• Monetary Metals
    05/02/2016 - 01:28
    The price of gold shot up this week, and silver moved proportionally. Headlines are screaming for gold to hit $10,000 or $50,000. Does this alleged new bull market have legs?

CLSA's Russell Napier - "QE 2 Fails - Sell US Equities - Await The Fed's Plan C On The Sidelines"

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Sun, 03/20/2011 - 09:07 | 1078344 The Alarmist
The Alarmist's picture

All the black swans we've had lately, and the selloff has been less than a hundred points on the S&P ... stop wasting our time & BTFD!

Sun, 03/20/2011 - 09:43 | 1078391 Samsonov
Samsonov's picture

Quite right.  "Watching from the sidelines" means being in cash and losing wealth at a 10% rate.  No thanks.  I know the S&P chart looks very run-up and frightening, so it's occasionally useful to compare it with GLD, which is a rough indicator of inflation.  This comparison shows that for the majority recent periods the market is not up at all.  Since it would be foolish to have everything in GLD, what are the choices?

Sun, 03/20/2011 - 10:02 | 1078447 6 String
6 String's picture

Since it would be foolish to have everything in GLD, what are the choices?

If you're concerned with, say, the next 3 months to a year....you would be insane not to have something on the short side. For a conservative investor, and no I'm not fucking kidding, a lazy portfolio could look this this:

Long Gold/Silver--Short Russell 2000--Long Swiss Franc/Canadian

This should be implemented equally or adjusted according to your view.You can literally sleep well with this portfolio until you know what size and scope QEIII will be....

For a more aggressive, lazy man's portfolio in the next 3 -6 months just leave out the fiat, go longer silver than gold. Short 2000 with an equal weight.

 

Think about this for a second, if everything keeps going up, it will only be because a mother of all QE's comes next. In which case Silver outperforms the 2000 while you adjust.

If everything goes down, the 2000 will lead the major indexes lower. Offsetting the possibility of GLD going down--though it went up last time we went off QE---and silver. In this scenario, the fiat is sitting their outside the dollar--ready for opportunity.

Sun, 03/20/2011 - 12:16 | 1078827 66Sexy
66Sexy's picture

The FED does QE to create deflation, not inflation.

Why would you think a private institution consisting of international banking interests would do anything that benefits the United States? Shouldnt we consider the FED as a wolf in sheeps clothes? Is the the FED a charitable organization, put into existence to bailout US institutions at a loss and fund endless wars without profit?

Inflation benefits debtors, like the US government. Deflation benefits creditors, like... the Federal Reserve. If these interests wanted to replace the US dollar with a global currency, it would be through a means not indoctrinated by the investment public; which has accepted that inflation is the real force at work.

... and we see the run up in equities as a psychological force of anxiety over losing purchasing power; an entirely created effect. you feel the urge to trade out of dollars and into assets. this being a created effect; why would you trust it? especially, if the source is the Federal Reserve.

Remember the swelling of anxiety when housing was running up? isnt that feeling familiar by now? it is created and ultimately will be replaced by the desolution of collapse... it always has been, always will be.

Sun, 03/20/2011 - 17:35 | 1079224 Oracle of Kypseli
Oracle of Kypseli's picture

Your principle is correct. Deflation does benefit creditors. However, the FED must firstly save the banks and create what it calls "stability and faith" in the system.

Call it what you may, deflation, inflation, asset bubble, Stagflation, wealth effect, etc.

The attempt here is that after the TBTF banks, being the owners of the FED, become stable the FED will eventually unload the losses to the taxpayers.

The attempt of the individual should be to understand the game and devise a plan to, at least preserve some wealth and perhaps profit from it. The working class will always be working class and is somewhat subsdized to stay silent. 

Sun, 03/20/2011 - 21:36 | 1080236 dogismyth
dogismyth's picture

Well I would agree with the deflation hypothesis.  I would disagree that the FED is or wants to save the banks.  I use to believe in that mantra but I see a fatal flaw.  Why preserve a company who is insolvent?  Why would the FED or even the company execs really care about the "shell" of the company as long as $$s can be skimmed one way or another (bonuses, loans).  The fed is pretending to "save" the banks or recapitalize them.  But its just a money laundering operation of sorts.  There is nothing to salvage in a company or its name.  And the banks certainly realize that things are unlikely to experience another credit expansion such as in the recent past.

We are heading down a new road.  Global asset forfeiture and the power behind controlling title of assets by the powers that be.  The "saving the banks' is just a distraction.  Money is being siphoning off and used to purchase the remaining hard assets.  The inflation and deflation arguments are just a distraction as well since a fiat currency will be worth zero at some point in time.  Hopefully, when you are not holding it.  And hopefully when you have completed your transaction for hard assets.

