This page has been archived and commenting is disabled.

No QE3 Right - So Why Did The USD Just Hit A New Cyclical Low? Citi Explains Why

Tyler Durden's picture


If you are confused why at one point every word the Chairman said was the equivalent of one pip lower for the DXY and 10 cents higher for gold, wonder no more. Here is Citi's Steven Englander asking, and explaining why the USD just hit a new cyclical low.

From Citi's Steven Englander

Asset markets pretty much liked the FOMC statement and really liked the press conference, but that's not the same thing as liking the USD. Consider the chart below -- the blue line shows the tick-by-tick drop in DXY (the dollar index) from noon to  4PM New York time, encompassing the FOMC statement and the press conference. The red line is the S&P and the green line is the two year yield. The question is what surprised the market  to such a degree that the USD basically hit new cyclical lows.
The factors:
1) the Fed comfort zone with how core inflation is evolving -- investors may have been looking for an upgrading of the degree of inflation concern that did not emerge either in the statement or in the press conference comments -- neither emerged
2) the dismissal of USD weakness as a factor driving commodity prices -- echoing a speech by Fed Vice-Chairman Yellen a few weeks ago; rapid growth in EM economies was viewed as the major factor in commodity price strength
3) the comments on a strong dollar policy were treated pretty much as pro forma relative to the view that a stronger US economy is a prerequisite to a stronger USD in the medium -- a view that embraces USD weakness in the near-term -- "The second thing we are trying to accomplish is get a stronger recovery and achieve maximum employment. Again, a strong economy attracting foreign capital will be good for the dollar."
4) reference to the success of QE2 -- in particular to the gains in stock and credit prices as the measure of the success of QE2 -- by implication a weaker USD is an unindicted co-conspirator in that success
5) the emphasis on the measure of Fed ease being the stock of assets owned rather than the flow
-- by implication the end of QE2 would be the end of additional easing but not the beginning of tightening -- the implication for the FX market is that a backing up of asset prices at the end of QE2 would be unwelcome.
6) given the success claimed for QE2, the conclusion "we've taken our forecast down just a bit, taking into account factors like weaker construction and possibly just a bit less momentum in the economy" seems very tepid.
It is not clear how much of these comments should have been viewed as a surprise and certainly whether they merit taking the EUR and AUD among other currencies to new cyclical highs. At a minimum they reinforced the view that any shift in policy was happening slowly and is still heavily contingent on economic outcomes. From the perspective of markets there is little to discourage flows into EM and the ongoing reserves diversification needs that have steadily weakened USD with G10 as well as versus EM..
The USD moves reinforce a story that is well known and widely priced in. It is clearly the path of least resistance at the moment, but also is increasingly contingent on ongoing global growth and asset market strength. The Fed did nothing to discourage that thinking, but at a certain point the distinction between USD weakness and asset market strength may become more clear than it is now.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 04/27/2011 - 17:32 | 1213723 lolmao500
lolmao500's picture

Because nobody in their right mind trust Bernanke or congress to do the right thing.


BTW... what's the technical support of the US dollar MUST NOT BREAK? Isn't it around mid-71?

And if you think gold has shot up... just wait till tomorrow after the next bond sale, the US will break the debt ceiling!

Wed, 04/27/2011 - 17:36 | 1213743 Cassandra Syndrome
Cassandra Syndrome's picture

Just above 71, record low set in July 2008. 2 months before the Sixth Sense death moment for the Global Financial System, it still hasn't sussed itself out as a ghost yet.

Wed, 04/27/2011 - 17:45 | 1213780 alien-IQ
alien-IQ's picture

actually it was 70.69 in March 2008...but that's just's toast.

Wed, 04/27/2011 - 20:58 | 1214406 mick_richfield
mick_richfield's picture

I see dead currencies.

Wed, 04/27/2011 - 17:36 | 1213751 alien-IQ
alien-IQ's picture

yes the all time low for the USD is just below 71...but that's irrelevant at this point since it is pretty much a given that the $DXY will be below 70 before June. The USD has NO support.

Wed, 04/27/2011 - 17:51 | 1213802 Yancey Ward
Yancey Ward's picture

But the Treasury Secretary just reaffirmed the strong dollar policy!  Surely Little Turbo Tax Timmy isn't a lying scumbag.

Wed, 04/27/2011 - 18:36 | 1213938 traderjoe
traderjoe's picture

Or a tax cheat...

All this talk of the DXY...comparing toilet paper to toilet paper as they all swirl down the loo...

Wed, 04/27/2011 - 18:24 | 1213913 narnia
narnia's picture

the DXY is 57% weighted towards the Euro.  one of its only items of support is the potential implosion or disintegration of that piece of toilet paper.

the $ reached an all time low against the AUD (#1 in Soverign Fiscal Responsibility Index) & near all time lows against the NSD (#2), sliver & gold. 

Wed, 04/27/2011 - 19:37 | 1214137 Arkadaba
Arkadaba's picture

It wasn't that long ago that 1 US dollar = .62 Canadian. Now one US dollar = 1.05 Canadian. Very bullish for cross border shopping. 

Wed, 04/27/2011 - 19:52 | 1214179 robertocarlos
robertocarlos's picture

I know what you mean but you explained it backwards. 1 CDN dollar  was equal to 62 US cents. Today 1 CDN dollar = 1.05 US dollars

Wed, 04/27/2011 - 22:09 | 1214592 RafterManFMJ
RafterManFMJ's picture

Yeah I remember getting lap dances for around 10 dollars US just 5 years ago... ah, Sundowners it's been too long.

Wed, 04/27/2011 - 19:50 | 1214183 Terminus C
Terminus C's picture

Other way around, but yea.

