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Citi: If NEW QE, Then Buy Gold
Some very curious thoughts ahead of tomorrow's FOMC announcement from none other than Citigroup:
Why QE3 FX impact may fizzle
There are several major differences between QE3 now and past QE. The one that is least remarked on is that the world outside the US is much less attractive now than in March 2009 or August 2010 when previous QEs were announced. In earlier QEs, EM was much more attractive, having shrugged off the debt crisis, there was an attractive destination for the liquidity the Fed was injecting into the global economy. Now the term ‘global leadership’ is linked to the US with its 2% (plus or minus) growth rate, and pessimism over Chinese, Brazilian, Indian and other major EM economies. So the downside risk is that the new liquidity sloshes around the banking system rather than being used for investment abroad. The outcome would change if China embarked on a major stimulus programme, though for now investors are not positioning themselves for such an expansion.
In addition, we are struck by the somewhat skeptical reaction of investors and colleagues to the Fed’s analysis of the benefits from past rounds of QE. In particular the Fed’s benefit calculation explicitly assumes that the level of stimulus is a function of the size of the Fed’s balance sheet, so keeping the Fed’s balance sheet fixed would not result in any diminution of stimulus. Most clients and traders feel that rates would back up significantly if the Fed were to stop expanding the balance sheet. In that world, subsequent rounds of QE just keep rates where they are rather than lower them and the cumulative benefits are much less pronounced. There is a strong view in markets that 1) the Fed have to do a big QE, given the expectations that have been built up, and 2) the added liquidity will have a marginal effect. Taken together this raises the risk that the assets that will benefit are those sensitive to liquidity, such as money substitutes and Treasuries, rather than assets that are sensitive to real business cycle expansion.
Two things here: Citi has finally figured out that the Fed will be unable to herd cats and instead of investors positioning to buy the assets that the Fed demands they should buy, i.e., stocks with a 100X P/E, a far simpler trade will be the one that has worked for years - to simply frontrun the Fed in what it will buy, as explained here months ago, when we showed why the performance of the long-bond has surpassed that of the S&P by a factor of almost 200%.
Second, and more imporantly, let's recall that "money substitutes" = gold. So... Citi basically said that tomorrow Ben Bernanke is about to (again) become a goldbug's best friend.
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New QE is another layer over old QE.
Turn that money to shit as fast as you can.
Long scimitars
http://www.youtube.com/watch?v=EHby-q7KgC0
Gold: "A barbarous relic for barbarous times."
Get yours while you still can.
Bari, Italy...
They still want to buy gold from the Italians... Just wait until I am back and can tell the story and show lots of photos. YES, I know pawnshops in America (and mall kiosks) are also buying gold, but not like what is happening here.
And the German court just said it was OK to monetize Europe... This will not end well, not for Europe, not for America.
All in on BitCoins. Next to wooden sticks with notches carved into it, its the best "money substitute" ever invented
I have a hundred acres of money sticks.
They grow taller every day.
Qualitative Easing
The new new QE
DOUBLE PLUS GOOD!
(and 50 lbs of brown rice)
Buy beanie babies. They are more valuable and a better store of wealth than bit cons.
+1 on the bitcoin thing. Best investment last year. 140% up this year. And block reward is halving in 80 days, ASICs are arriving, and the bitcoin mastercard, if it materializes, wil change everything.
Fuck TBTF, fuck the Fed, Fuck Bernanke.
somehow having your feelings 'hurt' over a movie and the slicing of throats for the pure joy of killing non-Muslims does not seem equal. One must wonder how the world of Islam and the rest of the world can co-exist. I realize that the violence is by a small number of individuals but there seems to be no central authority to control the masses. At least when the Catholics go on killing rampages with swords and submachine gun the pope can calm them down.
Yes, just as he did so promptly and decisively in Northern Ireland (1960s-1998?), and Byzantium (12-13c), and Germany (1939-1945), and-- Oh, wait...
I do share your misgivings about Islam, LVP; but, as usual, I suspect that a strong central authority would not suddenly make everything go well.
