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Fed Dove Evans Open Mouth, Demands More QE, Sends Gold Soaring
Who would think that all it takes for gold to surge by $40 in under an hour is for the Fed to resume the old song and dance. Yet that is precisely what happened: ever since Chicago Fed president Evans sat down with Steve Liesman to discuss that he would be in favor of more easing, and saying he believes in "room for accommodation" and that we "still need to do more on monetary policy", gold soared from under $1790 to over $1830. And confirming that gold will go far higher is his statement that "Fed policy was not a driver of the commodity price surge." In other words, these buffoons have not learned anything, and the commodity price shock is coming. However, as usual, it will be blamed on speculators. Luckily the CME can hold them in their tracks with a relentless series of margin hikes. Or not. When will the CME finally hike margins on printer toner cartridges?
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"Fed policy was not a driver of the commodity price surge."
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gold to surge by $40 in under an hour
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speculators.
Still don't think we get QE3 in Sept or Dec. We get big fiscal stimulus plans
Genocidal Evans?
These PhD economists are going to do more harm to the US than any terrorist ever could.
They target "wealth effect" and yet have no clue how capital markets work. And apparently they target inflation and yet have NO CLUE how that works either.
When the "arab spring" comes to the USA, i wonder who they will blame.
#ronpaul2012
Bet lot of those QE3 dollars go straight to cut-off European banks...
Beware!
I just bought 2 grams of gold and 200 grams of silver at lunchtime, so a quick price drop this afternoon is practically guaranteed!! haha
#wheeee #goldweluvit
QE 3 should be called Strike 3.
Bernanke -Evans-Yellen will be gone soon.
Unfortunately millions will lie dead.
So, Evans says more QE and gold takes off...why didn't equity futures do the same? It's so ridiculous that markets are moved by one asshole's words.
Why would the fed trot him out to say that? Do they need a little volatilty to justify more margin hikes?
Usually any gold price jump will have me take a quick look at short term yields, and sure enough, 3-month Treasury yields negative, according to Bloomberg:
http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
Not sure if you're kidding about the printer toner cartridge comment.
1. It is Treasury that prints, not FED.
2. The amount of currency in circulation has gone up almost at same pace in last 3 years as it did the previous 30.
http://research.stlouisfed.org/fred2/graph/?s[1][id]=WCURCIR
(ie there has been about 60 billion of 'printing' a year since 2008 - relative to over 60 trillion of 'financial claims' in US - or 1/1000th)
Back to the sandbox Nate.
Yes there are trillions more in bank balance sheets, but those are digits, and a very special asset that can't be lent out, so until those banks request FRNs there is little printing that has occurred. Its Tyler and 99% of people that misunderstand what QE was that need to go back to sandbox....(not saying the implications of what is happening are any less ominous - just that 'printing' has not occurred)
Nate, you might consider the possibility that you are not smarter than Tyler and 99% of the people here. "Printing" is kind of slang here for money creation. QE is creating money out of thin air, by the Fed, without the help of the Treasury.
I think Nate brings up a good point though. Like Nate, I perceive deflation before hyperinflation because when this debt bubble finally burst all those digits will simply disappear creating a deflationary spiral. "Then" we will see real "printing" like the world has ever seen. That's my take anyway.
I think Nate makes a series of fine points below with respect to the unwind, timing, etc.
In fact I think Nate is spot on, which make it even more odd that Nate was trolling TD as to whether the Fed or Treasury issued the PO for print cartridges and the latest paper bill count. Had Nate have simply posted his final post in lieu of first, I would have 7 minutes of my life back and think that Nate is a sharp guy and one cool dude.
IOU to Drickster: I, Nate, owe you 7 minutes of life.
Thanks I will promptly bundle & securitize it, seek a AAA rating and sell it off to some unsuspecting pension fund manager for a fat fee :)
"not saying the implications of what is happening are any less ominous - just that 'printing' has not occurred"
So what you are saying is "nah, nah, nah, semantically I can claim victory BUT that the substance of the statement with which I take issue, is undeniably correct"?
But wait, who gets to define "printing"?
The implications are that we are headed for financial collapse and as such gold is going higher, but not because there is some gargantuan amount of inflationary money entering system. And Im not claiming victory or that Im smarter than 99% of people here, only that I understand what QE is better than is commonly written on these pages. Owning more treasuries doesn't help at all with the funding problem - i.e. the problem is on the liability side of the balance sheet. The commercial banks simply CANNOT lend out the excess reserves at the treasury - this is an asset that is neither cash nor liquid in any way (except if they go to FED and ask for notes and coins for it, which hasn't happened).
