in Europe? You won’t find it in France, but for now you can still find it in Germany (for now).
The Markit Flash France PMI shows French private sector output falls at sharpest rate in eight months.
Key Points
Flash France Composite Output Index falls to 48.0 (48.4 in September), 8-month low Flash France Services Activity Index falls to 48.1 (48.4 in September ), 8-month low Flash France Manufacturing Output Index falls to 47.6 (48.4 in September ), 2-month low Flash France Manufacturing PMI falls to 47.3 (48.8 in September), 2-month low Summary
The latest flash PMI data signalled a deepening downturn in France’s private sector economy during October. The seasonally adjust ed Markit Flash France Composite Output Index , based on around 85% of normal monthly survey replies, slipped to 48.0, from 48.4 in September. That was its lowest reading since February, albeit indicative of a moderate rate of contraction overall. Faster declines in output were recorded in both the services and manufacturing sectors during October.
Employment in the French private sector fell further in October, extending the current period of contraction to one year. Furthermore, the rate of decline quickened to the sharpest since April 2013. Similarly solid rates of job shedding were registered across the services and manufacturing sectors. Staffing levels were cut in line with reduced workloads.
Outstanding business at French private sector firms fell for the sixth month running, and at the fastest pace since May 2013. Lower backlogs were signalled by service providers and manufacturers alike.

This post was published at Global Economic Analysis on October 23, 2014.

The Investing World In 10 Objects

What do an old German bank note, a current $100 bill, and an apple all have in common? The answer, according to ConvergEx’s Nick Colas, is that these simple objects can tell us much about the current investment scene, ranging from Europe’s economic challenges to the U. S. Federal Reserve’s attempts to reduce unemployment. Colas takes an ‘object-ive’ approach to analyzing the current investment landscape by describing 10 common items and how they shape our perceptions of reality. The other objects on our list: a hazmat suit, a house in Orlando, a barrel of oil, a Rolex watch, a butterfly, a heating radiator in Berlin, and a smartphone.
Imagine a radio program about the 100 most significant pieces in the British Museum. At first blush, this would seem to be a stupendously bad idea. Art is visual, after all, and radio is about the least visual medium out there. Still, the BBC did such a series a few years ago and the overwhelming success of the program led to a book titled, predictably enough ‘The History of the World in 100 Objects’ that went on to be a New York Times bestseller.
The idea works, even in radio format, because it simplifies large swaths of human history into identifiable works created by real people down through time. You might know very little about the situation in China 1000 years ago, but a statue or painting from the period allows you to relate to a community of actual human beings who lived, loved, worshipped and died there. Not just the world, but history itself, gets smaller and more approachable when viewed through this lens.
We can do the same with the world of investing and economic analysis, distilling many complex topics to their essential core. For the sake of brevity, let’s take 10 – rather than the 100 from the BBC series and book – and see how far we get. Here’s our take on a list:

This post was published at Zero Hedge on 10/23/2014.

Meet Janet Dupree:72, Alcoholic, HIV-Positive, $16,000 In Student Debt: “I Won’t Live Long Enough To Pay It Off”

One would think that Janet Lee Dupree, 72, a self-professed HIV-infected alcoholic, would be slowly putting aside material worries as she prepares to set the intangibles in her life in order for one last time. One would be wrong.
As she admits, “I am an alcoholic and I have HIV,” she tells the BBC. “That’s under control.” So what is the cause of most if not all consternation in the final days of Dupree’s life? “I was sick and I didn’t worry about paying back the debt.” As a result, Dupree defaulted on her loan, and since she turned 65 she has had money withheld from her Social Security benefits.
“Just recently I received a notification that they are going to garnish my wages because I am still working,” says Dupree, who works 30 hours a week as a substance abuse counsellor.
The debt in question: Dupree owes $16,000 in student loans she acquired in 1971 and 1972.
Or make that “student loans” – debt which is crippling the last days of a person who hasn’t seen the inside of a classroom in four decades.
Dupree, who lives in Citra, Florida, admits she forgot for many years that she had borrowed the money – originally $3,000 – in order to complete her undergraduate studies in Spanish.
The stunning story of how the exponentially rising…

This post was published at Zero Hedge on 10/23/2014.

Are sovereign bonds the last rampart before the collapse?

Last week was a rocky one on the stock markets, with London, Frankfurt, Paris and New York sliding heavily. Sort of a mini-crash, but not too serious… a simple warning showing some nervousness among investors: has the time of disillusion come? In Europe and Japan, stock market indices are below their January 1st, 2014, level, and in the United States, they’re just slightly above it.
The basic problem is that global liquidity is growing at a much higher pace than real economic growth. Even with the Fed stopping its QE, there is Japan accelerating its own QE and the European Central Bank is restarting its own plan, notably by buying banking assets. And all those central banks are maintaining rates at zero, which facilitates monetary expansion. The result being that all this excess money, which is not going into the real economy (loans to businesses haven’t picked up), finds its way on the markets and pushes asset prices higher. Hence the stock market performance since 2009 (March 2009 exactly, date of the first Fed QE).
But, at a certain level of appreciation, the prices of risky assets (stocks, corporate bonds) stop going up because investors realise that, obviously, the risk premiums are not enough to cover the risk anymore. And the fear is being reinforced by the fact that hopes for a real economic recovery are vanishing (the IMF lowered its previsions, a series of poor numbers were recently published in the United States and Germany).
How are investors reacting?

This post was published at Gold Broker on Oct 23, 2014.

“Warning Signs” & The Fed’s Grand Illusion

Via Scotiabank’s Guy Haselmann,
Ever since Bullard’s agoraphobic performance last week on Bloomberg TV, it should be crystal clear to the FOMC and investors just how powerfully markets will react to any shifts in Fed policy or attempts at policy normalization. An equity market freefall abruptly took an about-face, resuming its ‘melt-up’ trade, after a worried Bullard merely hinted at the possibility of more QE stimulants.
The FOMC should take this as a warning sign. It would be irrational for the Fed to believe that after QE purposefully elevated asset prices and generated a one-way moral hazard spectacle, that there is not going to be some-type of reversal (reaction) when QE is withdrawn and the first hike nears.
The new flaw in Fed communication that has arisen recently, and that was amplified by Bullard’s interview, is how Fed policymakers fundamentally assess and mollify the trade-off between attempts at stimulating real economic activity and financial stability risks.
For several years, the FOMC has been confronted with the delicate balance between removing accommodation too slowly and removing it too quickly. Since the Fed is basically out of effective bullets and its balance sheet has ballooned to the practical limits of prudence, the Fed is therefore trying to err on the side of not removing accommodation too quickly. In this regard, the Fed has allowed the fog to roll in, by repeatedly and cunningly changing the markets’ focus in order to ‘buy time’. (As a case in point, the first hike never arrived when the unemployment rate hit 6.5% as the Fed initially said it would.)

This post was published at Zero Hedge on 10/23/2014.