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Gold is Already Predicting the Next Fed Chairman
Gold is
acting fishy.
Indeed,
while emerging markets are generally going up in flames (literally) Gold hasn’t
done much of anything since October 2010. Heck, we haven’t even retested the
previous highs despite all the turmoil.
It’s odd,
Gold should be above $1,500 per ounce
by now given what’s going on in the world. By all counts demand for the
precious metal is increasing dramatically.
Central
banks became net buyers of the precious metal last year. China gold purchases
rose five fold. Indian purchases of bullion are believed to have hit a record
last year. Even the US mint ran out of Gold Buffalo coins in September 2010.
So what
gives? Why is Gold not EXPLODING higher yet?
I have a
sneaking suspicion the market is beginning to discount some MAJOR changes in
the US Federal Reserve… changes that NO ONE seems to be talking about. Those
changes are*:
1) There
will be no QE 3.
2) Bernanke
will be dumped as Fed Chairman.
3) Kansas
Fed President Tom Hoenig will be the next Fed Chairman
*some of this analysis stems from a conversation
with Bill King of Ramsey King Securities.
Regarding
#1, the whole QE game is over. I know that most folks believe Bernanke will
issue QE all the way to infinite, but the actual likelihood of this is low
given the public’s outrage over the continued bailouts and the like. Obama and
the rest of Washington can sell out to the Wall Street banks all they want. But
when the US starts experiencing the sort of turmoil that is rocking the Middle
East (and it will, mark my words) the QE game will end.
Regarding
#2, there are “three stooges” involved in the Great US Swindle occurring today.
They are, the big banks, the politicians, and Bernanke. When the public starts
rioting which one of these three is going to be sacrificed?
Bernanke.
The big
banks have been in power in the country for most of its history. They might get
broken up or rearranged, but the elite banker class will always exist no matter
what reform. Ditto for politicians.
But
Bernanke? He’s just an academic puppet. He can be replaced by another
figurehead while the system remains in place. Indeed, I fully expect Bernanke
is going to be canned as Fed Chairman before this term is up. Whether it’s
Obama making a “Hail Mary” play to attempt re-election by trying to look like
he’s actually engaging in reform or some other political move, market my words,
Bernanke is the one who’s going to be sacrificed.
Regarding
#3, Fed Kansas President Honeig recently uttered a series of absolutely
INCREDIBLE remarks concerning the US Federal Reserve. He said the US has
“deeply” undermined free-market capitalism and that the TBTF banks pose the
“greatest” risk to the economy.
These
statements are absolutely extraordinary coming from a Fed insider. Remember,
these guys are all ultimately politicians, so this kind of aggressive is a
clear indication that Hoenig has seen the writing on the wall and is distancing
himself from Bernanke as much as possible in order to present himself as a
potential future Hawk Fed Chairman who would be called in to reign in inflation
much as Paul Volcker did in the ‘80s.
However,
before all of this happens, I fully expect we’ll see another bout of inflation
similar to that which occurred in the 70s. You can already see this happening
as inflation hedges explode higher across the board:
|
Asset |
Price 1/1/10 |
Price 2/22/11 |
% Change |
|
Oil |
82.75 |
94.64 |
14% |
|
Gold |
1,137 |
1,397 |
23% |
|
Silver |
16.81 |
33.05 |
97% |
|
Wheat* |
5.53 |
7.62 |
38% |
|
Corn* |
4.25 |
6.79 |
60% |
|
Cattle |
85.00 |
110 |
29% |
|
Sugar** |
26 |
31 |
19% |
|
* per bushel |
|
|
|
|
** cents per pound |
|
|
|
Both Gold
and Silver will perform well in the coming months. However, their performance
will pale compared to other, less well know inflation hedges.
Why?
Everyone
knows that Gold and Silver are the most obvious inflation hedges out there. And
to be blunt, anyone who invests in these two assets will likely do very well in
the coming months as inflation erupts in the US.
However, to
make truly ENORMOUS gains from inflation you need to find the investments
that are off the radar… investments that the rest of the investment world hasn't
discovered yet.
Good
Investing!
Graham
Summers
PS. If you’re
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to prepare for the Second Round of the Financial Crisis… I highly suggest you
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He said the US has “deeply” undermined free-market capitalism and that the TBTF banks pose the “greatest” risk to the economy.
~~~~~reply~~~~~
Well, respectfully.... With talk like that Hoenig may get a few Tea Party votes for President but he wouldn't be able to beg his way within 1,000 feet of the Fed building. Anyone who doesn't kneel down before the TBTF doesn't have a chance as Fed Chair (or Treasurer, Senator, Rep, dog catcher....).
