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The Chart Making The Fed Nervous

Tyler Durden's picture


While Cyprus has been brushed away as a "storm in a teacup" and asset-gatherers stare blankly at their screens pointing at record highs to confirm the "market knows best", it appears something rather important 'broke' that day (and hasn't stopped breaking since). While we have discussed the rather glaring divergences between US equities' exuberance and global equity markets and macro- and micro- data; supposedly the Fed's key indicator (the 5Y5Y forward inflation expectation) has reversed rather significantly. The last two times, forward inflation expectations dropped so significantly, the ECB launched LTRO and the Fed launched QE3. It seems the BoJ's QQE is not having the effect perhaps they had hoped on inflation expectations. Will the Fed have to come to the rescue once again? And how will gold react to that?


Cyprus appears to have stolen the jam out of the reflation-game donut...


as one of the Fed's key indicators (5Y5Y forward inflation) is diverging significantly... suggesting multiple compression (not expansion)

or moar money-printing...

It seems the BoJ's actions are not holding up...


Perhaps this is why the G-20 so subserviently acquiesced to everyone devaluing (or fighting deflation) since if everyone devalues then no harm, right? And perhaps, just perhaps, the gold smackdown was pre-empting this to bring it back to a level that can be defended when the next round of global coordinated money-printing begins - or we move to QE-infinity-squared.


Charts: Bloomberg

(h/t @GreekFire23)


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Fri, 04/19/2013 - 09:58 | 3471493 CvlDobd
CvlDobd's picture

My inflation expectations will go up if my governmet promises to keep me safer via domestic drones.

Fri, 04/19/2013 - 10:02 | 3471521 toys for tits
toys for tits's picture

Brown shoots.


Fri, 04/19/2013 - 10:13 | 3471581 MillionDollarBonus_
MillionDollarBonus_'s picture

The gold and silver charts just look ugly. All the major moving averages and trendlines have been broken, the MACD is negative, and sentiment is increasingly bearish on this shiny metal. Stackers better brace themselves for more pain, because this is only the beginning of the great precious metals crash.  

Fri, 04/19/2013 - 10:24 | 3471639 firstdivision
firstdivision's picture

apparently you have a hard time differing value dervied by paper contracts, and actual value when not enough exists to cover the outstanding contracts. 

Fri, 04/19/2013 - 10:25 | 3471657 outamyeffinway
outamyeffinway's picture

Trolls don't know the difference between rocks and nuggets.

Fri, 04/19/2013 - 10:45 | 3471728 Jack Napier
Jack Napier's picture

QE5-6-7 coming soon unless they are going to allow default, which is looking increasingly likely with the inventory on the COMEX.

MDB, stackers love these low prices. We get more metal for cheap. Only specuators and debt slaves are scared of losing their fiat currency. Any historian knows that metals are the baseline for valuation, not monopoly money. This is a temporary aberration on the timeline. See Coinage Act of 1792.

In case you weren't around in 2008, this has happened before, and look what happened afterwards. Triple digit silver coming if the COMEX can survive into 2015. If it can't then we won't be measuring metals in dollars, we'll be measuring everything else in metals.

Fri, 04/19/2013 - 11:10 | 3471931 max2205
max2205's picture

I bet on full retard printing

Fri, 04/19/2013 - 11:24 | 3472001 nope-1004
nope-1004's picture

Labor force participation chart, Fed balance sheet chart, and AAPL look way uglier than any PM chart.  Of course, it depends on who your masters are:  Each nations' boyz printing and stealing, or a 4,000 year old natural monetary substance that knows no borders, nationality, race, religion.....


Fri, 04/19/2013 - 13:06 | 3472683 Pegasus Muse
Pegasus Muse's picture

This guy thinks MDB is a genius

Fri, 04/19/2013 - 13:20 | 3472751 i_fly_me
i_fly_me's picture

MDB *is* a genius ...

Fri, 04/19/2013 - 14:45 | 3473274 CClarity
CClarity's picture

When The Central Bank of China starts printing, as currency manipulators, then we should see gold sky. I think empty buildings count.

Fri, 04/19/2013 - 11:10 | 3471938 I am more equal...
I am more equal than others's picture

MBD are you talking from your ass again....MBD are you talking from your ass again ...I'm getting an echo.... I'm getting an echo    Get your head out of your ass the methane gas is destoying the few remaining brain cells ....  Get your head out of your ass the methane gas is destoying the few remaining brain cells

Fri, 04/19/2013 - 12:15 | 3472403 RafterManFMJ
RafterManFMJ's picture

Rocks are white, come in little vials and generally retail at your local street pharmacist for $10. Nuggets are brown, and come in a pack of six or twelve depending on how strong your stomach is. Hope this helps.

Fri, 04/19/2013 - 10:27 | 3471665 Scro
Scro's picture

Do trendlines have any relavence in a manipulated market? I don't think so.