1 CAD bought .62 USD in 2000

now 1 CAD buys 1.05 USD

Wed, 04/27/2011 - 20:05 | 1214219 Arkadaba
Arkadaba's picture

Thanks for the clarification. It has been a long day and I don't trade forex though I'm intrigued. 

Luckily, in terms of selling my labour, I've been on the right side of the trade. And having lived on both sides of the border, my celsius = fahrenheit ratio is totally screwed up too!

Thu, 04/28/2011 - 03:59 | 1215014 Law97
Law97's picture

 took a vacation to BC last summer and felt like I was damned poor.  Prices were 50% more expensive in Canadian dollars, just like it always had been, but this time the exchange rate made it so that everything was 50% more expensive in REAL terms.  $10 dollar happy meals, $120 cheap motel rooms, $8 pints, $4 ice cream cones.  I felt downright poor compared to the Canadians.  Here I am, a well-paid professional in the U.S. and I felt like I couldn't keep up with even the working classes I saw around me in Canada who were spending freely.  What a reversal. 


I travel quite a bit internationally and have for the last 20 years or more.  Americans always used enjoy very inexpensive prices pretty much anywhere they went.  Now it's the opposite.  When we travel we are being crushed by $15 hanburgers and $10 beers.  Even Mexico is no longer a bargain.  Our purchasing power destruction is obvious to anyone who travels internationally.  It's been a real eye opener just how far we've fallen in the last 5-10 years.

Thu, 04/28/2011 - 07:38 | 1215174 SoNH80
SoNH80's picture

I remember the good old days, summer '01, travelling in Germany, when the DM was artificially cheap v. the dollar... $20 hotel rooms, $4 dinners, $1.75 liters of beer-- and this was in places like Munich and Berlin.  Augsburg, the greatest small city in Northern Europe, was even cheaper. 

Wed, 04/27/2011 - 22:08 | 1214589 Id fight Gandhi
Id fight Gandhi's picture

Makes the drop in home prices all that worse

Wed, 04/27/2011 - 22:56 | 1214703 ebworthen
ebworthen's picture

Cue next European sovereign debt crisis to pop the dollar for a couple of weeks and let the HFT FX trade machines make some money.

Then QE 3 (purchase of MBS's by FED) then let oil and food prices go up another 25% and say that "core inflation is still at 2%" as seniors get 0.2% for savings and start buying dog food.

Lather, rinse, repeat.

Wed, 04/27/2011 - 17:47 | 1213786 AchtungAffen
AchtungAffen's picture

Yeah, 70.74, the all time low.

Wed, 04/27/2011 - 17:29 | 1213728 dick cheneys ghost
dick cheneys ghost's picture

pass the sweet and sour shrimp................

Wed, 04/27/2011 - 18:06 | 1213854 Bicycle Repairman
Bicycle Repairman's picture

Were you making a reference to the "mail order school of diplomacy" skit from '75 SNL?

If so, amazingly obscure.

Wed, 04/27/2011 - 18:19 | 1213895 Fred Hayek
Fred Hayek's picture

Oh . .

I was just about to cause an international incident by shooting someone who'd said something anti-american

Wed, 04/27/2011 - 20:54 | 1214390 Arkadaba
Arkadaba's picture

Like go Habs go! Game 7. I know it is bread and circuses but it is my one guilty pleasure.

Errr Edit: Not my only guilty pleasure but hey ...

Wed, 04/27/2011 - 17:42 | 1213740 falak pema
falak pema's picture

The FED predicts a GDP growth of 3.5% in 2011. This is a number that boggles the mind. Any body like to comment it?

Secondly if the growth does not materialize and/or inflation spikes the FED keeps its options open to ease once again the MS to levitate assets again...Right?

Have I understood the gist?

Wow! Benocide thinks he can run the ship up the growth hill without inflation, without asset devaluation, without USD caving in completely. A maestro at work! So corporates don't pretend your margins are getting crushed by commodity hikes that don't exist. Oil hikes are of NO consequence on inflation! October revolution anyone?

Wed, 04/27/2011 - 17:44 | 1213773 lolmao500
lolmao500's picture

3.5% is only ``nominal`` growth... if you factor in the ``deficit spending`` of 10-12% of GDP + dollar devaluation, the real growth is -10%...

Wed, 04/27/2011 - 17:46 | 1213782 falak pema
falak pema's picture

That beats zimbabwe...

Wed, 04/27/2011 - 22:19 | 1214077 honestann
honestann's picture

Sure.  To make it much easier to understand, just consider the exact equivalent situation for your neighbor next door.

#1:  His income drops 20% from last year.

#2:  He borrows funds equal to 23.5% of income last year.

#3:  Therefore, his GDP (and spending) this year is +3.5%.

That's how they calculate things.  Notice how we must totally ingore the increase in your neighbor's debt to end up with GDP at +3.5%.  The fact is, his real GDP is -25% to -45% depending upon the interest rate he is paying to borrow that money.  In the case of the federal government, the interest rate is only "a few percent".

The point is, the GDP is falling like a rock.  All these mind games are to attempt to hide the fact that the USSA has been in depression for several years now.  The fact is, the USSA is in deep, deep shit, and sinking fast.  The whole game of the federal reserve, federal government, banksters international and mainstream media is to fake gringos into a false sense of security and hope until they are completely sunk in the bog of history.  Whether that already happened or not is a matter of opinion, I suppose.

Wed, 04/27/2011 - 23:40 | 1214779 JeffB
JeffB's picture

The tragedy, however, is that the U.S. debt went up $1.7 trillion in 2010. That is 53% of total federal revenues for 2010 & 17% of GDP. Government spending, counting state & local was 48% of GDP.

Yeah, we're in a heap of trouble.