You are all playing a game among yourselves while the treasury in damn near every country is being looted, converted and reinvested into hard assets.  They want you to believe there is a sane and organized ending to this financial magic, and all will be well in the future.  Nothing is further from the truth.  And its the largest ponzi scheme ever, yet you will continue to play...like fools that you are...demonstrated by these articles, comments and meticulous study on the art of trading.

You must stop playing the game to preserve what remaining good is part of the system.  That includes the goods that you have sequester to this point.  Don't think for a moment that you are better off or safer because you have a few million or tens of millions.  You're not in the Big Club and you'll never ever have a "chip" to play in their plush club. 

Their plan has been engineered for years if not decades.  It is meticulously orchestrated to the moment.  Each world event is controlled.  Its all an illusion folks.  Tomorrow will start the week off with all good news.  Imagine that...Japan is better (all of sudden) and the Libya problem will be presented as "fixed".  And your heart will be racing tomorrow as the market gaps up as you throw your money as the cashier for the next roller coaster ride.

 

Sun, 03/20/2011 - 21:31 | 1080221 rosiescenario
rosiescenario's picture

In our new era scamenomics, the big banks actually want inflation as it bails out their bad loans, improves their balance sheets, gets rid of increasing REO, etc....but most of all, permits the management to pay themselves large bonuses.

 

Under 'Newtonian economics' you are correct, the creditor would be hurt by inflation and the debtor aided...but we have had a paradigm shift where inflation becomes a 'win / win' situation for both the debtor and the management of the creditor.

Sun, 03/20/2011 - 12:05 | 1078860 Samsonov
Samsonov's picture

I'm not insane, I just think that the environment is unfavorable for shorting anything.  The Alarmist is correct that QE3 (and beyond) is a certainty; therefore, it's unlikely that any hard asset will experience a significant decline in dollar-denominated price.  In other words, the Bernanke put is still there.

Sun, 03/20/2011 - 14:28 | 1079124 JimS
JimS's picture

Short at any S&P above 1300, then buy the dips to 1250. You can use the SDS ETF. You can buy calls or sell puts, as it is an inverse ETF to the S&P 500. You can short individual stocks if you have access to a technical service such as MarketEdge, and there are several out there that do the same thing. This market is in range-bound situation, as long as The Bernank is doing POMO and QE whatever.

Sun, 03/20/2011 - 10:33 | 1078531 The Alarmist
The Alarmist's picture

I know the S&P chart looks very run-up and frightening, so it's occasionally useful to compare it with GLD, which is a rough indicator of inflation.

Try looking at it in EUR terms ... not nearly as remarkable. But if your functional currency is USD, you may as well be all in, 'cos you know QE3 is a done deal.

Sun, 03/20/2011 - 09:18 | 1078351 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

The Bernank is more of a threat to your way of life than Gadaffi, yet i see no will, either publicly or politically, to remove the Bernank from this world.

The USA is a nasty disease and it could have a terminal affect on the world.

Sun, 03/20/2011 - 09:15 | 1078359 Yen Cross
Yen Cross's picture

I worked that chart section. I'ts just the way I'm built. I feel the need to understand.

Sun, 03/20/2011 - 09:17 | 1078365 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Hi Everyone--

 

Last week was a record breaking week for the team at ZH as they kept posting article after article to keep us current. Have you considered that the ZH team needs to eat?

 

I'll spare the Sally Struthers routine, but PLEASE donate to ZH. Whether its just enough to buy the Tylers a beer, or something larger, please do your part.

 

Parting with $20 won't kill you and you will certainly be rewarded for your efforts by getting all the news that the MSM doesnt have the balls to print.

 

So don't think--Just Do IT. Support your Fight Club. Right now!

Sun, 03/20/2011 - 09:38 | 1078411 Kina
Kina's picture

Yes, too true. ZH most awesome site on the net. will attend to it.

Sun, 03/20/2011 - 11:59 | 1078838 Abitdodgie
Abitdodgie's picture

I too will attend to it , consider it attended

Sun, 03/20/2011 - 12:11 | 1078888 Whats that smell
Whats that smell's picture

You may do the Sally Struthers routine as she performed in Five Easy Pieces !

http://www.imdb.com/title/tt0065724/

 

Sun, 03/20/2011 - 12:40 | 1078946 sourgrapesson
sourgrapesson's picture

First rule of Fight Club:  You do not talk about Fight Club

Sun, 03/20/2011 - 18:23 | 1079670 RockyRacoon
RockyRacoon's picture

I feel the need to understand.

The need to understand is just a form of control.   Sometimes one has to just let go and deal with the world the way it is.   No amount of charting will replace the peace of mind of knowing that things are just as they are.   Wear the world as a loose garment.