Fri, 04/19/2013 - 10:46 | 3471771 DeadFred
DeadFred's picture

IMHO trendlines are about all that matters in a manipulated market. The whole purpose of the gold takedown was to break $1525. Once below that they will have an easier time manipulating. They can do this for a bit more time... until they can't.

Fri, 04/19/2013 - 10:28 | 3471670 Iam_Silverman
Iam_Silverman's picture

"this is only the beginning of the great precious metals crash."

Personally, I'm waiting for it to get a little bit cheaper before I load up some more.  It's still quite a bit (nearly double) the point where I got in.

Fri, 04/19/2013 - 10:29 | 3471672 angel_of_joy
angel_of_joy's picture

Your charts are futile (as Borg would say...)

They only cover a paper market.

Paper value is inherently zero anyway...

Fri, 04/19/2013 - 11:06 | 3471903 stewie
stewie's picture

I am Bernankus, of Borg.  Shorting S&P is futile, buying gold is irrelevant.  Your financial wealth and distinctiveness will be added to our own.  Prepare to be assimilated.  HFT Unimatrix 424, Grid 116 activated.  Your life, as it has been, it over.

Fri, 04/19/2013 - 12:19 | 3472420 WhiteNight123129
WhiteNight123129's picture

Never ever ever short the market during money printing.

WHen people start to use the money in teh real economy. Inflation starts to tick and Bernanke can not and will not want to print more money.

You have an inflationary expansion, when the inflation becomes a bit annoying, the Fed has to start to raise rate.



Fri, 04/19/2013 - 13:13 | 3472716 JeffB
JeffB's picture

I'm wondering how they're going to raise rates with so many trillions in debts. It'll crash the economy and make the insolvency of the US all too apparent to everyone.


Fri, 04/19/2013 - 10:43 | 3471699 WhiteNight123129
WhiteNight123129's picture

Here is the deal MDB.

Indian, Indonesian, Vietnamese, Chinese DO NOT CARE ABOUT YOUR CHART!

You are correct in your observations but it does not make the conclusion correct. Why?

As Dalio says, you have to look at who are the buyers and why are they buying.

THe buyers in the West are people concerned (unduly) about hyperinflation. The people in the West could be correct if the off-balance sheet liabilties are not adressed, but it would require a societal change. If the people who were taxed to bail-out wall street are being asked to go fuck off on the promises due to them, how can you maintain at the same time lobbies and war spending? Impossible. So down the road Druckenmiller will be correct. The problem with wacking Gold on the day the JGBs are limit down is that it does affect inflation expectation lower, pushes the treasuries higher and force the Fed to print more. Perversly it vindicates some people saying QE does not create inflation. It also pushes the Gov to do nothing about the middle term issues of societal changes, that is no more entitlements ONLY at the condition that there are no more war spending and not more lobbies. Good luck doing all of that!

In Japan they are correct about their fear of hyperinflation.

In India, CHina, Indonesian, people are coming from very poor backgrounds, with no bank account, with horrible currencies (China in 1948, and up until the 70s).

For them wealth = Gold. And they keep buying while actually their paper will become better quality and their countries are becoming less precarious. It will take 1 or 2 decades before they change their mentality.

In the West, the majority of people are in paper (because they are used to stable paper more or less and not so precarious). So they do not understand gold, however their paper and situation will become more precarious. So bizarelly the countries with paper becoming less precarious buy Gold (premium in Asia) while the people in teh West bash it for the most part and dishoard (discount).

Finally there are teh hedge funds, to which buying and selling Gold is a trade, a paper play if you will, with only a reference which is the 70s.The paper market is not teh market, it is somewhat of an abstraction because it is levered. It is a financial toy for hedge funds.


Finally there are the central banks which are buying Gold to diversify, for now they increase, but they might stop increasing gold and shift their diversification into Yuan as Yuan becomes convertible.

So those are the dynamics, you chart is usefull only for the Western hedge funds considering Gold a paper play. I hope that helps.



Fri, 04/19/2013 - 10:56 | 3471843 PeakOil
PeakOil's picture

Central Banks buying Gold to "diversify"? Hello??

Gold. Extinguishes. Debt.

Fri, 04/19/2013 - 11:04 | 3471897 WhiteNight123129
WhiteNight123129's picture

I know that, I am a promoter of redeemable currency. The only redeemable currency today is the HKD through the bid ask system. There was a bid ask system for Gold against BoE notes through bid at the BoE and ask at the mint.

Hong-Kong is the place to have your money. Interest rates and monetary base dictated by the market. Hong-Kong is the only survivor of the XIX century redeemable currency system. The only problem is that they peg to the wrong thing (USD) but the system in itself is sound.


Fri, 04/19/2013 - 11:26 | 3472012 SubjectivObject
SubjectivObject's picture

MillionDollarBonus ignore WhiteKnight.

How telling.

But MDB will be early in the next thread.

How telling.