Thu, 04/28/2011 - 00:38 | 1214861 Urban Redneck
Urban Redneck's picture

The mind of the central banker is a scary place to visit-

Chronicle of currency collapses: re-examining the effects on output

The impact of currency collapses (ie large nominal depreciations or devaluations) on real output remains unsettled in the empirical macroeconomic literature. This paper provides new empirical evidence on this relationship using a dataset for 108 emerging and developing economies for the period 1960-2006. We provide estimates of how these episodes affect growth and output trend. Our main finding is that currency collapses are associated with a permanent output loss relative to trend, which is estimated to range between 2% and 6% of GDP. However, we show that such losses tend to materialise before the drop in the value of the currency, which suggests that the costs of a currency crash largely stem from the factors leading to it. Taken on its own (ie ceteris paribus) we find that currency collapses tend to have a positive effect on output. More generally, we also find that the likelihood of a positive growth rate in the year of the collapse is over two times more likely than a contraction; and that positive growth rates in the years that follow such episodes are the norm. Finally, we show that the persistence of the crash matters, ie one-time events induce exchange rate and output dynamics that differ from consecutive episodes.

Wed, 04/27/2011 - 17:34 | 1213742 honestann
honestann's picture

The dollar is toast.

No, cancel that.  Toast is real.

Wed, 04/27/2011 - 17:42 | 1213762 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

The U.S. dollar went extinct in 1971. It can now be referred to correctly as one of the following:

Federal Reserve Note

Monopoly money

Jew Confetti

Wed, 04/27/2011 - 18:22 | 1213901 john39
john39's picture

i get it man.  you get it.  I just can't understand why so few americans get it.  what people really don't get, none of this is really about money, that is just a means to an end.  lets just see how this all turns out. 

Wed, 04/27/2011 - 19:20 | 1214085 Spastica Rex
Spastica Rex's picture

But...but... iPads...

Wed, 04/27/2011 - 20:41 | 1214334 Chuck Walla
Chuck Walla's picture

Few Americans get it because:

!. In school, they were more concerned with getting condoms on cucumbers.

2. They all knew the welfare system would be there.

3. Finance and money is so boring unless one wants a quick 8 ball.

4. New season of Idol!

5. Hope & change is a hell of a lot eassier to vote for than do.

Wed, 04/27/2011 - 23:43 | 1214786 JeffB
JeffB's picture

"lets just see how this all turns out."

I feel too much like a fly stuck in a web watching a spider approach to enjoy watching how things unfold.

Wed, 04/27/2011 - 18:49 | 1213995 Ratscam
Ratscam's picture

Wrong, not jew confetti, rather zionist confetti.

Big difference between Ashkhenazi and sephardi jews.


Wed, 04/27/2011 - 19:06 | 1214029 Holodomor2012
Holodomor2012's picture

If it walks like a duck.

Anyhow, nice work on your +9 Funky.  Someone told me it's a point for every Jew who junks you and 10 for every vitriolic sayanim who responds.

Wed, 04/27/2011 - 23:06 | 1214724 Richard640
Richard640's picture

but what about Kirk Douglas's magnificent chin...?

Wed, 04/27/2011 - 19:09 | 1214054 barkingbill
barkingbill's picture

fine but you know not all jews like bernanke or the fed, or the status quo at the moment...lets not get all hitler over know how that ended

Wed, 04/27/2011 - 19:23 | 1214101 Holodomor2012
Holodomor2012's picture

No, actually no one knows how that ended because they get thrown in jail for talking about it. 


Wed, 04/27/2011 - 22:18 | 1214607 Id fight Gandhi
Id fight Gandhi's picture

They are doing a lot of damage to themselves but its not right to ruin USA economy for their own games.

Wed, 04/27/2011 - 19:24 | 1214103 buzzsaw99
buzzsaw99's picture

Joo, not Jew. One has little to do with the other.

Wed, 04/27/2011 - 22:13 | 1214599 Id fight Gandhi
Id fight Gandhi's picture

You're spot on, why the junks?

Thu, 04/28/2011 - 01:28 | 1214910 Client 9
Client 9's picture

Your comments are racist, ignorant and cruel. You must desist.

Wed, 04/27/2011 - 17:42 | 1213777 lolmao500
lolmao500's picture

You can eat a toast, but you can't eat toilet paper!

Wed, 04/27/2011 - 18:07 | 1213850 sabra1
sabra1's picture

depends what's on the toilet paper!

Wed, 04/27/2011 - 21:46 | 1214542 rosiescenario
rosiescenario's picture that Nutella??? uh, the aroma seems a bit off....

Wed, 04/27/2011 - 17:51 | 1213809 willien1derland
willien1derland's picture


Wed, 04/27/2011 - 18:27 | 1213921 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

I can eat toast....sandwiching my iPad...yummy!

Wed, 04/27/2011 - 18:44 | 1213972 Conchy Joe
Conchy Joe's picture

I like my toast golden brown - the gold you can eat.

Thu, 04/28/2011 - 00:58 | 1214882 tsx500
tsx500's picture

that is a huge slap in the face for toast my friend !

Wed, 04/27/2011 - 17:34 | 1213744 GFORCE
GFORCE's picture

Because it's another carry scam. Perpetual rises will occur in all commodities, currencies and stocks until the next crisis.

Wed, 04/27/2011 - 21:45 | 1214543 rosiescenario
rosiescenario's picture

" Perpetual rises will occur in all commodities, currencies and stocks until the next crisis."


...and then they will really take off.

Wed, 04/27/2011 - 17:40 | 1213745 plocequ1
plocequ1's picture

Where did you hear no QE3? You have to play it backwards to get the messages. Sort of like Revolution 9. Remember? 

Wed, 04/27/2011 - 17:36 | 1213750 dr.charlemagne
dr.charlemagne's picture

The need for more economic heroin was not ruled out.