Sun, 03/20/2011 - 09:28 | 1078363 lynnybee
lynnybee's picture

yea, it's a nasty disease, alright !    it's called ZIRP ! CHEAP MONEY !  NO INTEREST PAID ON SAVINGS & BERNANKE has infected this countries precious elderly population !   ......... god help them make it with ZIRP. 

Sun, 03/20/2011 - 09:35 | 1078403 Horatio Beanblower
Horatio Beanblower's picture

“Well, Doctor, what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it.”

 

http://www.bartleby.com/73/1593.html

 

Unfortunately later generations could not keep it.  The only generation that can take back the Republic is the current generation.  The world needs it just as much as Americans need it.  The world is waiting.

Sun, 03/20/2011 - 09:41 | 1078414 overmedicatedun...
overmedicatedundersexed's picture

HB, any idea what asset classes do best when investing under a dictatorship aka monarchy??

seems we need an analysis of same here on ZH.

Sun, 03/20/2011 - 09:45 | 1078418 Horatio Beanblower
Horatio Beanblower's picture

Central banks and arms manufacurers.  One cannot really go wrong.  Tally ho!

Sun, 03/20/2011 - 09:45 | 1078423 NidStyles
NidStyles's picture

Pain, brutality, and starvation. I think they will fall under commodities.

Sun, 03/20/2011 - 09:15 | 1078364 Thomas
Thomas's picture

The nasty decisions going forward really relate to inflation hedges: Do you pull them out and leave yourself exposed to inflation (and runaway hedge costs) to avoid a plunge? Do you sell gold and energy equities? You can get left behind VERY easily in such a strategy.

At one point, a reader asked Bill Fleckenstein to explain why not buy inflation hedges until you can see the inflation in plain site. The answer is that they will cost too much when that time comes.

A whoosh down will hurt but exposing myself to inflation is haunting.

Sun, 03/20/2011 - 09:16 | 1078367 Yen Cross
Yen Cross's picture

Doesn't anyone ask anymore? Equity reduction BITCHES.

Sun, 03/20/2011 - 09:19 | 1078370 Robert Neville
Robert Neville's picture

Why would anyone loan money for a fixed rates in an environment that is sure to morph into hyperinflation if the economy actually starts to grow? If the fed wants banks to loan they need to let the market set interest rates, but then the insolvency of the government would be obvious.

Sun, 03/20/2011 - 21:37 | 1080241 rosiescenario
rosiescenario's picture

...when you are loaning OPM, you don't really care...you just want to make sure that the assets backing the loan are sufficient so that no bad debt loss happens under your watch which might affect your bonus.

Sun, 03/20/2011 - 09:23 | 1078371 Captain Benny
Captain Benny's picture

buy silver, short the indexes!

Sun, 03/20/2011 - 10:57 | 1078629 PenchantForHoarding
PenchantForHoarding's picture

Running out of holes in the back yard to bury the stuff.  Portability is becoming an issue.

Sun, 03/20/2011 - 12:04 | 1078858 Abitdodgie
Abitdodgie's picture

That easy buy a Donkey

Sun, 03/20/2011 - 21:38 | 1080246 rosiescenario
rosiescenario's picture

...I'll rent you some of my backyard if that would help?

Sun, 03/20/2011 - 09:23 | 1078372 Yen Cross
Yen Cross's picture

Ok Now I'm pissed. What is VIX? What is XLF?  What Is Baltic DRY? It bottomed Bioatches. This is for the ladies.

Sun, 03/20/2011 - 09:27 | 1078382 tallen
tallen's picture

Vix is the volitility index, it's based around how many people are buying puts/insurance incase the market goes down. A fear indicator.

XLF is the biggest financial ETF (Electronic Trading Fund) holding all US banks, financial institutions, BOFa, Jpmorgan etc.

Baltic dry index the index tracking demand for shipping capacity versus the supply of dry bulk carriers. I.e. if it goes down, global trade is reducing. 

Sun, 03/20/2011 - 11:41 | 1078785 Richard Head
Richard Head's picture

Exchange Traded Fund

Sun, 03/20/2011 - 09:22 | 1078374 TexDenim
TexDenim's picture

Napier is correct, but he is more of an economic seer than a political prophet. Watch the new GOP congressmen and senators use the prospect of QE3 to push for dismantling of spending initiatives and create tax cuts. There may well be a QE3, but it will very much be the outcome of compromises with Bernanke behind the scenes. The Fed is supposed to be independent of politicans, but that isn't true when it ceases to govern monetary policy and jumps over to run the entire economy, which is precisely what Bernanke has been doing since 2008.

Sun, 03/20/2011 - 23:50 | 1080579 glenlloyd
glenlloyd's picture

The cuts aren't meaningful in any way. They're a minute fraction of what needs to be cut. We will never see serious cuts nor will we see the dismantling of wasteful bureaucracies at the federal level.

