Danger: The QE 3 “Hope” Rally is Going to End TERRIBLY

Phoenix Capital Research's picture

I’ve warned many times that QE 3 will not be coming any time soon and that stocks are on very VERY thin ice.


With that in mind, I wanted to alert you to the following news story:


Those looking for a clear and unambiguous green light for QE3 from Fed Chairman Ben Bernake’s much anticipated speech in Jackson Hole on Friday could be disappointed.


There are three reasons that add up to Bernanke likely falling short of market expectations for an all-out endorsement of additional Fed [cnbc explains] action at the annual meeting of central bankers in Wyoming the way he telegraphed QE2 [cnbc explains] last year.


It’s also rare for a Fed chairman, especially one this consensus-oriented, to get too far out front of his committee. The August policy statement clearly showed a willingness of the committee to conduct additional asset purchases.


This article was written by Steve Liesman of CNBC. Liesman is known to have extremely close ties to the Fed. So for him to write this sort of story before the Fed’s Jackson Hole meeting (Friday) is EXTREMELY significant.


Consider that the only reason the market is holding up is due to the bulls desperately hoping the Fed will unleash QE 3 this Friday. Now consider that Bank of America is close to collapsing at the very same time that the European debt contagion is threatening to take down the entire European banking system (Germany is increasingly unlikely to give the “greenlight” to more bailouts).


In this environment, for the Fed to NOT unleash QE3 on Friday could cause a full-scale market collapse. So it would make plenty of sense for the Fed to try and do some damage control ahead of time with stories similar to Liesman’s.


Now, have a look at Gold’s action this morning: the precious metal is down over 3% in just a few hours. Do you think perhaps some “well-connected” investors might know that Bernanke isn’t going to unveil QE 3 tomorrow (the Fed has a precedent for leaking information to the “chosen” few).



If QE 3 were coming, Gold shouldn’t correct. The same is true if BAC were going to be bailed out suddenly: Gold should keep rallying. But instead Gold is falling sharply.


The same goes for Brazil: THE commodity player and one of the emerging market darlings for the Bulls. Does this chart look like we’re about to see QE 3 (which would send commodities through the roof)?



Again, this is a major signal that QE 3 is not coming. Those who are hoping it will need to look at what the markets are telling us. Ignore stocks and pay attention to the credit markets: they’re on DEFCON 1 RED ALERT.


I fully believe we’re about to see another catastrophic Crash similar to 2008. Many people are going to see their portfolios get completely destroyed. However, you don’t have to be one of them. Indeed, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor. 


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chinawholesaler's picture

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alexwest's picture

V.V.V. lame...

THAT KIND OF analysis good for 2d rate student.. not for me..

only purpose of QExxx is finance budget deficit , and because seems in 2012 fin year its gonna be closer to 2 trln$$$, bernanke dont have a choice .. THEERE MUST BE QE3...


so, i guess movement in BRaz/gold are legitimate ,,  but big boys read situation better than anybody so ITS TRAP...  we are due for huge rally 100-150 pp in spx, then another leg down to 1050,,,




bill1102inf's picture

NO QE3 will tank the market AND gold.  We will finally see if they really want america destroyed like most of you think.  No QE3 and that idea goes out the window.  I think there will be QE3 and gold will go to 2 then 3000. BUT, WHAT IF the top is in????? That would be funny.

tony bonn's picture

as much as i love graham's articles, i disagree about qe4.....it is coming and probably hard....

trendybull459's picture

Most here just crazy on gold and on bear market,be sure you get gold slamed and bull in stocks:http://trendybull777.blog.com/feed/