Wed, 04/27/2011 - 17:41 | 1213756 _Alekhine_
_Alekhine_'s picture

If the dollar weakens, it shows that the economy is recovering. 

If the dollar strengths, it shows that the economy is recovering. 

Wed, 04/27/2011 - 17:41 | 1213760 Robslob
Robslob's picture

Any gold folks here...time for me to decide 10oz of Eagles vs 10oz of Maples.

Seems Maples advantage are cheaper and more pure and possibly good to use when you flee the US into Canada or to avoid confiscation of government property aka gold eagles.



Wed, 04/27/2011 - 17:44 | 1213775 Irwin Fletcher
Irwin Fletcher's picture

I like the Austrian Philharmonics.

Wed, 04/27/2011 - 21:07 | 1214440 Klaus Daimler
Klaus Daimler's picture

Agreed - they are the most attractive of the bullion coins, IMO.

Wed, 04/27/2011 - 22:25 | 1214627 JoeSexPack
JoeSexPack's picture

Silver Phil's are much shinier than others.

Like the musical instruments also.

Wed, 04/27/2011 - 17:47 | 1213787 traderjoe
traderjoe's picture

Those reasons are all good. I prefer Maples myself. 

Interestingly tho, Eagles are actually legal currency at their face value of what $50. Therefore, theoretically, you can barter with people and legitimately value the transaction at $50. Of course, there are some tax implications of that, but it's possible anyway.

What about 5 and 5?

BTW, I also like the Australian Kangaroo, because each individual coin comes sealed in a nice plastic holder directly from the mint. And low premiums too... 

Wed, 04/27/2011 - 17:55 | 1213820 Robslob
Robslob's picture

Thanks Joe and other ZHers.

My thoughts were for Maples the Canadian Dollar might be worth more and those also have face value in Canada but could be more useful in the US.

Does the purity get you any extra value? The Eagles are like .9167 vs .9999 for Maples.

Wed, 04/27/2011 - 18:09 | 1213862 Trial of the Pyx
Trial of the Pyx's picture

gold is gold


the eagles, or krugs, will wear better as they are alloyed with a harder metal

Wed, 04/27/2011 - 19:21 | 1214098 cowdiddly
cowdiddly's picture

What he said. those maples are ultra pure but a bitch to keep nice. As far as price they run about the same.

Wed, 04/27/2011 - 18:17 | 1213881 Moe Howard
Moe Howard's picture

Authorized by Congress in 1985 and first minted

in 1986, American Eagle Gold Bullion Coins

are minted according to the durable, 22-karat

standard for circulating gold coinage. Each coin

contains its full, stated weight of pure gold, which

by law, must be taken from newly mined sources

in the U.S. The balance consists of silver and

copper, added to increase the coin’s durability and

to help resist scratching and marring. American

Eagle Gold Bullion Coins are rich in history, too.

The obverse is based on world-renowned

American sculptorAugustus Saint-Gaudens’

design for the prized 1907 $20 gold

coin. The reverse pictures a family of eagles,

symbolizing family tradition and unity.

What that means is this:

1 Troy Ounce of Gold, total weight is 1.0909 - the other crap makes the rest. You are not getting less gold with the eagle. 

Wed, 04/27/2011 - 18:19 | 1213887 Robslob
Robslob's picture

Thanks Moe but you lost me at : Authorized by Congress


Wed, 04/27/2011 - 23:22 | 1214750 ebworthen
ebworthen's picture


If the FED can hold the American people hostage when it is an amalgam of banking interests - it would be a small thing for any U.S. coinage or currency to be declared "property of the realm".

Look at how they shook down the supposedly neutral Swiss.

If you are in the U.S. I think your initial thought of something OTHER than U.S. Eagles was the correct one.

Wed, 04/27/2011 - 20:38 | 1214333 equity_momo
equity_momo's picture

Krugers are the most widely circulated coin and thus theres always a market wherever you go in the World , they also tend to be the cheapest. I would balance my physical holdings with whatever country you live in , whatever country you think you would like to live in and then Krugers. So you have 3 types forming your portfolio.

Wed, 04/27/2011 - 23:44 | 1214793 rosiescenario
rosiescenario's picture

"Of course, there are some tax implications of that,"


....taxes need to be paid on Government created inflation....unless you are GE.

Thu, 04/28/2011 - 00:49 | 1214872 Urban Redneck
Urban Redneck's picture

As far as the IRS is concerned - there are tax consequences to bartering- regardless of what is exchanged.  The IRS closed all the domestic bartering loopholes a long time ago, as far as the IRS is concerned, it's fine to barter, but THEY WANT THEIR CUT, and reserve the right to come after you if they don't get it. 

IRS Tax Responsibilities of Bartering Participants,,id=188095,00.html


Wed, 04/27/2011 - 17:49 | 1213792 AG BCN
AG BCN's picture

I'm all Maples, no logical reason for it, even though there is a really bad representation of Queenie on the newer coins.


Wed, 04/27/2011 - 19:22 | 1214106 cowdiddly
cowdiddly's picture

I agree I think the should have stopped updating her profile at like 30. 

Wed, 04/27/2011 - 17:51 | 1213800 Stormdancer
Stormdancer's picture

Just something to consider if Australia is a possible destination.  As it currently stands, there is no tax on bullion that is .995 pure or finer.  Krugs and Eagles don't make the cut and will attract a 10% GST on crossing the border.

I've stuck with .999 bullion for that reason.  Of course, it matters to me since I live in Oz and travel to the US occaisionally.  I carry metals so I can avoid paying the banksters their FX conversion spread :).  I prefer the local dealer get the vig and consider building the relationships on both ends of the trip to be valuable.