OR Citi is in on the fact that the Fed wont announce anything tomorrow, and is shorting into this rally. Another scam on the muppets. It won't last forever though.
Exactly, fuck these asshole bankers. They cannot be trusted to ever tell the truth about anything, and especially gold and silver.
Gold needed no "QE" for many years of this Golden Bull market (2001-2008), and it doesnt need it now to move higher.
ZIRP and inflation are good enough reasons on their own.
And a 50%+ probabilty of global economic collapse thrown in as a bonus.
yes gold needs lsaps now....which is why it dropped from its high after the market realized there wasnt another large scale asset purchase on the heels of the end of qe2............gold didnt need it before because the credit/debt expansion continued to grow unimpeded without limit or full saturation.........there were no deflationary headwinds in the credit market.....if ben doesnt continue to his attempts to expand his balance sheet at a rapid clip, gold stalls....if he announces qe3 tomrrow (which he wont), i can see gold getting over the $2000 hump fairly quickly......
QE, good for gold.
No QE, good for gold.
I wish it would last. Rising paper gold price just makes stacking physical more expensive. Fuck the PM traders. There are plenty of other paper products they can play with.
The gold paper market is 'essential' for 2 reasons: 1) it allows hedging of dollar backed assets by the use of 'gold' and 2) the mere existence of the paper gold market has a deflating effect on the POG....without it we would already be at a gabillion dollars an ounce (even without the fairly obvious manipulation). Fofoa just did a nice analysis of this last month. When the paper market collapses gold goes much higher and quickly! If you are still in acquisition phase you should hope the process drags on just a bit longer.
Haven`t read the analysis, but there is a subtle distinction between the "market" and the "participants" above.
The big money is institutional fiat money, which has different rules constraining its flows. Prior to the ETFs the only paper options were the miners, and futures (or an option on the future, since a lot of institutional vehicles aren`t allowed to risk physical settlement). The very existence of paper brings in additional flows that simply wouldn`t otherwise exist if there was no way to buy "gold" other than bars and coins. The existence of a paper market can facilitate price supression (or appreciation) because certain large participants have access to unlimited fiat which can be more easily converted to unlimited "gold" to meet their trading ambitions, but men don`t surrender a goal just because the route isn`t easy enough.
To factually determine whether the price would be higher or lower, you would need access to some information that governments don`t share, as well as a fairly comprehensive quantitative analysis.
Not just a big QE expected, but a double secret big QE. Anything less, and well.......
In reality - this is just the FED doing its part for the war on terror. The way the FED has it figured, the Islamist hat free market capitolism - so the FED is just killing it so they don't have to.
I'm having a real hard time seeing any upside left with or without "Newer, better, QE". But who knows. I'll be watching, anyway.
EDIT: Chartporn:
http://blog.quantsig.net/2012/09/12/usdx/
http://blog.quantsig.net/2012/09/12/wti-2/
http://blog.quantsig.net/2012/09/12/gold/
http://blog.quantsig.net/2012/09/12/30-year/
And the outliers, Silver, Brent:
http://blog.quantsig.net/2012/09/12/silver/
http://blog.quantsig.net/2012/09/12/brent/
Starting to feel like they're building up a QE launch only to trap the bulls. I see disappointment coming from Bernanke.
I agree... As a general rule of thumb, when the Cartel starts touting one thing, run the opposite direction... Us muppets gotta survive some how...
Yeah. that's the way I see it too.
More talk, no action. Maybe the talk gets a little closer to doing something soon but this is the last bullet and gas prices would move up immediately. Don't think they'll do it.
The USD has been dropping in anticipation of some QE and will drop through the floor which I think the FED would like to delay.
Tyler you keep posting this crap from the IB's
You keep flip flopping on QE, have been banging QE drums since last summer, and then you post an article a few days ago that the FED cant do QE.
Lets hear your posistion, are they launching QE tomorrow?
IMO, HELL NO
He flip flops more than most realize.