Fri, 04/19/2013 - 11:40 | 3472127 WhiteNight123129
WhiteNight123129's picture

This is your Gold-Dow ratio explained.


The next currency which will have to debase is the EUR.

One could buy Gold at that point maybe, but there is not a need to prevent a disorderly move of sovereign bonds like in Japan.

My own thesis is to sell a bit of the Gold you bought on the wacking day, because it is totally artificial (JGBs halted).

Recycle the proceeds in soft commodities.

After that we move to a period of seemingly ~back to normal~.

The US equity market has a last hourrah because many people not understanding that money is not fixed are still in cash and bonds.

As they feel that ~things are better~ they spend in stuff equities, good and services etc...

But by the same token they trigger a long bear market in bonds and systemic price rises because the dam of idle base money has been breached and it leaks in the economy. Then the only way the Fed can fight it is by doing ~GO-STOP-GO 70s style~, this is what Soros talked about.

Gold will touched its intermediary bottom when ~we are backed to normal~. But this expansion will be driven by money no credit. The end of the bear market in bonds will be when all the base money printed has finally entered the circulation resulting in a new price revolution. It could take years....

PE will contract for years.... And the Fed will stop printing as soon as people cheer that we are ~ back to normal~

Expect Gold to really by bashed then, somewhere around $1,000 and then as the base money from teh damn keeps leaking and leaking and leaking, the interset rates long term rise and rise and rise, and interest rates rise and rise.

The good thing about this inflate away is that inflation makes the nominal GDP rise and taxes, which are a % rise, while the financial assets are discounted at ever increasing interest rates.

Et voila, since your Gold is a present good along commodities, goods and services, it rises with inflation which financial assets shrink with the higher interest rates that inflation are forcing.




Fri, 04/19/2013 - 10:35 | 3471708 Tycer
Tycer's picture

HaHa. Go to your local PM store or eBay and aske to buy some gold or silver. If they have any to sell, it will cost you the same as it did two weeks ago. Someone forgot to tell the dealers the price went down.

Fri, 04/19/2013 - 10:41 | 3471738 NotAMathWhiz
NotAMathWhiz's picture

Not bad, MDB.  How's your new job as the Krugman's 'Wit' going?

Fri, 04/19/2013 - 10:42 | 3471757 MonsterBox
MonsterBox's picture

hope so. many of us have dry powder just waiting to use and accelerate the paper vs physical divergence.

Fri, 04/19/2013 - 10:46 | 3471773 holgerdanske
holgerdanske's picture

I never get it. Metal in one hand, paper in the other.

The choice is easy.



Slap on wrist!

Fri, 04/19/2013 - 10:47 | 3471777 roadhazard
roadhazard's picture

I have to give MDB a shout out here. He has the perfect rap going on, if he turns out to be right he can say, "I told you so". And if he is just digging for attention and is wrong then most here will think he was just BSing the whole time anyway.

carry on...

Fri, 04/19/2013 - 10:52 | 3471804 LinesOnCharts
LinesOnCharts's picture

Glad someone actually believes more in making money rather than accusing every mistake they make on market manipulation.


As long as gold bugs exist, a downtrend will continue.  Not until panic makes everybody except the passive investors dump will gold reverse.

Fri, 04/19/2013 - 12:17 | 3472406 WhiteNight123129
WhiteNight123129's picture

I actually agree with you, the passive guy buys the Gold for his daughter´s wedding. He does not care really.

Everyone will dump his Gold when there is a last hourrah on stock.

The last hourrah is when people spend the idle cash, the unemployment is lower no need to be scared etc... but in the meantime inflation pciks a bit and interest rates are negative.

That means teh idle money will enter the systems for yeeearrs. and then your gold starts to grind higher, and higher, and higher until all the base money has made its way in the circulation.

As the base money already made its way in teh circulation already?

Hell no.

So first move is devaluation and scare.

Middle move is illusion that we are back to normal.

Third move teh money enters the circulatioon and we have stagflation.

We are probably at the end of the first part and the weak hands will sell.

When we enter in teh third part, this is the third leg.


Fri, 04/19/2013 - 10:55 | 3471834 Clark Bent
Clark Bent's picture

That sounds like a script for Marketwatch. 

Fri, 04/19/2013 - 10:56 | 3471842 Buzzworthy
Buzzworthy's picture

Only the deluded look to chart technicals as evidence of strength or weakness in a "market" corrupted by central bank intervention.  Enjoy your return-free risk, Sir.

Fri, 04/19/2013 - 11:04 | 3471898 Lordflin
Lordflin's picture

Meanwhile premiums are up over 100 percent since the start of the year for physical... It must be nice living in Never Neverland...

Fri, 04/19/2013 - 12:01 | 3472298 ejmoosa
ejmoosa's picture

I will know the value of my PMs when I decide to sell them.  I do not, however mark to market.