Plus, it's an excuse to spend "expense" money on metal ..even if only for a short time.

Wed, 04/27/2011 - 18:02 | 1213843 fries_with_that
fries_with_that's picture

Thanks for that comment. Helpful. When taking coins from one country to another do the security people at the airport have anything to say?

Wed, 04/27/2011 - 18:04 | 1213844 Robslob
Robslob's picture

Interesting thought Fries but my take would be it is face value different than dollars/toilet paper.

Wed, 04/27/2011 - 18:25 | 1213897 Stormdancer
Stormdancer's picture

In Adelaide I watched the scanner operator's eyes go wide as my carry on went through.  I smiled at her and said "I figured you might want to see that" and she asked

"What is it?" 

I said "It's silver coins I'm taking to the US to trade with other collectors."  They were Kangaroos in mint packaging so I imagine they must have looked very cylindrical and perhaps a bit ominous if you were on the alert for a bomb.  Anyway...she just nodded her head and nobody even asked to open the bag or see them.  They just waved me on through.

In Singapore and London I didn't say a word and none of the security people did either.  In San Francisco they didn't even bother with a customs check at all.  There was no line...nothing.  I turned in my declaration form to a guy standing by a stanchion...he glanced at it and waved me on.  I was looking for a line to get in and suddenly found myself outside the customs area.  No searches at all. be honest...I seemed to have gone through at a time when things were so lax that it may not have been a good example.

Going the other way, it's good to have contacted customs first and tell them what you're bringing in.  Get a letter from them (they're easy to deal with) verifying the duty free status of your coins to carry with you because some of the customs agents don't know the law.  I have heard of stories where people had to pay the GST because of ignorance on the part of the customs officers.  It was promptly refunded when appealed, but it's an unnescessary hassle...and one I haven't personally experienced.  But I hear some have.

Edit:  Also, note that I was not carrying anything close to $10,000 total value, even combined with the cash I was carrying.  That would probably be a gamechanger and I've never tried it.  I was not required to declare what I was carrying in writing.  I would definately contact Australian customs before the trip and obtain that letter if I ever intended to carry more than $10,000 value.

Thu, 04/28/2011 - 01:50 | 1214928 ViewfromUnderth...
ViewfromUndertheBridge's picture

Agree Aust. Customs are easy to deal with if you are upfront...used to regularly travel with more than 10k and declared it, no problems ever and you get to go through the fast lane.

Wed, 04/27/2011 - 18:28 | 1213923 Rogerwilco
Rogerwilco's picture

There are two sides to the border. What do you suppose the tax on this side will become when enough people decide to flee with their gold and silver?

Wed, 04/27/2011 - 18:35 | 1213933 Stormdancer
Stormdancer's picture

It may not be long before we find out.  It's certainly a time to make sure you're caught up on the latest before travelling.

Wed, 04/27/2011 - 18:45 | 1213969 traderjoe
traderjoe's picture

You are way too caught up in the possibility of confiscatory taxes. First, the thinking favors bugging in and not bugging out. Secondly, huge tax rates would merely embolden the black market. If it happens everyone will have a whole mess of problems and not just PM taxes.

Thu, 04/28/2011 - 02:52 | 1214969 Arkadaba
Arkadaba's picture

But don't US citizens, regardless of where they are living, have to file with the IRS? I thought I read something about that:,8599,1983238,00.html

Thu, 04/28/2011 - 05:10 | 1215041 Urban Redneck
Urban Redneck's picture

US Citizens & Permanent Residents do and the additional forms make the basic 1040, + Schs A,B,C,D,E combo look easy.

Customs reporting is completely different though.  The problem with transporting unregistered & over-limit gold across borders is that it is legally subject to seizure by the governments on either side of the border.  However, in civilized and high-tax countries transportation counter intuitively tends to be free of the duties and taxes. 

Gold is very similar to lead and lead delivery vehicles, if you want to cross borders with it- there is a bunch of homework around the specifics of the jurisdictions to do before hand, but it almost eliminates the possibility of some very unpleasant State actions (uncivilized countries are a different story).   

I would recomend starting here and typing "gold" before crossing the US border with more than $10,000 (which is rapidly becoming a smaller & smaller quantity of gold)

Wed, 04/27/2011 - 18:21 | 1213896 fiddler_on_the_roof
fiddler_on_the_roof's picture

I only like Maples and Philharmonics. None of those 22K coins.

I recently converted my Perthmints directly to Maples at a $35 cost to me per coin.

Wed, 04/27/2011 - 20:43 | 1214355 equity_momo
equity_momo's picture

Just curious , why?

Wed, 04/27/2011 - 21:05 | 1214431 mick_richfield
mick_richfield's picture

You won't have to flee the country.  The government will flee the country.

Welcome to the new world.

Wed, 04/27/2011 - 22:18 | 1214616 Id fight Gandhi
Id fight Gandhi's picture

I'd say go for junk 90%. Easier to get better deal under spot as people clean out grandpa's coin collections.

Wed, 04/27/2011 - 17:40 | 1213765 Sokhmate
Sokhmate's picture

Aaaand .. it's gone. it's gone, it's all gone.

Wed, 04/27/2011 - 18:15 | 1213882 fuu
fuu's picture

What's all gone?


The money in your account, it didn't do too well, it's gone.

Wed, 04/27/2011 - 18:57 | 1214010 Let them all fail
Let them all fail's picture

should be good tonight as they satirize Apple

Wed, 04/27/2011 - 17:42 | 1213766 Silver Bug
Silver Bug's picture

Because anyone with a grain of common sense already knows there will be QE3 / QE to infinity, even if they don't call it by that name, and even if they don't annouce it. They have no choice.