Me on the other hand, i'm almost always wrong.
NO QE tomorrow!
Easiest short entry point we have had all year.
I don't think QE is going to happen. Largely ineffective at this point anyway. At what point do they run out of options if they do more QE? That dynamic can't be far away.
With the market already pricing the QE largely in and with effective jawboning doing much of the work. Why not just say once again we need to see more data?
They never act on cue. They will keep everyone but the connected in suspense.
The only sure position is one that bets on their screwing up the system over the long haul.
However, a disappointment would set the stage for a rescue that sidesteps the political motivation issue before the election.
You realize there are many different writers posting these articles, yes?
I know
Lets hear ZH's take.
they talk all day about it, post crap from IB's that they then turn around and make fun off
It's becoming a joke.
It's a coin flip with Bernanke. That crazy bastard could do virtually anything but one things for sure all the other fed governors will lock step with the worst Fed chairman in my lifetime because no one thinks any differently. Group think sucks.
gold bitchez!
The purpose of ZeroHedge is to illustrate that there is no hedge. If you're reading this for "investable ideas", you are a fucking idiot.
I think many haven't figured that out.
Just because he posts an article doesn't mean he flip flops. It means he posts and article so we can read what other people are telling clients. It's up to you to draw your on conclusion. Myself..I have a turkey sandwich riding on whether or not Benny boy prints.
whether or not = flip flopping
I'm not flip flopping. I'm firmly in the print camp. It may not be this meeting but eventually they have to print again. The feds can lie all they want to and tell us thatit's about economic growth, but it's not. It's about the shadow banking system deflating , helping the banks, and lowering the government's borrowing costs.
Vote up!
1
Vote down!
-5
whether or not = flip flopping=may not be this meeting
I like what u usually say but it's repetitive and you beat around the bush .
Looks like i might become down arrow champ on ZH in the future and looking forwards to it.
Hah Doc you sound like me. I have a mercury dime ridin' on the same thing. I hope you took the bear side.
Agreed as well Doc. The Tylers post lots of information, from satirical to theoretical, but all with an obvious finger on the pulse of the dying man (in this case, world economy and freedoms).
It takes the sage reader to look at this information and determine for themselves exactly what the author is presenting, from their perspective, if the information is 'whole' inasmuch as it can be based on the exposure of information to the writer and their individual goals, and last, it depends on the situation of the reader, their knowledge base, and most importantly: their understanding of what the writer's goal is.
The Tylers AKA ZH has it's own history and unique positions, and is only presenting data and information that they themselves need to survive, while giving us a glimpse of what they feel will help enlighten us as well so that we don't drown in all the heavier BS that the MSM is shoving down our throats. At times I see the articles as a devil's advocate approach, at others I see them as a warning of what could be, but may still be adverted. All in all, ZH has never presented itself as: THE ONE TRUE AND ONLY WAY TO GO. Rather it has helped to get the brain flowing for those who are willing to THINK.
Generally, the ones I see on here who argue the loudest, with the least substance, are pushing their own agenda's or attempting to sway others to a path that is only applicable to the writer. And those with an 'ONLY THIS WAY IDIOTS' approach are nothing more than shills with no intentions of better perceptions, but are their to help cloud the issue and disparage the site.
I liken them to the zealot religious types who stand outside a sex shop and talk of the evils of its way, all the while gawking openmouth at the wares, but never looking away. If it really did offend them, they wouldn't even step foot on the street, let alone be caught under the shadow of it's sign. Just an observation on my part.
For the rest of you ZH'ers who bring enlightment to my day, and help me digest the information with all your carefully worded evaluations, and supporting links: I thank you.
Most of all you WBanzaii, you help me smile, even when I'm sharpening my knives. LOL Take care all.
I agree, well said.
They have to go QE or at least give some more "specifics" cause if they don't the market will fall down and go boom.
I'm not convinced. I think it will be yet another, "It's definately coming next time" market ramp.
Brief drop and another market pop. This has been, and will continue to be, their M.O. for quite some time.