Ergo, the 'printing' has been to tune of 180 billion, and there has been aggregate M1 creation of ~2 trillion, but this is hardly the massive inflationary impetus into system that many believe. The FED/Treasury will print, and in a big way, but not until there has been rampant jubiliee across most sectors. Then and only then will there be hyperinflation. Deflation first, and how...
Not taking sides in the debate, but it is easy for me to visualize a scenario where physical FRNs decouple from Digital Money...
To a certain extent they already have, waving a little cash always gets a better price.
Don't forget the vast ocean of overseas dollars moving out of the UST paper icebox. No way to stop or control them. 100s of billions from China to the 3rd world under resource contracts entered into over the last 3 or 4 years, for instance.
<<until those banks request FRNs there is little printing that has occurred.>>
What about ATM cards, checks and EBTs? They don't need any physical FRNs.
Don't these fuckin' goons learn. Ben is never going to be able to press the button on QE3 until the markets are allowed to tank, like S&P 800 or less. Then he can jump in with his cape swooshing like to tosser he is.
They know exactly what they're doing. Driving up food costs in the third world while enriching gold hoarders.
As any properly vetted economist knows, you can't have price inflation without wage inflation.
There is no wage inflation, therefore there is no price inflation.
People without EC Phds just can't understand the basics and should refrain from comment.
(It accepts the major premise or it gets the hose again)
Yes of course and as any non-"fringe" person understands, Food & energy do not actually have prices, rather they are denominated in a transitory monetary equilibrium signal which fluctuates wildly due to the actions of evil speculators, who of course operate in a vaccum completely disconnected from the dimension habited by the FOMC.
If this is unclear then you are simply a hateful, fringe racist or you are in the employ of the Koch brothers.
Comrade!
When people talk about inflation, what they really mean is the erosion in their standard of living. With no wage increase, then erosion in purchasing power of the dollar occurs (people get poorer). Wage increase on the other hand... that's inflation as you correctly point out.
There are two concepts of inflation: 1) monetary inflation - increased money supply; and 2) price inflation - higher prices. The second follows the first, often with a lag. When "people" talk about inflation they generally mean the second kind. They will feel it more acutely if the price of labor, their wages, do not increase along with other prices. To say "wage increase is inflation" or the increase in the price of labor, alone constitutes inflation makes little sense. Current price inflation comes from a world-wide supply of dollars moving with increased velocity -- ie. coming out of the deep freeze of UST paper investment and other USD denominated reserves.
Talk is cheap. There will be no more QE. That's why there's a JSC. Evans exists to hold down the guard of those big fish about to be consumed in systemic feeding frenzy venturing to satisfy the largest at the top, desperate for assets on the cheap against which unsustainable leverage might be stabilized.
QE by any other name will stink just as badly.
What is 'JSC'?
I wonder what the relationship is between the amount of physical gold held by people who are not going to sell anytime before the apocalypse, even if CME raises margins to 95% and temporarily suppresses the paper price of gold, and the amount of paper gold/silver represented by futures contracts on which CME can raise margins?
Just thinkin - isn't there going to come a point at which nobody is willing to let go of physical, and with super high margins for futures contracts, those suckers are going to go ballistic?
More gold bullishness. Chinese BTFD!!!
Analysis: Record prices spawn new wave of China gold bugs""The surge in prices has sparked another gold-buying craze. The 50 gram and 100 gram gold bars were selling like hot cakes," said Ms. Liu, a store manager at Shanghai's major jeweler Lao Feng Xiang Co Ltd, who said gold sales this month were up at least 30 percent from a year ago.
The attitude of Chinese consumers -- expected to soon overtake Indians as the world's top buyers of gold -- will be an important influence on longer-term trends.
Demand from the world's most populous country, which is adding hundreds of thousands of people to the ranks of affluent and middle-income consumers every year, implies that the long-term price floor for gold is set for a steady increase."
""Many Chinese investors and consumers see price corrections as buying opportunities. The view that gold is an enduring store of value is firmly rooted in Chinese cultural traditions," said Hou Xingqiang, a gold analyst at Jinrui Futures."
http://www.reuters.com/article/2011/08/29/us-china-gold-demand-idUSTRE77...
At the moment it looks like this dovish pose isn't working quite the way they want: S&P -0.4% Gold up 2.0%. End of day ramp for stocks and new highs for gold on the way, I'd guess.
Nice call, I must say. Gold up $10 since then. Almost enough to make me want to start trading CME Gold again . . . NOT !!!!!
Bah! screwed up the time-stamping when I edited a typo in the previous post "the" to "they." Post was an hour old or so . . yah, sure . . . never mind.
I'm feelin' your pain Bastiat. Lemme sum it up 4U, what chu really wanna say:
Goled Bitchezz!
Yes! Thank you
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