Wed, 04/27/2011 - 18:35 | 1213931 Rogerwilco
Rogerwilco's picture

So, Mr. Common Sense, how does Obama get reelected with gas at $6?

Wed, 04/27/2011 - 18:45 | 1213980 traderjoe
traderjoe's picture

And you're so sure that's the objective?

Wed, 04/27/2011 - 21:36 | 1214513 AVP
AVP's picture

He doesn't...

Wed, 04/27/2011 - 23:39 | 1214764 ebworthen
ebworthen's picture

They need to roll it back the Repubs. for a while.

In times of crisis, it rolls every four years.

As long as they flip-flop back and forth they can keep the sheeple thinking it matters as they are fleeced of their assets through taxation, fees, currency devaluation, insurance ("health" industry), and indentured servitude with shiny LCD screens and ape'ing the young.

Wed, 04/27/2011 - 17:44 | 1213784 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

round them up americans.

line em up over there against that wall.

now you americans with the guns, see how many you can take out using as few shots as possible.

the one with the lowest number of shots fired with the most kills wins the big prize:

freedom for everyone in america like it is supposed to be !

thank you.  come again.

silver bullets and shields bitchez !

Wed, 04/27/2011 - 17:51 | 1213803 johnnynaps
johnnynaps's picture

We can give away banksters' homes as prizes!

Wed, 04/27/2011 - 18:11 | 1213865 razorthin
razorthin's picture

That's why I prefer the Casull.  The skull fragments of one banksta can take out several more.

Wed, 04/27/2011 - 17:49 | 1213790 Al Gorerhythm
Al Gorerhythm's picture

Oh, what a tangled web we weave....

When 'ere the banks promote QE

Thu, 04/28/2011 - 02:55 | 1214974 Arkadaba
Arkadaba's picture

Oh what a tangled web we weave

When old Bernanke does deceive ...

Wed, 04/27/2011 - 17:48 | 1213798 scatterbrains
scatterbrains's picture

It's going to be interesting when bernank finally has to step in to save the dollar at the expense of his pet stocks... or perhaps he thinks the dollar will find it's own level.. but what if it dosn't ?  Shouldnt the momos be piling in on the dollar short trade until he flinches ?

Wed, 04/27/2011 - 17:52 | 1213804 carbonmutant
carbonmutant's picture

"the dismissal of USD weakness as a factor driving commodity prices "

Isn't this how he got into trouble with the housing crisis?

(January 10, 2008) "The Federal Reserve is not currently forecasting a recession."

Wed, 04/27/2011 - 17:50 | 1213805 disabledvet
disabledvet's picture

How do you create a "weak dollar?"

Wed, 04/27/2011 - 17:56 | 1213824 carbonmutant
carbonmutant's picture

Buy buying Turbo Timmay's notes...

Wed, 04/27/2011 - 18:38 | 1213949 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

i convert frn's to physical silver.

i think that helps the dollar weaken.

don't say i'm not helping!

Wed, 04/27/2011 - 20:25 | 1214292 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

oooh i know - use paper?

Wed, 04/27/2011 - 17:52 | 1213807 darteaus
darteaus's picture

Once I saw what a trillion dollars looks like I realized that the US debt will never be paid back. Plan on it.

Wed, 04/27/2011 - 18:40 | 1213953 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture


as if !


Wed, 04/27/2011 - 19:00 | 1214022 web bot
web bot's picture

I believe that a pile of $1 bills stacked 68 miles high is $1Trillion.

Wed, 04/27/2011 - 21:13 | 1214455 mick_richfield
mick_richfield's picture

I keep trying to check that, but the high-altitude winds are just killing me.

Wed, 04/27/2011 - 17:53 | 1213808 ReturnFreeRisk
ReturnFreeRisk's picture

Bernanke is impressive in his resolve to be more dovish than the market expects for 8 straight years. Unreal.

This man does not know anything besides easy monetary policy. He opened the door to QE3 today. And the market responded appropriately.

Wed, 04/27/2011 - 17:53 | 1213818 TruthInSunshine
TruthInSunshine's picture

Rickards predicted this.

Here is my question for Jim Rickards and anyone else who claims that by rolling over income on existing assets that they own (MBS and Tnotes), the Fed can do large scale purchases of additional Tnotes for very long -

I listened to his 3/27 podcast. I am still mulling over what's he saying given how rapidly things are unfolding. There's a lot to chew on.

Rickards is a very smart guy, but he is the one who seems to be defending the Fed, and even goes so far as to claim they'd rather not be doing QE, etc. He almost seems to be caught up in the efficacy of their alchemy.

He also claims that QE is losing steam, as have low interest rates, etc., but that the Fed will do not do QE3, but rather, 'QE by stealth,' by simply reinvesting their (now) massive balance sheet (which includes principal and interest payments on MBS) into 'being a buyer at margin of treasuries,' in order to reduce nominal interest rates on treasuries.

If he concedes that QE is losing steam, how would such an approach do anything remotely effective in tamping down interest rates, when full blown QE2, which is 100 billion per month in POMO, has not only failed to lower interest rates, but has seen interest rates go higher?

I'd like to see Rickard's math if he modeled his claims.

I realize he put the disclaimer (rightfully so) that the Fed is not transparent, so he's been forced to speculate to some degree, but I'd love to see how much he thinks the Fed is going to be able to roll over into continuing treasury purchases if QE2 ends, because a lot of that has to do with maturity dates, interest to principal paid, default/delinquency rates, etc.