That is until the house of cards comes down.

Sun, 03/20/2011 - 09:24 | 1078378 Hannibal
Hannibal's picture

A LIFE SPENT PAYING TO LIVE

Sun, 03/20/2011 - 15:28 | 1079333 bluebare
bluebare's picture

aka slavery

Sun, 03/20/2011 - 09:29 | 1078383 apberusdisvet
apberusdisvet's picture

I strongly suggest that everyone grab some silver at the bottom of the next raid; things are starting to get really hairy for Blythe; we could have a $10 pop soon.

Sun, 03/20/2011 - 09:49 | 1078427 Long-John-Silver
Long-John-Silver's picture

Should be a huge pop in Oil, Gold, Silver, and the Military industrial complex on electronic trading @ 6:00 PM EST. War profits Bitchessssss!

Sun, 03/20/2011 - 09:52 | 1078435 overmedicatedun...
overmedicatedundersexed's picture

'Should be a huge pop in Oil, Gold, Silver, and the Military industrial complex on electronic trading @ 6:00 PM EST. War profits Bitchessssss!"

body bags , that's a start up business worth looking into..tip o the day fwiw.

Sun, 03/20/2011 - 09:29 | 1078385 Alcoholic Nativ...
Alcoholic Native American's picture

This is bullshit QE never stopped. The anonymous billionaire boys, the FED, have been the buyer of last resort for the private and the public sector.  Without them buying out all the MBS who would be propping up the markets today, wouldn't be any large financial institutions cause they all would have gone bankrupt.  Who would be buying all these government treasuries?  What's the difference between an anonymous billionaire and the FED saying Oh gee we are purchasing more treasuries we will call it QE2!  NOTHING it's the same god damn thing.  QE 2,3,4,5, whatever the fuck they wanna call it is just the right hand movement, WHEN IN REALITY THEIR LEFT HAND IS STILL BUYING AND QE NEVER FUCKEN STOPPED.

 

Sun, 03/20/2011 - 09:32 | 1078388 lesterbegood
lesterbegood's picture

The Fed's Plan C.

Head for the bunkers.

Leave the suckers holding the empty bag.

Sun, 03/20/2011 - 09:44 | 1078420 Brokenarrow
Brokenarrow's picture

mutual fund managers are behind and hedge funds.........

pleanty pomo coming...........

i left 90% on my cash behind reading these kind of pieces

Sun, 03/20/2011 - 09:53 | 1078433 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

But the FED is not federal and it has no reserves...

... and they are the only hope of a return to 'normality'!? The people of the USA has it's hopes for the future pinned on this criminal entity!?

The USA, and in turn, the world is very very screwed if this is the case. As has been seen in Japan recently, equities can lose 25% of their value in a few days.

I wouldn't touch anything associated with the U.S. given the choice... well, maybe silver eagles, but that would only be if canadian maples became un-sourcable.

Sun, 03/20/2011 - 09:53 | 1078434 silvertrain
silvertrain's picture

 There will infact be a qe3 and 4 and 19 and on and on..The only thing about it is that it will not be announced, In fact , the fed will announce the end of there program..

 See Jim Rickards article on King World News website titled  "QE IS DEAD, LONG LIVE QE"  for the full explanation as the fed can print into the wild blue yonder because there balance sheet has gotten so big..

Sun, 03/20/2011 - 18:33 | 1079706 equity_momo
equity_momo's picture

Indeed.  Yet to maintain a positive effect on asset prices (or inflation) the printing needs to be of an order of magnitude larger than the prior round of printing. I doubt that is possible and therefore you will see QE20 , as in Japan , but it will be during a deflationary environment for stocks and housing , because the Fed CANNOT PRINT FAST ENOUGH to have a meaningful impact.

This paradox will pass many investors and fund managers by.

Sun, 03/20/2011 - 09:54 | 1078438 plocequ1
plocequ1's picture

No

Sun, 03/20/2011 - 10:16 | 1078491 blazen
blazen's picture

of course there will be QE-n! The point which ANA makes applies here - with everyone's dumping treasurys, their prices go down and interest rates have to rise. If they rise, you have to print more and more to prevent the government from going bankrupt -> death spiral, possibly hyperinflationary

which of course doesn't prevent them from playing small 'correction' here and there - they want markets to ask for next QE, or at least make it appear so...

So the only question is if QE-n is announced or just implemented

 

Sun, 03/20/2011 - 10:19 | 1078498 I am a Man I am...
I am a Man I am Forty's picture

ZH should discuss the no QE3 necessary due to the fed balance sheet being so large and so many treasuries maturing that this can continue to infinity without a QE3

Do NOT follow this link or you will be banned from the site!