Fri, 04/19/2013 - 10:06 | 3471548 RockyRacoon
RockyRacoon's picture

Is the entire upper level power structure delusional... or is it just me?

Fri, 04/19/2013 - 10:28 | 3471599 Turin Turambar
Turin Turambar's picture

By definition, inflation is an increase in the money supply.  Inflation is already here.  It's an intentional, ongoing monetary policy that has been ramped up since 2008.  People conflate rising prices with inflation.  While there is a correlation, this misunderstanding can be confusing.  Money is non-neutral.  That means that its effects throughout the economy are not fixed.  For example, an increase in the money supply would not result in an across the board increase of say 6% to prices of all items at the same time.  Some prices may increase more than others and at different times.  This is the major reason that the government can tout a low CPI because food and fuel are excluded from their fabricated index.  Exclude the rising prices of items most immediately impacted by an increase in the money supply and presto! the government can propagandize an inflation rate of less than 2%!

Again, don't be confused by the "no inflation" rhetoric.  The very definition of inflation is long-standing Fed policy.

Fri, 04/19/2013 - 10:41 | 3471741 DormRoom
DormRoom's picture

Inflation is correlated to an increasing velocity of money.  Increased money supply is a necessary but not sufficient condition for inflation.

Fri, 04/19/2013 - 11:27 | 3471795 Turin Turambar
Turin Turambar's picture

"Inflation is correlated to an increasing velocity of money."

Rising prices may be correlated to an increasing velocity of money, but the velocity of money has no impact on the money supply, hence no impact on inflation (increase in money supply).

"Increased money supply is a necessary but not sufficient condition for inflation."

That is not correct.  Inflation is by definition an increase in the money supply.

As per my original post, people conflate rising prices (an effect that may accompany inflation) with inflation per se (increase in money supply).

Fri, 04/19/2013 - 21:55 | 3475497 WhiteNight123129
WhiteNight123129's picture

Not really, the Banking School has it better than the Currency School. It is the printing which creates inflation, it is the using of the newly created money into circulation.

When money is created is initially monied capital (a large bank account doing nothing, or playing with stocks and bonds), when it starts to be spent into the circulation of goods services rather than into financial assets, then you have your inflation.

Long term the printing always ends up in the circulation so in that sense the Austrian are correct, but in the short term, I you print a gazillion dollars and I put that in my bank account or buy stocks, I feel rich but nothing happens on prices.

Next if I decide to spend half of that, ouch!!!

The other thing si that there are two means of circulation or means of payment. Money and credit. If a lot of base money is printed while credit is contracting, one offsets the other.


Fri, 04/19/2013 - 11:08 | 3471929 Lordflin
Lordflin's picture

I think of inflation as water building in a damn... Seems benign enough until the damn breaks... You will get all the velocity you could hope for then...

Fri, 04/19/2013 - 11:44 | 3472168 WhiteNight123129
WhiteNight123129's picture

It is totally correct.

The inflation damn is the base money, as long as it plays in teh finanical markets, it does go into the spending and circulation nothing happen.

What will make enter the circulation, is a sense that things are ~back to normal~ which they can not because ~normal~ was a 25 years boom financed by rising debt over GDP.

When it leaks prices will rise.

Then Soros will be correct, the Fed will have to adopt a ~GO-STOP-GO 70s ~ style like he said in his interview.

Essentially short term interest rates are a bribe for the liquid to stay idle in the damn instead of entering the circulation.

There is little risk of ~break~ outside of Japan. But leak, definitely.

Be patient, when people feel we are ~back to normal~ Gold is totally bashed but at the same time, this is what will make the dam leak.


Fri, 04/19/2013 - 10:24 | 3471643 RaceToTheBottom
RaceToTheBottom's picture

Maybe the drones are also there to measure greenhouse gasses?  So many measurements, we will learn lots....

Fri, 04/19/2013 - 10:02 | 3471512 youngman
youngman's picture

I am smelling deflation....

Fri, 04/19/2013 - 10:05 | 3471541 Lewshine
Lewshine's picture

ZH ask: "And how will gold react to that"???


The only way gold can react...THE WAY THE FED WANTS!! down to 1000.00 in a hurry! Geez!!

Fri, 04/19/2013 - 11:56 | 3472079 GVB
GVB's picture

I'm not sure if you used irony in your post. Let's suppose not, then I don't agree with your statement. Since the recent "smackdown" of gold (which is just a temporarily paper game) these banksters unwillingly fueled the bullion sale tremendously. This will only accelerate the disconnect of gold price as in "paper vs physical". When I see this plunge in gold, my guts tells me that something behind the scenes is really f*cked up. I refer to (1) ABN AMRO not delivering physical gold anymore to their costumers. But settling them with cash ,(2) bundesbank waiting 7yrs for repatriation of their gold. These are facts that we cannot ignore.