Hahahahahahahahahahaha.
Unless there are riots in the streets and/or oil hovers around $200 or higher, QE3 and following will happen. Not because it's the right thing to do, but because it is the path of least resistance for the politicians.
"Government stupidity is the most liquid of all assets, spreading everywhere at the slightest provocation. Look for more of it and you won't be disappointed." – unknown
Good Idea Honig. Who would want to be associated with metally retarded(at best-at worst a flat out CROOK) individuals like Ben Bernanke. It's time for the reckoning.
The Rentenmark was issued on 15 November 1923 to stop the hyperinflation of 1922 and 1923 in Germany. The Rentenmark was only a temporary currency and was not legal tender. It was, however, accepted by the population and effectively stopped the inflation. The Reichsmark became the new legal tender on 30 August 1924, equal in value to the Rentenmark.
Hoenig as Fed chairman? Dream on, unless you have some impeachable dirt on the current POTUS. Obama would never appoint him and the Senate democratic leadership would never let his name get out of committee.
The Federal Reserve system means nothing to them. The banks are what they value (and the BIS) and if banking regulations are too harsh they simply move their investments and focus to the developing world which is exactly what they are doing. The Fed is their strawman and by attacking it you help them achieve their goal. The Ron Paul T-Shirts should say “Control the Fed” not “End the Fed”, but they would never let that happen. They want it ended and Ron Paul doesn't realize he's advancing their agenda of devolution.
The recent policy change decouples the U.S. Fed from the regional Fed balance sheets. Do you think that's some sort of coincidence? In business it's done all the time and it's called upstreaming. It's half the reason a RICO statute was needed because when I own a chain of car washes and lease them equipment from another company that I own and lend that leasing company money from a bank that I own and foreclose... you get the picture. I still keep all my stuff and simply burn my partners and unsecured creditors.
To pull this off however, they need this new two-channel "divorced" system ready to roll as per Mervyn King's proposal see attached: http://tradewithdave.com/?p=5467
Dave Harrison
tradewithdave.com
When are more people going to call for Bernanke's arrest as a FINANCIAL TERRORIST? He is crushing the SAVING-CLASS, the latest Census showed 5 million more, mostly seniors, entered POVERTY in the last year!
Based on average historical CD rate of 4.5%, he is annually taking over $1 Trillion from savers and giving to the Bankster Mafia Cartel.
And much of my dad's (and mother's) IRA savings are in that stolen $1 Trillion..
Bernanke has become a bad joke and dirty word - literally.
Graham: This is wild speculation, trying to make a point nobody else sees at the moment. This is like going for the Jackpot in the lottery. QE will go to infinity. I know you would love to do killer trades going short, which makes you rich in no time. But consider this: Printing money makes sense to pay the depths off without austerity - so they will have to do it - no matter who´s the captain. Priniting delays the revolution, which will happen anyway. So prices will go up in nominal terms - no short trade to see here.
There isnt enough gold at $1,400 an ounce but thats because the price of gold in useless toilet paper is too low
The US is rolling over $2 to $3 trillion of debt in 2011 and combined with a $1.6 trillion deficit there will be a need to issue $4 trillion + in new treasuries. QE 3 is guaranteed to happen no matter what the public thinks about bailouts etc
Peter Schiff has been saying that some day, one ounce of gold will buy the entire stock market.
Hilarious FastMoney interview:
http://www.youtube.com/watch?v=v064y3N5Yag
Just heard Bernanke dismiss the gold standard because he says there is not enough gold to support currency requirements.
This seems like nonsense to me. A "gold standard" does not mean we all have to carry gold around in our pockets. We could still carry gold or silver certificates which are backed at least partially by the PMs. Also, if there is not enough gold, doesn't that mean the price is too low?
There was no mention of silver. It seems feasible to have a bimetallic standard.
I would never expect a central banker to support a gold standard. But I wonder why these Senators never grill Bernanke on the details.
The main reason the argument is nonsense is because the amount of money is arbitrary.
You can have a money supply of 2 trillion dollars with some level of prices or have a money supply of 4 trillion dollars with double level of prices or have a money supply of 1 trillion dollars with half the level of prices.
It does not matter the amount of gold, as long as prices are adjusted accordingly. This is economics 101 and Bernanke knows it.
What you are proposing is no different than the promisory notes of the past, promising exchange of gold upon demand. When money supply quickly outpaced gold supply the .gov converted the paper to FRNs with no backing. Bottom line: any paper not backed by actual gold supply is not a gold standard.