Banks making huge money on your gold bull,everyone forgot that banks who is issue the company and its shares at the IPO and banks holding options and 15% initial package on companies,comapnies shows to banks all their secrets to get IPO and banks knowing all gold dillema,they just use you as sheeps,gold is dead,we are in deflation period which FED promoting as inflation,prices rises,but what?There is falling revenues from those rising prices which is deflationary,what you will to choose:to leave on year normally or scrap evey penny and saving each piece of bread while holding gold?The person who in reality holding fisical gold must be very rich or its holding is miserable compare to invironment expences:normally its going 20-25k$ in the year on leaving in very conservative style,no much disco and concerts with 40$ drinks,agree?So,what must be gold holdings of such person to survive unincome time holding gold?You have had 30k investment into 680$ gold price back into 2008 with clear Moses vision its will rise non stop,any other person got it too late and too expensive:lets say for 1000-1200,then you had invest just minimum 30k$ to survive ,its just few individuals,so,who is others:others is big corps which hurry to unload to you gold they digging from nature and polluting it at unrecoverable speed,while you sponsoring this nature polluting,then you wonder of earthquickes and earth slidings.Governments never will coming to the gold standards,by the time last kitchen worker in China will get his 2-10gr portion of his life savings into the 5000$ gold governments may turn bullish on their currencies and become true managers of their fiat just to let gold holders way back into 250$ per ounce

Would you be rich people when lets say system will agree to exchange 5000$ per ounce on gold,how much will cost your house then Bought on morgage in 2006,are you sure your gold holdings will not go to cover your short bets while Ben will run markets for 3-5months up?

oct2gon's picture

I would say QE3 is already here given the Fed has pledged near zero interest rates for another 2 years. That said, optics alone will say there's no chance of a public annoucement of more stimulous. They'll just do it behind our backs and tell us about it later. Kinda like all those "revision" in financial data.

sheeple2012's picture

"Fed has a precedent for leaking info to THE CHOSEN few" ...couldn't have said it better myself... 

rsnoble's picture

my theory is gold, margine requirments and buddies. nothing to do with qe3.

disabledvet's picture

But there's a hurricane coming. I figured after the earthquake rally a huuricane should be worth at least another 300 on the upside.

Money 4 Nothing's picture

If they QE anything, I'm moving out of the QE Country on that QE news. It's toast either way.

The Bad Guy.

YesWeKahn's picture

How do you know what Bernanke is thinking? Maybe he is absolute idiot. Nobody is really sure at this point.

Money 4 Nothing's picture

If I wanted total control of a Country, I would keep manufacturing problems (sub prime) and QE it to death all the while seeming like Bernank is trying to help, riding to the rescue... Not.


Give me control of a Nations money, and I care not who makes the laws.


The Bad Guy.

MrPalladium's picture

I think that the market is rising these past two days because shorts are covering to reduce their risk ahead of Chairsatan's speech - a sensible move if you are heavily short. I am flat, and will be buying puts ahead of the speech in some of the flakey consumer discretionary stocks that have been screaming higher over the past few days. BID and HOG come to mind. 

IQ 145's picture

"The rally will end horribly---"; not as horribly as you will when the last dope wakes up and cancels his newsletter subscription; 'cause you'll have to get a job, and that won't be possible. This guy is absolutely amazing; never in doubt, but usually wrong. The babbling just goes on and on.

sun tzu's picture

You are the Mississippi River of stupidity

DeeDeeTwo's picture

Assclowns will assclown, baby.

dojufitz's picture

Monkey wants cheaper Gold and Silver....go down baby!

Frankie Carbone's picture

I disagree with this article. Although I am not sure if QEIII is going to be announced this week or not, I do know that if I were a power that be, I think that I'd want to apply a "treatment" to the PM markets prior to announcing QE. I'd wage a short, shock battle on it, via margin hikes and so much naked paper shorting that I'd have to write some contracts on tree bark.

I'd want to bring down it's price and discourage the market from reflexively rushing to gold if QEIII or QE 2.n is announced.

Personally I thought gold "wasn't ready yet" and she got running a bit too fast and needed to trip over her own feet. She'll settle down at about $1,550 where solid support lies, consolidate, and then defiantly and stubbornly start marching right back up again. She has to. It's built into her wiring to start walking uphill as soon as she smells debasement. That odor hasn't left the air yet, nor will it.

It's a healthy move after a parabolic rise. And I think it's a bit over the top to question margin hikes since they would be a normal move for any commodity (not saying that gold is a commodity, we know it's not, but most people don't and what they THINK matters) who's price action started climbing parallel to the y-axis.

Ohh, I own a shitload of gold and am hedged with GLD puts. When the price settles I'll have the same value dollar-wise in the hedge and will take the shitty fiat and buy more gold.