Wed, 04/27/2011 - 18:11 | 1213868 Tyler Durden
Tyler Durden's picture

Really? We have to post this again? Not opaque - one just has to know where to look:

The Fed Does Not Need QE3 And Can Fund Debt Monetization Merely From Rolling Debt And MBS Prepayments? Wrong

Wed, 04/27/2011 - 18:20 | 1213900 TruthInSunshine
TruthInSunshine's picture


Wed, 04/27/2011 - 18:49 | 1213986 Village Smithy
Village Smithy's picture

Yes, you will need to post this and various iterations over and over again because already tonight I have heard the MSM trot this "rolling over" bull shit out at least a dozen times. Thanks for your patience. 

Wed, 04/27/2011 - 18:34 | 1213929 Youri Carma
Youri Carma's picture

Rickards: "... gives the Fed about $750 billion per year of buying power without expanding the balance sheet."

btw I don't agree with Rickards. I think the FED will have to start an explicit QEIII a couple of months after ending QEII 'heavy' in June.

QEII+ will continue anyways.

For the Quote see: Jim Rickards - “QE is dead, long live QE!”, 11 March 2011, by Eric King (King World News),_long_live_QE!.html

Wed, 04/27/2011 - 18:55 | 1214012 web bot
web bot's picture

I'm really looking for some well thought out opinions.

What is the movement of Silver in the next 18 months?

Wed, 04/27/2011 - 20:34 | 1214318 Terminus C
Terminus C's picture

It will probably return to the cost of digging it out of the ground...

How much was that exactly Math Man?


Thu, 04/28/2011 - 03:15 | 1214988 Arkadaba
Arkadaba's picture

He he

Wed, 04/27/2011 - 21:27 | 1214489 mick_richfield
mick_richfield's picture

As the "dollar" loses reserve currency status, it will become clear to many more people (and money managers) around the world that there is no alternative to precious metals for use as global money.

Gold will accelerate rapidly in all currencies, but most of all in the "dollar".

Silver will rapidly stop caring about its price in "dollars" and start instead caring only about its price in Gold.  Silver will continue to appreciate relative to Gold.  From today's Au/Ag ratio of 32, Silver will . . . . hmm ...  in 18 months?   ...  we will be somewhere between 20 and 15.

So if Gold doubles in 18 months ( relative to the "dollar" ), Silver will be between $150 and $200.


Unless Something Really Bad happens.   Then the price of silver in "dollars" (FRNs) will become meaningless.

Wed, 04/27/2011 - 21:54 | 1214566 web bot
web bot's picture

Sounds sensible.

Do you think we'll have a correction once QE2 ends or sometime in May?

Wed, 04/27/2011 - 21:14 | 1214462 TruthInSunshine
TruthInSunshine's picture

How in the hell is a 3 trillion dollar balance sheet full of treasuries and MBS going to throw off 750 billion annually in income stream?

That's the equivalent of 25% interest on assets held.

I haven't read the link you cited yet (but will right now), but the only way I could see the Fed having 750 billion to reinvest is if they liquidate about half of their holdings, which are probably relatively impaired, by the way, as yields on equivalent maturity duration assets they hold are now higher than those of the Fed.

Bernanke owns a poisoned well.

Wed, 04/27/2011 - 21:22 | 1214483 Klaus Daimler
Klaus Daimler's picture

This presupposes that their holdings comprising those loans are actually performing, does it not?  My understanding was that they traded their treasuries for tranches of loans backed by used Winnebago loans and the like.  At par, of course.

I'll be interested to see what quantity of income they're going to be able to recycle into this sinkhole.  Will it provide income to match the pace of QE2?  If not, things could get really interesting.

Wed, 04/27/2011 - 17:55 | 1213819 bogey4
bogey4's picture

Does anybody have an opinion as to what happened to silver futures at the close?  Last I saw they were up close to $3, and then at the close they're only up 90 cents or so, depending on the contract.

Wed, 04/27/2011 - 18:20 | 1213892 hambone
hambone's picture

I'm looking at $48.46 @ 3:20pst...up $2.86...

Wed, 04/27/2011 - 17:56 | 1213823 lolmao500
lolmao500's picture

Soon the US government will do like the soviets. Round up every physical gold owner and torture them till they give it all up.

Wed, 04/27/2011 - 18:40 | 1213948 A Lunatic
A Lunatic's picture

Not so.There will be hoards of people willingly turning in their gold for a spot at the all you can eat Taco Tuesday buffet before too long. Fish fry Friday is where people will turn in their guns.

Wed, 04/27/2011 - 19:50 | 1214171 avonaltendorf
avonaltendorf's picture

Big laugh. Won't work in flyover country, y'all.

Wed, 04/27/2011 - 22:59 | 1214713 StychoKiller
StychoKiller's picture

Por que? still exists -- the Ignorati are trading in their fillings for FRNs!

Wed, 04/27/2011 - 17:56 | 1213825 cswjr
cswjr's picture

Bernanke's theme song:


Thu, 04/28/2011 - 03:22 | 1214995 Arkadaba
Arkadaba's picture

Think this related vid might be more apropos:

Wed, 04/27/2011 - 17:54 | 1213826 Moe Howard
Moe Howard's picture

<HELP> for explanation.


They can't even forge a pdf correctly.

Wed, 04/27/2011 - 17:54 | 1213827 6 String
6 String's picture

What Ben said:

Fuck the dollar.

Fuck our trading partners. I double dog dare you--China, Japan, etc.--bitchez to sell our paper (oh, "I don't want to speculate on a hypothetical that I doubt will ever happen" he responed to the question about our global commerical partners worry about dollar decline. That moment will go down with the "I doubt housing will ever decline on a National basis since it never has" moment.

I'm abdicating the responsibility of this mess, and more importantly, QE 3 to Congress. It's their fault. They spend too much and that's why I have to do QE 3 (coming to a theatre near you) and that's why China is selling 2 trillion worth of worthless tokens.

And that what Benny boy really said folks.