Then we go to war ...... again..... and all bets are off.
Money Substitutes, Bitchez!
Is that like splenda for sugar? Here I was thinking the reverse.
Money Substitutes for Muppets: http://www.youtube.com/watch?v=7GSXbgfKFWg
No shit, what a revelation, buying gold......i wonder how much that horseshit analysis costs.
Not a dime. Some puke at Citi read Zero Hedge and had a moment of mental clarity...
QE is coming!...QE is coming!...MOAMT...
Mother Of All Muppet Traps.
boy that Vikram Pandit , is a genius
<<< Money of Kings
<<< "money substitute"
Shit this makes me suspicious if citi is telling clients to buy gold.
It's Citi, not Goldman. Don't worry, muppets will be buying the hope that Faceplant will go to 100 and AAAPPPLLL will go to 1,000,000.
All the IBs are crooked..Goldman just happens to be better at being crooked.
Thanks Citi.
Where the fuck would we be without you?
Gold doesn't need more friends. It's already a fantastic buy no matter the will of govt/bankers/Berankers. Gold, reference point no1. Always is/was. Physical only pricediscovery will blow your mind :)
And silver is a loser. 16:1, not in this lifetime. I have much too much of it. I'm selling to buy gold. while the ratio is still at the average for the past 40 years.
10Y is looking mighty tasty here for some paper profits.
Just before every FOMC all the bank-paid analysts talk as if QE3 is a done deal. With stock markets hovering around multi-year highs, gas prices near $4, and no major economic crisis in progress, I don't see how the Fed can make a good case for another round of QE. Also, QE1 and QE2 were unpopular and didn't seem to do much in any case.
The last jobs report was a bit weak and there is an election coming up, so maybe the Fed will some minor action. But I doubt that it will be anything on the scale of QE1 and QE2.
I think you're right. I also believe the financial cliff awaiting necessitates that they stay on the sideline here in case they need to take action in the coming year. We shall see.
Fed needs the DJIA to fall 30% before they can justify a new bout of expansion.
"Citi has finally figured out that the Fed" will be unable to herd cats and instead of investors positioning to buy.
Gang, Citi is part owner of the privately held federal reserve bank. There ain't no figurin out to be done. Duh!
Best Guess Fed ownership:
The top 4 banks: B of A, JP Morgan Chase, Citigroup & Wells Fargo-Wachovia control roughly 54% of the stock of the Federal Reserve Bank. The top 10 banks, including Goldman Sachs, HSBC and the Bank of New York control roughly 70% of the stock.
Prior QE's didn't require anything but a 5% shift down to print. Since the central banks everywhere seem to be fixed on disgregarding inflationary pressures, I don't think they would wait for a drop or a market stall. It will just be done.
There is also the case of Real Estate. When the market looks shakey and Treasuries are paying shit and many don't have a clue about gold then and the economies can't support the hgih prices of commodities, there are not a lot of options left. Gold or Real Estate. Depending on how much you believe that the banks or the TPTB actually know what they are doing and herding the sheep back to real estate. Think of all the properties they own, this is logical for the next real estate bull.
I am begining to think that they have no clue going forward because all
the thieves are falling out.
Its dog eat dog now.Their staple of Muppet protein is exhausted.
WHEN QE give us the heads up so we can front run - now that would be a useful article, give at least 10 minute lead time if you can then we ALL can be goldman jp etc traders YAY bonus time
A few years back, I recommended gold to a friend as a prudent diversification plan. "Just buy 3 one ounce gold coins, one for you, one for your husband and one for your daughter. $650 x 3 = $1950. Last weekend, I mentioned it again because she's finally getting worried about the economy.
$1730 x 3 = $5190. Eye rolling exceeded anything I've ever seen before.
Indeed, the very headline of this article, "If New QE Then Buy Gold", is rather putting the cart before the hourse --- analogous to being officially told "If dying of smoke inhalation and severe burns in a flaming building, THEN exit flaming building". Isn't it wiser to foresee the obvious danger and exit the building BEFORE the fire completely engulfs it?
if pimco=0
If QE =1
then gold
elif
sell fx-everything and hide
endif
elif
buy TBonds 30yr
endif
...