Also, no valid reason exists that explains this smackdown. In my opinion, this is a game that has just started its own end. The end of a Ponzi scheme. In essence, it all started with fractional reserve banking & fractional gold lending. Price will meet reality when deliveries cannot be fulfilled. GRTZ

Fri, 04/19/2013 - 10:11 | 3471582 disabledvet
disabledvet's picture

"gold repatriation" coming?

Fri, 04/19/2013 - 11:46 | 3472191 GVB
GVB's picture

Earliest within 7yrs (pinky swear!). Next country would probably get its gold back within 12 years, then the following next country within 15 years and so on. And they all promise to arrange the repatriation within that time span. yeah right. Now, who were Obama's guests again in the white house? And where is France intervening. Mali, right. According to Wikipedia, Gold is the 3rd largest export product of Mali. But that will probably be coincidence. 



Fri, 04/19/2013 - 10:25 | 3471649 PeakOil
PeakOil's picture

Gold is not the same as frozen pork bellies after all (pdf download)


"There is no reason to fear that the Fed is pushing the world into hyperinflation.
In fighting the gold price the Fed unwittingly pushes the world into

All the same, it is destroying the dollar and the international monetary
and payments system.

Fri, 04/19/2013 - 10:32 | 3471689 Turin Turambar
Turin Turambar's picture

I am so afraid of deflation.  The horror of things becoming nominally cheaper!  Print! Print! cry the banksters.  We must slay the deflation monster.  No thanks.  I prefer to pay less for things.

Fri, 04/19/2013 - 10:51 | 3471800 roadhazard
roadhazard's picture

If this is deflation I do not want to se what inflation looks like. The only thing going down in my world is my worth.

Fri, 04/19/2013 - 11:00 | 3471878 Turin Turambar
Turin Turambar's picture

Only somebody who listens to Fed and government propaganda would think that what we have going on is deflation.  By definition, deflation is a reduction in the money supply.  Uh, not happening!  Some prices decreasing?  Sure.  But what does one expect after popping a big ol manufactured bubble?

Fri, 04/19/2013 - 11:09 | 3471930 reload
reload's picture

Deflation can also happen with demand destruction.

Rapidly declining disposable incomes = demand destruction for all but the vital neccessities.

Money supply up with monetary velocity hitting the buffers ....... we need to look at both sides of the coin.

Fri, 04/19/2013 - 11:40 | 3472111 Turin Turambar
Turin Turambar's picture

I understand what you are saying, but technically declining prices are not the equivalent of deflation.  Deflation is a decrease in the money supply, regardless of whether prices are rising or falling.  Falling prices are a possible effect of deflation because as each monetary unit becomes more valuable with increasing scarcity of the units, more may be bought with less (reflected in declining prices).  Falling prices as a result of a popped bubble are a correction, not necessarily deflation because the Fed may actually be increasing (inflating) the money supply while prices continue to drop (correct).  The correct focus should be on the money supply NOT prices.  People all too often focus on nominal prices, and this confustion works to the Fed's advantage.  Heck, the Fed even encourages this misconception to its advantage.

Fri, 04/19/2013 - 11:11 | 3471915 Quinvarius
Quinvarius's picture

There is no deflation in fiat.  There never will be.  Only vs gold can things deflate.  Fiat deflation causes debt default, which explodes into hyperinflation.  That garbage they pulled in the paper gold market won't even show up as a blip on the chart when this is over.

No sovereign debt default has ever strengthened a currency.  When people default on loans, the money that was created when the loan originated stays in the system.  There is no demand on it anymore and it never gets destroyed in repayment.

Fri, 04/19/2013 - 11:47 | 3472201 css1971
css1971's picture

Yay. Someone else finally sees that defaults are inflationary.

Fri, 04/19/2013 - 11:33 | 3472067 Bam_Man
Bam_Man's picture

Fekete makes some very insightful observations in that paper.

Especially with regards to what "Permanent Gold Backwardation" represents. (Basically a return to barter-for-Gold and an infinite Gold price in $)

Fri, 04/19/2013 - 10:41 | 3471740 WhiteNight123129
WhiteNight123129's picture

In Which country?

Fri, 04/19/2013 - 10:50 | 3471788 Reven
Reven's picture

Argentina had deflation, right before they hyperinflated.