SwingForce's picture

Why does anyone think that Benbernak will do anything to make gold go higher? He's a student of History & The Depression, are you a student of The Fed? You should be, you would know that 1) They do it all for their Bankster friends , and 2) they are not involved in anything that does not pay them interest. 

kaiten's picture

Agreed, there wont be any QE3 announcement on Friday, so fasten up your safety belts, ladies and gents.

sun tzu's picture

My guess is the Fed will give a wait and see approach, trying to reassure the market. QE3 would cause commodities to skyrocket again, which will sink any recovery hopes

sellstop's picture

It is possible that the outcome of this Fridays Jackson Hole meeting may be a market crash. However, EVERBODY is already saying that the Bernank won't give any real assistance to the stock markets. And they are going up the past couple days. While I don't give much credence to the stock markets rising on lower volume, I do give credence to the bond markets. And the long bond is starting to look toppy. If this Friday was going to have a bad outcome I would expect the bonds to hold up, even as the stock market advanced on low volume, but the selling and the size of the move is larger than I would expect.

What can the Fed do to lower interest rates? Nothing.

What can the Fed do to get behind the curve on inflation? Stand pat.

Is inflation good for the long bond? I think not...

I suppose stocks and bonds could fall, but where would the money go? Gold picked the last couple days to collapse. It could go rocketing up, but not likely for awhile...



damnitalready's picture

Pardon my ignorance, but why would knowing that QE3's not coming bring down gold?  I would think knowing it's not coming would bring down gold as funds shift to stocks but you also said the stock market could crash if QE3 doesn't come... so, again, why is it bringing down gold?

healey's picture

QE3 is inflation. Gold is an inflation hedge. It would tend to go up with a QE3.

Re: stocks, "knowing it's not coming" would tend to lower stock prices. Why? No new QE3 money that can go into the equities markets to purchase stocks.

dumpster's picture

not so much a inflation hedge as a move as all currencies world wide are being debased .

gold is the ultimate berometer of the failing keynesian experiment world wide.

the punk analysis of the gold market is breath taking in its shallow understanding

gold was taken down by a concerted effort by the fiat masters ... paper doggys .

gold will rebound into the 2000 dollar range come nov dec . 

on it way into the stage three rocket ,   it sniffs out the bullshit that is uttered by diaper clad kiddies who not only forgot to buy gold at 300,, but were standing around in sand boxes ,, kicking dirt learning about falling knives, candlesticks  and other useless endevior,   Like the   llittle  league players ,, kick dirt preen adjust belts , spit,, and charge $250 to keep the lights going their  own little world .


constant yadda about something very few have a handle about ,  pass the tacos

Buck Johnson's picture

Bernanke may not say anything about a QE3 on Friday, and that will destroy the markets big time. 


DeadFred's picture

He was never going to directly say anything about it anyway. He will give an airy speech filled with vague phrases then afterward ( and during) people will wet themselves because he used the phrase "near term" as opposed to "current", then the shills will twist it and the sheep will follow what TPTB scripted for them all along. This has all been put into a playbook and reading the tea leaves to find out what the plan is mainly an entertaining mind game.

On the other hand TPTB are totally powerless to script earthquakes, tsunamis and hurricanes. As fun as it is to try to psych out what "The Plan" is, it is more fun to watch the pigmen run in circles when they come up against real power. Goldman's near perfect trading record went down the toilet the last few months. They thought they had it all scripted but then the water came rushing out of the sea. Their Yen carry trade caught the flu and the just-in-time supply chain failed. This weekend what will Irene do? What will happen to the pigmen's plans if she throws a hissy fit? Then what will happen the next time they come up agaist real power? <Short XLU>

anony's picture

OK I'll buy all the puts I can get my hands on, leveraging all my assests to juice it.

If the market doesn't tank, and instead rises, can I come live with you?  I own a bull mastiff and several quarter hourses that will need fed too.

centerline's picture

On the plus side, you can eat the dog and horses.

virgilcaine's picture

Stocks are the dumb money crowd..in Vegas  at least you see a show and have a nice dinner..WS all you get is scrvwed-.

centerline's picture

Visit the message boards from time to time.  A regular freak show every day.  And free.

sun tzu's picture

probably yahoo finance - filled with tons of brainless permabulls

Quinvarius's picture

The banks will continue to get all the free money they can borrow at 0%.  The Fed will continue to buy Treasuries on the sly as they have been doing for the last 10 years.  The idea of a liquidation sale in the market is really not something I worry about.  I think the market is overpriced and I am a bear on the economy.  But I know how how much money is out there.  No bank is going to be forced to sell anything.  I am far more concerned about hyperinflation, despite the games played in the markets.