Wed, 04/27/2011 - 18:13 | 1213870 Bear
Bear's picture

"I'm abdicating the responsibility" ... Hell, he took credit for why its so good

Wed, 04/27/2011 - 18:21 | 1213894 6 String
6 String's picture

No, Bear. He took repsonsibility why QE 2 was so good. He said the risk to reward tradeoff doesn't make sense--as things stand--for QE 3. Therefore, claiming he doesn't think QE 3 makes sense....

That is all a guise to deflect blame on Congress on why he will HAVE to do QE 3--markets going crazy when Treasury goes bidless. But we know in his warped little heart he'd love to do it but this time he'll claim it wasn't "his doing" and that it's their (Congress' fault). This way, when Hyperinflation ensues he can try to deflect the blame and critisism.


Wed, 04/27/2011 - 19:06 | 1214042 Bear
Bear's picture


Wed, 04/27/2011 - 17:57 | 1213832 linrom
linrom's picture

Where is James Grant now? He assured us that we'll have QE3. LOL!

Wed, 04/27/2011 - 18:02 | 1213841 6 String
6 String's picture

Didn't you hear Bernanke? He will QE 3 after treasuries go bidless and the economy goes into a tissy.

Wed, 04/27/2011 - 18:09 | 1213856 Life of Illusion
Life of Illusion's picture


Bill Gross pissed says on CNBC he can do better in Italy, Germany and Canada.

Start 19:00 min

Wed, 04/27/2011 - 18:09 | 1213863 gkm
gkm's picture

Higher asset prices will bring more economic weakness requiring more QE etc. Until unemployment is roughly 80%. History repeats.

Wed, 04/27/2011 - 18:11 | 1213867 honestann
honestann's picture

Let me see if I understand this.

Bernanke claims interest rate stays at 0%.

Bernanke claims QE2 shall end on June 30.

Bernanke says fed will stop buying US debt.

Nobody else willingly buys US government debt.

The US government refuses to cut spending or deficit.

Therefore we know exactly what Bernanke and the fed intend to do.  They intend to create and spew about $2-trillion in fiat, fake, fraud, fiction, fantasy money to non-US banks with the understanding they will buy somewhere around $2 trillion of US government debt per year.  Right?

This way the fed can pretend (wink, wink, nod, nod to the mainstream media) that QE is finished, shall never be needed again, and their fraudulant QE programs were "a success" and "solved the problems".

Do I understand this correctly?

Wed, 04/27/2011 - 18:20 | 1213902 DUNTHAT
DUNTHAT's picture

One Simple Question!!

How will the Fed fund the Govt. Fiscal Deficit, assuming of course, the limit is raised??

That deficit is running at about 120 Billion per month, and whatever is not bought by domestic and international outside sources must be made up by the Fed??

I guess my question is how can they take a QE break? They can take a POMO break, but not a QE break. In other words, the Deficit is continual, every month 120 Billion has to be net created to fund the shortfall.

All occurring in an environment of a devaluing dollar.

Can someone explain??

I mean the only thing I can come up with is direct monetization--or printing-- without the circle jerk of involving TBTF banks.

So its not POMO per se, just direct expansion of the Monetary Base.

Maybe someone has a better description on how this is done. To me, you would be bypassing the TBTF banks and directly injecting the money into the economy through Govt. spending.

Wed, 04/27/2011 - 18:37 | 1213947 honestann
honestann's picture

Exactly correct.  Which is why I assume the fed will be pressing keys on its international keyboard to create $2,000,000,000,000 new digital dollars per year in the accounts of foreign banks so they can buy the US government debt and thereby own the USSA even more completely every day.  This is how they intend to take over the USSA.

Wed, 04/27/2011 - 18:52 | 1213999 DUNTHAT
DUNTHAT's picture

WOW Didn't think of that little diversion. Thanks.

Wed, 04/27/2011 - 20:43 | 1214345 Terminus C
Terminus C's picture

That is a pretty good deal... you buy America with its own money and have them "pay you back" for the privilege of becoming slaves.


Wed, 04/27/2011 - 22:18 | 1214614 honestann
honestann's picture

That's exactly what they're doing.  And in fact, if you read what banksters have been saying for the past 240 years at least, you'll see this is exactly and literally what their plan has been all along.

Wed, 04/27/2011 - 18:21 | 1213905 6 String
6 String's picture

Well, sort of. But you get the important point.

Wed, 04/27/2011 - 18:12 | 1213873 arkel
arkel's picture

While watching the live feed of the Ben's press conference, the player stated there were roughly 15,000 people watching on the feed. Granted many more were probably watching on cnbc etc., but 15,000?!?!? Shows you how many people are still hypnotized to moronic crap like today's story of the day "the royal wedding".

Wed, 04/27/2011 - 19:23 | 1214099 blunderdog
blunderdog's picture

Yeah, but keep in mind the bars and all the places that hosted "Bernanke-conference Parties" where 10-15 people would all sit around a single PC with beer and chips and such.

Wed, 04/27/2011 - 19:27 | 1214111 magis00
magis00's picture

Birth Certificate. Royal Wedding. NFL Draft. NBA Playoffs (for another 3 months or something).


NHL Playoffs are different - that's hooooookey.


Still, bread circus ad nauseum.

Wed, 04/27/2011 - 20:45 | 1214356 Terminus C
Terminus C's picture

Or... maybe they were working?


Wed, 04/27/2011 - 18:23 | 1213907 Youri Carma
Youri Carma's picture

NO QEIII? Well Rickards was right with how it looks like for now. This is QEII+

Jim Rickards: "QE Forever" - Rickards says that even if they won't do QEII explicit the FED's balance sheet is so wide that in practice QE is going forward implicit.

"... gives the Fed about $750 billion per year of buying power without expanding the balance sheet."

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