Fri, 04/19/2013 - 10:02 | 3471515 Conman
Conman's picture

Headline is dead wrong. Nothing makes these guys nervous. Its obvious all these guys are psychopaths.

psy·cho·path  (sk-pth)

A person with an antisocial personality disorder, manifested in aggressive, perverted, criminal, or amoral behavior without empathy or remorse.
Fri, 04/19/2013 - 10:16 | 3471604 EscapeKey
EscapeKey's picture

I think sociopath is more fitting of the bill:


Characteristics of a sociopath are as followed :

1. Sociopaths are very charming. 
2. Sociopaths can be extremely manipulative and will try to con you whenever possible. 
3. Sociopaths feel that they are entitled to everything. 
4. Sociopaths will lie continuously to get what they want. They can even sometimes manipulate a lie detector. 
5. Sociopaths have no remorse, shame or guilt. 
6. Sociopaths will show love and happiness only when it serves their purpose. None of the feelings are genuine. 
7. Sociopaths have no room for love in their life. 
8. Sociopaths need to have excitement in their lives or live on the edge. 
9. Sociopaths have lack of empathy hen their victims suffer pain that they have caused. 
10. Sociopaths believe that they are all mightier than tho, there is no concern on how their behavior impacts others. 
11. Sociopaths usually have a long history of juvenile delinquency as well as behavior problems. 
12. Sociopaths will never take blame for anything they have done to anyone no matter if it is family or friend. 
13. Sociopaths have many sexual partners and tend to act out many sexual acts. 
14. Sociopaths rarely stay in one place for a long time (home/work). 
15. Sociopaths will change themselves if they know it will keep them from being found out.

Fri, 04/19/2013 - 10:38 | 3471719 Rubicon
Rubicon's picture

Ive often wondered what made me tick. Thx.

Fri, 04/19/2013 - 11:07 | 3471912 Clark Bent
Clark Bent's picture

Clinton-Obama, together they model every aspect. 

Fri, 04/19/2013 - 12:33 | 3472503 JimBowie1958
JimBowie1958's picture

It is easy to manipulate a lie detecter, lol.

Fri, 04/19/2013 - 10:17 | 3471610 Bearwagon
Bearwagon's picture

Correct. These people suffer from serious mental illness. But the term 'psychopaths' has been officially abolished for quite a time. Makes one wonder why, doesn't it?

Fri, 04/19/2013 - 11:46 | 3472175 WhiteNight123129
WhiteNight123129's picture

What makes them nervous is the sense they lose control. That makes them very very nervous. And that is how they make mistakes, the fear of losing control.

They did a big mistake by wacking Gold, because it forces them to do more QE than necessary.


Fri, 04/19/2013 - 10:02 | 3471518 btb2010
btb2010's picture

One more block coming out as the global game of Jenga plays on - it always ends the same - this time is not different

Fri, 04/19/2013 - 10:03 | 3471519 btb2010
btb2010's picture


Fri, 04/19/2013 - 10:03 | 3471526 polo007
polo007's picture

Doc Zone | Season 2012-13, Episode 25 | Apr 18, 2013 | 43:20

The Secret World of Gold

A look at the power and politics of gold. Where is the gold and who really owns it?

Fri, 04/19/2013 - 10:26 | 3471654 TLT
TLT's picture

Can't see the video from here. I think it is only available in Canada. It your be nice if someone released via Torrent.

Fri, 04/19/2013 - 10:04 | 3471529 sudzee
sudzee's picture

The only thing deflating for me is the value of my gov't cheque.

Fri, 04/19/2013 - 10:04 | 3471530 fonzannoon
fonzannoon's picture

I was just hoping the comex was running out. QE7 is kind of boring.

Fri, 04/19/2013 - 10:04 | 3471532 Divided States ...
Divided States of America's picture

Yeah well stock prices still need to readjust to the new level.....and by 10%...looks like stocks arent immune to global central bank devaluations either

Fri, 04/19/2013 - 10:07 | 3471552 Never One Roach
Never One Roach's picture

Looking around me seems the Fed is behind the curve on this....prices plunging all over...increased unemployment...empty malls...stagnant or falling wages...and so on....

Fri, 04/19/2013 - 11:23 | 3471697 OneTinSoldier66
OneTinSoldier66's picture

I would say that the Fed has been ahead of the curve ever since it was created.


But it has now gotten to where the curve has come full circle, 360 degrees, and is now starting to go up the the Fed's rear end. It is now a circle jerk of sorts. A kabuki theatre circle jerk. Is this the kind of entertainment we really want in society?

Fri, 04/19/2013 - 10:08 | 3471554 astoriajoe
astoriajoe's picture

So the fed will perhaps offer to make an LBO of the entire domestic stock market?

That should go well.

Fri, 04/19/2013 - 10:12 | 3471575 yogibear
yogibear's picture

They buy everything and make the debt vanish.

Just like their missing 9 trillion.


Fri, 04/19/2013 - 10:32 | 3471691 Iam_Silverman
Iam_Silverman's picture

"Just like their missing 9 trillion."

I suspect it's not lost.  They may have just forgotten that they left it in their printer.......

Fri, 04/19/2013 - 10:14 | 3471598 fuu
fuu's picture

Maybe just admit they picked it up on 5/6/10.

Fri, 04/19/2013 - 10:10 | 3471561 yogibear
yogibear's picture

America, welcome to Japan!

Fri, 04/19/2013 - 10:09 | 3471563 The Invisible Foot
The Invisible Foot's picture

I thought Cyprus was a small little nothing?