## Pimco reduces treasury bonds. Nice, obviously they've finished to do so sending muppets to reduce it further. Then they'll buy, with QE --> Win!
money substitutes = gold......parkay......no its butter
My neighbor's son just took out a $28,000 'student loan.' He put half into his education and bought the shiny Barbaric metal with the other half.
Half-Smart lad.
Good luck to him, by the time he's finished his degree he can flip one ounce to cover four years then go buy a senator.
Are we there yet Daddy??
The wordsmith genius of spin doctors = The situational ethics of banking board managers.
Even Shakespeare may give em a thumbs up for how far Bullshit sentences can be hurled.
These are the well paid...for such dribble. Albiet, cameleons they'll forever be.
'Shit this makes me suspicious if citi is telling clients to buy gold.'
-i think most of us are, for those of us in the know.
However - and this is just thinking outside the box - but maybe, their will be a point in time where 'they' actually do mean it somewhat - to buy gold that is -because they know the normal average person...the MASSES...just wont be able to afford it...or think its insane to spend $1,800+ on a 1oz gold coin and of course - wont do it...
Then 'they' can say - ummm, we told you so...
Dont under estimate the power of the brain washing going on by the illuminati controlled main stream media
Citi, what fucking morons. There is no such thing as sterilization, just what the fuck do they not understand about the fact it is QE now?
Friends: cutting thru all the hype and clutter, HERE is the key: it is now Mission Critical for all smart people to SAVE MOST OF THEIR "MONEY" IN THE FORM OF GOLD.
Save it in paper, and watch its value continue to melt away as it's debased into non-existence!
The fact that the trashcash one swaps for gold (and yes, silver too) will likely PERFORM like the double-digit gaining investment it has been for the past 12 years is a lovely side dish, no doubt. It may well perform far better going forward. That changes nothing (except your net worth:)
Now, if you want to swap an ADDITIONAL amount of trashcash for precious metal (and REAL METAL ETFs like CEF, PHYS, and PSLV) that you'll view and treat like investments, that's fine too.
Just don't make the soon-to-be deadly mistake of not SAVING in gold. Do not wait. For a "drop" or for anything else. The stuff may not BE there when you finally decide to get off your ass. "Price" is meaningless: WEALTH will soon be measured IN OUNCES owned. Destitution will be measured in the worthless paper in your accounts, and in how cold and hungry you and your family have become.
This simple understanding and distinction of savings Vs. investment in PM is about to separate those who get it, from those who don't. And it will happen in the most profound as well as the most disturbing ways.
Bob out.
Ben will probably do what Soetero wants... if Mitt get's in, Ben is out on his corrupt ass. That would mean a big buy, with OUR money, of a large chunk of toxic, worthless MBS, and he will probably pay 100 cent$ on the dollar... OR, if not MBS, maybe he will just hand it out to all the illegals directly... their votes may be the difference he needs. Asshole.
Liquidity will make itself felt in snp futures in micro-nano seconds, or whatever they are called, and long before the "gold bitchez" have a clue.
A sounbite from a utube medley surrounding the "Mitt" camp, shows him espousing the
glories of Bernanke and the Fed as an incredible marvelous 8th wonder of the world thing!
Clearly illustrates that humungo butt is being pre-buttered for a welcome to the BOOM-TOWN.
Gosh...he does it with the sincerest smile too.
Bernanke for Gold, Obama for Guns...thanks!
Calling gold a "money substitute" is like calling sugar an aspartame substitute, or bacon a Baco-bits substitute.
Gold is constantly manipulated down in price by the U.S.A. Exchange Stabilization Fund.
It has Timmy .Benny and a couple other rats running the game.
If you do not know about the ESF,\(Exchange Stabilization Fund) that the USA treasury manipulates things with learn it on up..
Thanks for listening.