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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
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getting worried about the future of the stock market and have yet to take steps
to prepare for the Second Round of the Financial Crisis… I highly suggest you
download my FREE Special Report specifying exactly how to prepare for what’s to
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I call it The Financial Crisis “Round Two” Survival
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As above. Volcker's bitter medicine threw the US into a recession for 3 years and pushed unemployment above 10%. And we were in vastly better shape 30 years ago. What would hiking interest rates do to this current ponzeconomy (h/t Money McBags) with a U-6 of 17-22%?
You are correct.
The FED has to maintain the QE and ZIRP environment OR we have banking collapse. This can will be kicked down the road as often as necessary. All the bridges behind us have been blown. There is no retreat. It either print or die.
I could see the Bernank being sacrificed for Obam's next election. I cannot see any return to a precious metals base until a post-war economy provides us a fat and fed people willing to trade their gold or at least unwilling to fight for it. And even then it would be fractional. I agree with the author's main point here though, which is that the FED cannot keep this up forever without destroying itself.
With these debt levels a rate rise is nearly impossible without restructuring. What's going to happen, rates rise to 2% and a law gets passed capping primary dealers so they can only charge 3% interest on loans? Tell us what you think is "off the radar" don't come here and pimp your "research", share it outright, bitch.
you might be right. the trick is how far will we be down the rabbit hole before the plug is pulled on bernanke, if it's pulled. and at that point what alternative tools will a new fed chairman have?
I suspect that there is anticipation of the end of QE2. Perhaps this will cause some pain which will result in a pull back in the market. People will reel from the withdrawal and clamor for more QE to numb the pain.
Or, perhaps the FED will just blatantly print without even resorting to causing pain in the market first.
These criminals are experts at sending mixed messages designed to leave the masses puzzled, perplexed, baffled and bewildered with the goal of confounding and confusing the investing public.
I suspect that there is anticipation of the end of QE2. Perhaps this will cause some pain which will result in a pull back in the market. People will reel from the withdrawal and clamor for more QE to numb the pain.
Or, perhaps the FED will just blatantly print without even resorting to causing pain in the market first.
These criminals are experts at sending mixed messages designed to leave the masses puzzled, perplexed, baffled and bewildered with the goal of confounding and confusing the investing public.
More coke for the banksters
Great article, Phoenix.
If anyone thinks the pressure on Bernanke is bad now, if things continue on the path they've been on, just wait until the 2012 election campaigns kick off - you haven't seen ANTHING yet.
Robert Menendez, a Democratic Senator from NEW JERSEY, was hammering Bernanke today on his claim that inflation was tame and that the proper metric to measure the success of QE was that equity markets have risen.
Mendoza sees the forrest through the trees. Can you imagine what conservative Democrats and even moderate Republicans, let alone conservative Republicans, are going to say 2, 5 or 8 months from now?
Scumbag congresspeople and wannabees will be treating Bernanke like a proverbial punching bag.
"End The Fed" - I wonder what would happen if everyone wrote it on every piece of counterfeit paper which gets passed.
Let's start that.
If did, how long 'til laws outlawing as defacing government property?
Just did it on my wallet photos of GW.
It's already illegal, but really, what is a law other than a written demand dictated by a handful of people?
Time to order a box of stampers to pass out.
http://www.endthefednow.com/stamp.html
all political grandstanding that means nothing. They act tough in front of the cameras and then vote whichever way their banker bosses tell them. The "financial reform" bill made that clear.
The Fed has abandoned free market principles because we have a socialist government and it suits TPTB. They make money plus get more control. Crony capitalism is fine if you're a crony.
I think Hoenig would be a hard sell. He's the only Hawk and would be surrounded by everybody else who are on the other side of the table from him. How's he going to change the Fed 180 degrees without a purge? For me, the big tell was when Volcker walked away. There's no Volcker coming back.
This is a black swan song for the USD, a one way trip to the IMF with a fiat SDR WRC, a global central bank, and more cronies and crime. With any luck gold will be in the basket and perhaps also if Asia has more say.
The Fed exists to create inflation: Americans and their freedom are victims of this total power grab.
“Without the Fed there would be little or no inflation. The Federal Reserve exists to create socialism in our nation. The major steps are recommended in The Communist Manifesto for the establishment of economic dictatorship in any nation. Step Five reads: ‘Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.’ The Fed is the realization of that recommendation. It is using its illegitimate power both to steer our nation into tyranny and to expropriate the property of the American people.” -- Financial Terrorism: Hijacking America Under the Threat of Bankruptcy
No new world order on monetary side will occur without the agreement of creditor nations : China, Japan, Middle East (this last now politically in jeopardy). So the US has lost a vital ally amongst the creditor nations. Means more power in China, as Japan has mega debts and is demographically weak.
Every thing you said is basically correct, but please understand the difference between a fascist and a socialist. This is a fascist govenment by any reasonable intepretation of the definition.
fascism IS socialism.....for the rich
Don't quibble with me... I know the difference, he didn't.
Is the difference that fascism is real while socialism is imaginary?
Took a little while....after playing in the peak oil threads, the subltety meter needed to be recalibrated....
While I agree with Hoenig and much of his position, I'll wager a fin that what a hawk like Hoenig proposes would never be "allowed" or "permitted" to happen.
That being said, I'll pray that Hoenig is our next Fed Head!
I'd file his protest under the category of "controlled dissent." He is a natural relief valve for ideas whose time has comes, while at the same time providing continuing credibility to the institution that is The Fed.
But no, I can't see him getting the keys to the car. He will remain in the backseat until he sees a safe place to bail (or at least before they run it off of the cliff).
Volker 2.0? Only if they want to crash it all at once, then blame it on him.
by the way, whatever happened to Volker 1.0?
I think he was like "Screw you guys." And went home or to his bunker or wherever he goes when he isn't saving America.
right, they are going to put in a hawk at the Fed, the result would no doubt be a collapse in the global debt ponzi and would wipe out the banks that own the Fed.
You cannot be serious.
There will be more QE. The majority of the public does not associate QE with 'bailouts'.
The US debt is overwhelmingly short term debt. They must keep rates low or the deficit will explode. QE is the best way they have to accomplish that.
They can't stop QE or the market will implode. Obama doesn't want that happening before the 2012 election...
Besides, the sheeple will demand more "easing" to relieve their pain. The Treasury will then spend billions to print-out $500 checks for the masses so they can pay a couple of bills.
Even if they don't, The Bernank will buy everything for sale till his dying breath, as that is his sole function.
"Besides, the sheeple will demand more "easing" to relieve their pain."
Yup. the "recovery" is here!
QE "worked".
Bernanke/Obama "saved the economy".
"Please sir, may i have another"
The FED can't raise rates to like 10%-20% like it did with Volker(because the debts held by every1 are 10x to 100x bigger), it would instantly wipe out all the banks, every1 would need to default on their debt including the Treasury, it would be the end of the system
Ya, it would skrew over the Fed's owners.