Fri, 04/19/2013 - 10:14 | 3471595 Bearwagon
Bearwagon's picture

Did you really think that - or was that just what you've been told?

Fri, 04/19/2013 - 10:09 | 3471564 otto skorzeny
otto skorzeny's picture

shalom vs abe in the world series of devaluation.

Fri, 04/19/2013 - 10:29 | 3471674 ParkAveFlasher
ParkAveFlasher's picture

Golden Gloves?

Fri, 04/19/2013 - 10:11 | 3471573 scatterbrains
scatterbrains's picture

one thing they wont run out of is the DTCC's ability to nake short NUGT ??   but with a few lottery tickets I'll take the other side of that trade for now.

Fri, 04/19/2013 - 10:12 | 3471579 khakuda
khakuda's picture

Like clockwork, every round of QE cause oil to rise and the economy to slow 6 months later.  As inflation expectations fall with the economic slowdown, the Fed does another QE, spiking oil and slowing the economy yet again.

No learning.

Fri, 04/19/2013 - 11:43 | 3472161 css1971
css1971's picture

No, the central banks are not able to fix the problem. All they can do is create more credit/debt, and that's what's causing the problem in the first place.

They are literally doing the only thing they can. Delay. Preferably until it's someone else's problem.

Credit can't be used to pay down debt. Credit is created as a debt in the first place so if you pay off your debt with credit there is simply a debt somewhere else that still needs to be paid.

Now, paper money can pay off debts. There is only 1 solution to this. Devaluation or default. The effect is the same but the time frame and victims are different. With default the wealthy lose. With devaluation, the poor lose.

Fri, 04/19/2013 - 10:13 | 3471586 Tic tock
Tic tock's picture

How far can the can go down the road?

Fri, 04/19/2013 - 10:39 | 3471731 BandGap
BandGap's picture

Not too much further. Too many wild swings starting, too many omens pointing in the world direction.

Still it puzzles me that we see this type of data, and we know where Europe is heading too, and all we get is what amounts to a blank stare out of Wall Street. Fucking weird.

Fri, 04/19/2013 - 10:15 | 3471601 100pcDredge
100pcDredge's picture


Fri, 04/19/2013 - 10:27 | 3471660 RaceToTheBottom
RaceToTheBottom's picture

The key piece of information will come where you least expect it:

Lululemon yoga pants

Fri, 04/19/2013 - 10:30 | 3471686 Wjunk
Wjunk's picture

Perhaps, but I have seen TA become far less useful as a tool in the last 5 years. At one time, it was a decent proxy as to market participant sentiment and one could consistently use it as an analytical tool.

I see it (and the various indicators) less as a tool for forecasting what might happen than a simple view of what is happening now.

"I'm Cold"


"What will happen in 20 minutes?"

"I don't have an F-ing clue"

Fri, 04/19/2013 - 10:32 | 3471695 LinesOnCharts
LinesOnCharts's picture

Sooo...moar opportunity for further easing then?  Dow 25,000! =D

Fri, 04/19/2013 - 10:36 | 3471712 bnbdnb
bnbdnb's picture

PMs selling 30% over spot, which is higher than when the shitstorm started pushing paper down. A lot of good that did huh?

Fri, 04/19/2013 - 10:55 | 3471822 Quinvarius
Quinvarius's picture

QE5 banking recap.

Fri, 04/19/2013 - 11:14 | 3471916 polo007
polo007's picture

According to Morgan Stanley:

The Gold Standard, a system of fixed exchange rates, is blamed by some for creating the Great Depression. Caught between rising domestic unemployment and the commitment to a fixed exchange rate, the UK exited from the Gold Standard in September 1931.

Almost immediately, Scandinavian economies followed suit, devaluing their currencies in line with sterling. The US, Italy and Germany stubbornly resisted…until they gave in and left the Gold Standard as well (the US in 1934, Italy and Germany in 1936). The decision to leave or stay on the Gold Standard separated the winners from the losers. Between 1931 and 1935, economies that devalued early got the benefits of monetary easing and saw their production expand, while those that stayed on it faced economic contraction. When everyone was off the Gold Standard by 1936, everyone was able to ease monetary policy and help their ailing economies.

Today, GME3 – the third wave of the Great Monetary Easing – is in full swing. This is typically the time when central banks start thinking about keeping policy on hold for a while before withdrawing stimulus, not easing policy further. Yet, the lingering question marks about growth (bigger in some places like the euro area, smaller in most EM economies) along with currency strength have resulted in exactly that – a further round of easing.

Such aggressive action has raised the stakes around the world, nowhere more so than in Japan. But the risks are high too, nowhere more so than in Japan.

The risks, while certainly not negligible, are the lowest for the Fed and the ECB: Neither should mind easing (or in the case of the Fed, not tapering off the easing) at this juncture. The economic downturn in the euro area seems likely to stretch on for longer, and both conventional and unconventional easing are back on the table following last week’s ECB statement and press conference. The US economy is now going through a soft patch, and with the growth relapses of the past few years in mind, keeping QE3 purchases going to minimise the risk of a premature end to easing will likely outweigh the risks.