Treasury issued instruments redeemable in US minted intrinsically valuable coinage leaves ample room for any metal or combination thereof to be used as currency.
Congress is vested with the responsibility to establish such weights and measures as needed and instruct the treasury to issue notes to back this currency at par as legal tender.
Further, as accumulation of these physical assets occurs at collection points, (historically known as banks), true capitalism may actually resurrect from the ashes of credit issuing fiat exchanges.
Wouldn't that be something?
So, you say, “Hoenig has seen the writing on the wall and is distancing himself from Bernanke in order to present himself as a potential future Hawk Fed Chairman”?
There is no “future Hawk Fed Chairman." With a round table of chicken hawks led by besweatered Bernanke, the occasional public disagreements are nothing but a cruel joke. They’ve all been caught in a total tissue of lies, no matter how they reiterate their innocence and try to portray a balance back and forth that they are some kind of deliberative body, that they all have some kind of independent opinion.
It’s disturbing that somebody thinks that the comments of some Fed governor, who’s been sitting at the Fed table since 1991, is related to anything connected with policy. Policy is determined by the OWNERS of the NY Federal Reserve Bank.
I agree with William Black who agrees with Charles Ferguson, Berkeley filmmaker who made the Academy Award winning documentary “Inside Job.” Black said, “He raised exactly the right question.”
Said Ferguson, stepping to the podium to receive his award: “I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail – and that’s wrong.”
Polls show Americans agree.
Whose fault is that? The “U.S.” Federal Reserve System’s.
In any regard, in a truly free country, the market, if left alone, will determine interest rates fairly and promptly.
The US is a deeply damaged oligarchy. Not free. Not free market. Running QE-wild, to hide its shadow banking deficits.
The OP is incredibly naive politically. There is one polical party in this county: the Wall Street party with two branches. While Bernanke could be sacrificed his replacement would be another clone. The only way there could be a fundamental change in the Federal Reserve is the growth of a new political party.
As with the Bush and Brown during Katrina disaster:
First: "Great job, Bennie."
Then: the BOOT.
PATIENCE LITTLE PADUAN!!
The article brings up interesting issues but gets it wrong.
Bernanke is a useful tool for the bankers (who need low rates) and the Congress/Obama (who do not really want to cut spending and thus need QEx). Bernanke is going nowhere and if he didn't exist, the oligarchs would have to invent him.
Hoenig is a modest, nice man representing a District (KC) with no money center/TBTF banks. He will never even be Vice Chairman, let alone Chairman. He is an old school, midwest central banker who believes in a modest, more limited role for the Fed. Nobody in NYC or DC wants this now.
Greenspan forever killed Central Bank restraint in this country. Bernanke has continued Greenspan's unfortunate legacy of a grotesquely distorted mandate and public profile for the Fed. The Fed is addicted to this institutional "mission creep"; just witness the endless appearances of Fed Governors on TV now. They use this bloated Fed role as a way to gain celebrity status and high-paying jobs after they leave the Fed. SAdly, there is no constituency with any power who wants to tame this new out-of-control Fed.
Hoenig is writing for posterity. He knows his ideas have no chance of being implemented before his term expires. He is the last of his breed. It's too bad.
TSTM
If Obama stays prisoner of WS/FED he is toast in this escalating spiral of inflation fed on QE/ME instability. They are just kicking the can and the deflation will be all the more painful. It will now bring down the ME ring of despotic countries whose time is up. This is a ring dinger if it destabilises Saudi center.
Agreed.
If the Fed stops printing the Ponzi scheme is over.
Zumzwang.
And so it is if he KEEPS printing.
IMO.
ok; so than why would you not focus your attention on the puppeteers who control and own these stooges? Instead of commenting on the obvious? That's what I want to know.
Bernanke will not be fired. There will be QE to collapse. And they will use the poor performance of the economy as the justification for it.
If they did anything else, it would be admitting that everything they have done was wrong and that admission will not happen.
The Fed is trapped no matter who is in charge.
All you are saying is they have time to kick the can further down the road. Maybe, how far with rising food prices, oil prices and political instability? Something's got to give soon..
Like say, maybe, 2012?
if your 1,2, & 3 are true then that would be enough to stabilized the Dollar and the price of gold.
If the FED falls USD is toast. That starts the concomitant assets and commodity deflation.
Burnt bananas and sour cream.
This is just like that Andes Mountains plane crash back in the 80s.
Bernanke will be eaten by politicians and other pseudo-economists at the Fed for survival purposes.
What does Bernank taste like?
Bacon?
Foie gras?