As a side note, the only bubble going on is in the Yen.  They have a circulation/velocity problem, not a quantity problem.  And that thing is going to collapse like a black hole as soon as the first big bank tries to get out of their Yen.  And they will because the entirety of Japan belongs in a radioactive containment zone.  Some day soon, the Yen is going to slam to the floor.

spekulatn's picture

I always thought the job of Leisman(and others in his line of work) was and is to get you the viewer to lean the wrong way.  The beast must eat.

caconhma's picture

Everybody is sure that gold is finished. Good luck fools.

The ruling oligarchy is not about to start a revolution. The US government printed endless amount of money in 1930s. Bernanke and oligarchy think it was not enough. So, this time, they will print much more to debase US$ and US debt.

I hold physical gold for a long time and it did not go always up. This time will not be much different.

NEOSERF's picture

We can only hope Moody's reaches down, grabs hard and downgrades France on Friday to make the apocalypse complete

reader2010's picture

Bullshit. Perpetual QE and Perpectual Wars are in place forever. 

SwingForce's picture

For once you are right: Gold is getting KILLED!

For details about the REAL QE3 Ask Larry, he'll answer himself.


virgilcaine's picture

Why would anyone ever want to own a stock again?   The Bots and Dumb Pension Money are all thats left.

vast-dom's picture

Graham if there is QE3 I will send a team of rogue leprechauns to gang-rape you and extract that imaginary $350/oz gold you were so fond of peddling before you were called out on your scams. 


Pray for no QE3 for your own ass, literally!

Bring the Gold's picture

Why do we always get the shit jobs? My people have a UN protected status now you know!





Jason_1sandal's picture


Watching the markets is like watching my girlfreinds boobs on a 90 mph seesaw.... it's fun, but I wouldn't wanna be on the damn thing

Fiat2Zero's picture

I think we need to graduate from saying QE3, to "world wide currency debasement and loss of confidence".  Let's broaden our horizons a little bit so we don't miss the bigger picture.

Fiat2Zero's picture

I'll agree that Gold was going to correct as it has been trending outside it's up channel, and was extended very far.  However, it's the _way_ in which gold corrects which was important.  Manipulation of PM prices is well documented.  You either believe in six sigma miracles (i.e. gold's rise being so orderly as to never rise more than 2% per day over 10 years, despite being in a massive bull market), or you believe in rational explanations (the price is controlled, so as to benefit bankers).

The JPM call of $2,500 gold at the point gold was fully extended was a great ploy to pull pigs in for the slaughter.  The waterfall declines on the COMEX during the LBMA hours are well documented, and anyone who watches Kitco charts multiple times a day has learned to spot them.  Options expirations week are always fun, and provide a great buying opportunity for people who come in after (but watch it as the price doesn't stay down long).

The attempt for the cartels was to "damage the technical charts" by inducing feedback driven waterfall declines.

There are some interesting things one can notice when comparing the types of manipulation that is going on.  First, the takedowns have started hours earlier, and days earlier.  Secondly, it seems that the asian exchanges are learning quickly as they beat the COMEX to the punch at margin increases (it seems likely they acted independently to protect their own exchange).

Yes, gold was due for a correction, which we got.  But if you think everything just happened in a natural way, you are sorely mistaken.

The problems which caused the 2008 financial crisis have not been addressed, have gone world wide, and are on the brink of exploding.  Do not be fooled by this very brief pullback (you should be buying physical hand over fist).

Disclosure:  I'm a gold and silver bull, very long on physical.

rocker's picture

Good Stuff "Fiat2Zero"  Like the way you think.  I also buy the physical early summers or on major pull backs.

RockyRacoon's picture

When vexed I just go look at a 10 year chart and feel much better.   Sleeping well lately, too.

Panafrican Funktron Robot's picture

GLD will be north of $190 by the Sept. 17 expiration.  BTFD.