Fri, 04/19/2013 - 11:30 | 3472043 css1971
css1971's picture

Morgan Stanley is a bank, they don't want bank credit to be implicated in recessions and depressions.

It is the creation and destruction of bank credit which cause the business cycle, recessions and depressions and it does this because they hold a fractional reserve which produces leverage and allows people to have their cake and eat it, (for a while). The depressions and recessions are created during the boom times, as credit expands.

Banks create booms and banks create depressions. The underlying base money, whether it is gold or paper is largely irrelevant. Gold happens to restrict politicians ability to inflate and they have to explicitly devalue, of course the need to inflate or devalue a currency is because the banks have already expanded credit and the alternative is the crash as the credit is wound back in.

Fri, 04/19/2013 - 11:15 | 3471953 Mototard at Large
Mototard at Large's picture

Out of gold. Amost out of silver...

I went into ScotiaMocatta this morning to buy some AU and AG.  The polite and professional agent tells me that ScotiaBank/Mocatta had no gold for sale.  No bullion and no Maple Leaf coins.  He believes they may have gold available on 06 May 2013.

When I asked for modest amount of silver bullion (5  0Z bullion Sunshine) he smiled politely and said:  "Let me just check inventory before I agree to the sale."  He and an associate opened a cabinet, did a quick count and agreed to the sale.

I realize this is anecdotal information, but interesting to see a major national level seller of PMs unable to deliver their main product until 06 May.

Silver was selling for equivilent of USD 26.24 inclusive of all fees etc.


Fri, 04/19/2013 - 11:15 | 3471956 Tombstone
Tombstone's picture

Central banks are failing, as do all central planning schemes, to keep prices/assets/fiat money/debts propped up.  Do we see any heavily debted countries shrinking their burdens?  Not to my knowledge.  Where will we be in 5 or 10 years if debts continue higher?  What about the probability of interest rates rising during this time?  The worldwide socialists and Kommies are blinded by Keynesian thinking and desperately hoping that somewhere down the line growth will turn this puppy around.  Socialists and Kommies, by their very nature, are anti growth-wealth and free market capitalism.  Good luck may drive gold down 50% from its highs, but in the longer run, your fake dollars will eventually fall 98% in value.

Fri, 04/19/2013 - 11:44 | 3472165 polo007
polo007's picture

According to Macquarie Research:

Corporate Bond Rate + CPI Inflation Implies S&P 500 at 1742

Our research theme for several months has surrounded the ongoing Risk-off Rally in the equity markets, highlighting sector preference for defensives and yield plays, but the common question we have received is regarding fair value for the equity market. While bottoms-up consensus EPS augers for a fair value range of 1550 – 1600, the unnatural impact of monetary policy on bond rates suggests a cross-asset arbitrage model may provide a better perspective. Using our CPI Inflation model we find that the fair value of the S&P 500 could be ~1742, or around ~12% above its current price of 1552.

Given that our cross-asset arbitrage model uses the S&P 500 Dividend Yield as valuation, presumably yield stocks would significantly outperform during a rally to 1742.

While this analysis is more for thought than basing investment decisions, it does provide perspective that the ongoing global quantitative easing undertaken by central banks should continue to push investors out on the risk curve and support higher equity markets. The question then becomes, as the Monetary valuation regime, is increasingly detached from a Fundamental/ Economic valuation regime, what happens when central banks ultimately reverse course?

Fri, 04/19/2013 - 12:26 | 3472457 polo007
polo007's picture

According to Duke University:

The Golden Dilemma

Gold objects have existed for thousands of years but for many investors gold has only recently become a tradable investment opportunity. Gold has been described as an inflation hedge, a "golden constant", with a long run real return of zero. Yet over 1, 5, 10, 15 and 20 year investment horizons the variation in the nominal and real returns of gold has not been driven by realized inflation. The real price of gold is currently high compared to history. In the past, when the real price of gold was above average, subsequent real gold returns have been below average. Given this situation is it time to explore "this time is different" rationalizations? We show that new mined supply is surprisingly unresponsive to prices. In addition, authoritative estimates suggest that about three quarters of the achievable world supply of gold has already been mined. On the demand side, we focus on the official gold holdings of many countries. If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels. As a result investors in gold face a daunting dilemma: 1) embrace a view that "those who cannot remember the past are condemned to repeat it", there is a "golden constant" and the purchasing power of gold is likely to fall or 2) embrace a view that "this time is different" and the "golden constant" is dead.

Fri, 04/19/2013 - 12:33 | 3472500 polo007
Fri, 04/19/2013 - 13:03 | 3472663 The Carbonator
The Carbonator's picture

I'm with you guys on all the Gold and Silver.  But it doesen't do much without a closet full of Lead.

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