The FED falls, then the Arabs fall, then the EURO falls, then the japanese fall, then the chinese fall. Then all hell breaks lose as there is no world community. It's every nation for itself. We are back to the world pre WW2. Very fragile state. Regional economies. Prices fluctuate wildly as shortages of everything but no liquidity as no fiat currency and no solution but move to gold standard. Except that no reserve currency except maybe the German DM and Renminbi, outside the USD toxicity zone which will last a decade or more. Imagine world GDP shrinking by 50% to absorb insolvency of TBTF and deflation of world assets, before we take off again, each in his zone!
This is a vicious cycle of which there is NO ESCAPE! Neither for (U)s nor
Mr Great Depression II! They will keep printing until they can no more, for the only
reason there is...TO GET RICH AT OUR EXPENSE! Their only Escape "strategy" is
to FLEEEEEEEEE once they have "enough"!
Our Strategy is GO WITH THE FLOW ,MAKE THE DOUGH, BUY Physical PMs and
PRAY you are still alive when it all comes down, resets and starts all over!
Its about buying power AFTER reset!
QE3? Several Top Federal Reserve Officials Seem To Think That More Quantitative Easing Is Necessaryhttp://theeconomiccollapseblog.com/archives/qe3-several-top-federal-reserve-officials-seem-to-think-that-more-quantitative-easing-is-necessary
I truly believe you are right, but way too early. Bernanke will be sacrificed but in some years.
The reason is simple: if QE stops the USA government will default. QE is a hidden default by inflation, but it does not force politicians to cut spending. QE allows the politicians and corporatists to keep growing the size of government. The next QE round might not be called QE, it might be called "return to normal" but, regardless of the name, it will be more money printing to keep buying government debt.
Only when the government debt has gone back to a manageable size, in some years, Bernanke will be sacrificed and the central planners of the Fed will start speaking about free market again, like if they really mean it.
Correct. I think a good number of people know this, which means that the "New Normal" as Bill Gross defines is actually short lived and not normal in any case. Much is talked about in "Peak Oil", but there is also concurrently a crisis in "Peak Fiat Currency". ZH mentions the article on Italian Bankers changing their accounting methods to suit. The crowd at Davos equates the need for more credit to fill the void by which these banker run governments operate, but credit is debt which is the current bubble being expanded. Conclusion is, the current bubble which is starting to blow up in places like Algeria is "Peak Fiat Currency". When all nations experience their side of the fiat currency bubble explosion, they will like the Italians return to hard assets.
The author makes one big mistake in assumption of the purpose behind QE. QE in the beginning was done to get money velocity going, but because of what is in the White House and in Congress last two years it was futile. Increase in money velocity is still part of the Fed goal, but QE is now used to backstop the US government which is hopeless. The author is right about several things however, Bernanke is toast but so is the existing Federal Government as it is.
Well, I'll certainly feel better once we rearrange the deck chairs on the Titanic. This is just like the demopublicans or republicrats talking about how different things will be when they're in control. Nobody makes it to the level of Fed president without being beholden to the system.
It is my opinion that QE will continue until all comittments are rendered meaningless. The alternative? Default ... ealier than necessary and risk the collapse of the empire. The end game, and I'm just speculating, is that the elite are going for broke - it's all or bust, world domination through patsy governments and war on the recalcitrant. After all, fiat is just paper, and as Mao said, power comes out of the barrel of a gun.
...there are “three stooges” involved in the Great US Swindle occurring today. They are, the big banks, the politicians, and Bernanke. When the public starts rioting which one of these three is going to be sacrificed?...
Is this a valid question? To throw just one cause of the problem under the bus is prolonging the agony. Our solution is simple and has been provided from the plans and specifications drawn before the contractors veered off on their own and threw logic to the wind.
The US' temporarily employed elected legislators need to reopen our mints to the coining of intrinsically valuable currency and direct the treasury department to immediately begin issuing notes redeemable on par and without interest in this currency.
Without this foundation, any posturing of financial investments, budgetary discussions and authoritative credibility is irrelevant and will lead right back to our current enslavement of an otherwise free citizenry.
Until this minimally disruptive, viable and logically constructive return to sanity occurs, it would be my hope the free citizenry of this nation completely excuse themselves from voluntary compliance of any of these organizations requests of allegiance, as they have certainly proven themselves unworthy of it.
All very sensible, except...
Today the US government cannot exist with Volcker-style interest rates, and the US government cannot exist without the FederalReserve buying Treasuries hand over fist.
The debt situation is so bad, in fact, the feds can't even pull this off for a short period of time, like 1 year.