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Gold And Silver Levitate As The Day Of Printing Nears

Tyler Durden's picture


Gold has pushed back above $1600 this morning (and +2.6% year-to-date) as it appears the Hilsenrath-rumor is sinking in and the day of reckoning printing draws nearer. There was little new in the statement, as we have stated, but its timing and specificity is to be noted though we, like BofAML are more predisposed to expectations of a rate extension next week to mid-2015 followed by NEW QE in September (with a disappointed equity market slump in between that 'enables' NEW QE). The herald cry from every hypocritical CEO and retired banker this morning appears to be "but, but, but the central banks have to do something" - even if they 'know' the economic impact is nil - as pre-emptive omnipotence has always worked before.


BofAML: Fed action is likely in the next several months

The Wall Street Journal is suggesting that the “Fed Moves Closer To Action.”


Originally posted on the WSJ Online late yesterday it helped spark an end of day rally in equities (even with the rally equities finished down on the day) and a bid in Treasuries. Today, the article appears on the front page of today’s Wall Street Journal, Jon Hilsenrath, argues that “Federal Reserve officials, impatient with the economy’s sluggish growth and high unemployment, are moving closer to taking new steps to spur activity and hiring. Many officials appear inclined to move unless they see evidence soon that activity is picking up on its own.” The last statement is important because as we have argued the Fed does not need to see a further deterioration in growth to spark more monetary easing but rather no meaningful pickup from today’s sluggish pace.


Further, Hilsenrath notes that “central bank officials could take new steps at their meeting next week though they might wait until their September meeting to accumulate more information on the pace of growth and job gains before deciding whether to act.” Overall, this article is very much consistent with our view. In our view, the Fed isn't quite ready to launch QE3 yet – would prefer to see more data – but could extend forward guidance to reflect the recent string of disappointing data at their August 1 meeting. We continue to expect a rate extension next week to mid-2015 followed by QE3 in September.


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Wed, 07/25/2012 - 08:54 | 2648591 firstdivision
firstdivision's picture

Market didn't seem to notice the USG10Y hitting a record low over-night.

Wed, 07/25/2012 - 08:58 | 2648608 BaBaBouy
BaBaBouy's picture

GOLD $50K.

Wed, 07/25/2012 - 09:01 | 2648625 nontaxpayer
nontaxpayer's picture

I believe the ballpark estimate was $55k and is now $60k...

Wed, 07/25/2012 - 09:05 | 2648647 Stackers
Stackers's picture

Cartel traders are just finishing their coffee. Give 'em a minute and they will have it pushed back under the brick wall known as $1,600 here in a bit.

Wed, 07/25/2012 - 09:27 | 2648816 malikai
malikai's picture

QSN is running gold on the Public gateway. It looks like another setup. Note the divergence is -$17 at the moment.

Need a current Firefox or Chrome to see it.

Wed, 07/25/2012 - 09:51 | 2648912 Muppet of the U...
Muppet of the Universe's picture

dude seriously.  i am having a hard time wrapping my mind around how 1 track yours are. 

I understand, gold and silver long term.  But we are soooo mother fucking far away from another QE.

wtf are you thinking?  WHY would QE come this high in the market? 

That's like firing a firehose a mile before you've reached the burning house.

What do you think is going to happen to gold and silver as the market heads down?


I mean if I wrote, gold and silver to the moon?  I get 100 dopes votes up.

But if anyone even attempts to challenge that view logically, its vote down without thinking.

How the fuck do you expect to beat the muppetry; ascend to something stronger.

If you just hold the qe's coming eventually! mentality. 


You could have just let the banks short it into oblivion and bought again at super low prices, sold off, let bank's short again into oblivion, and buy again at super lows. 

Instead its just this 1 track mind and no timing.  What do you think is going to happen to your precious plan (when QE comes we buy gold silver!!)... 

if the Bernank just issues a silent qe4 like he did late 2011?  Start using your brains if you got em.

pzpzpz owned.

Wed, 07/25/2012 - 09:57 | 2648976 TheCanadianAustrian
TheCanadianAustrian's picture

So if someone says "gold and silver to the MOON", what is your logical response?

Do you not believe in their long-term fundamentals? If not, why do you continue to visit this site? You know what this place is about.

Or are you one of those people that think they can time the highs and lows and predict the next move of a market that can go months at a time without ever responding to fundamentals?

Wed, 07/25/2012 - 10:28 | 2649142 Muppet of the U...
Muppet of the Universe's picture

you make a shitpoor austrian, but a great canadian.  Yes I can and do call the markets.  Yes I do believe long gold silver.  But not for a long long time.

Wed, 07/25/2012 - 11:23 | 2649447 zerotohero
zerotohero's picture

Muppet you had me at "yes I can and do"

Wed, 07/25/2012 - 12:29 | 2649750 I dont belong here
I dont belong here's picture

You mind loaning me your crystal ball for a couple of weeks? Define long long time.

Wed, 07/25/2012 - 14:08 | 2650048 Muppet of the U...
Muppet of the Universe's picture

Gold and Silver will soon be breaking with their relative correlations with the Indices.  This is good.  It will allow the market to fall and gold to rise.

1607-1613 appear to be critical juncture prices.  I would remain short until this range is crossed. 

As correlation between indices and gold dips to 0 (which it more or less has), expect the pinch to be taking over, and gold and silver to begin moving freely. 

Eventually gold and silver will take up negative correlations.  Dips in the market are alway met with negative correlations between gold and indices.

So this means, even though the market MAY be in a downswing later on, gold can still continue up.

For now, even though the indices may be in an upswing (although this may be impeded by bad economic data (you see the redbook yestered? -17))

Gold and silver may not be carried up.  The end word is that Gold and Silver are correlated, is this is VERY important.  But also, as a general rule, since the indices and gold have no correlation as of currently, rely upon the pinch, not upon their market markup.


Essentially what this means.  Is that this flies counter to everything I've been saying.  Since negative correlation is likely coming, expect the pinch to continue for a while, and that buying on the lows of the pinch is still the name of the game. 

I just want ppl to think outside the box.  You see.  It doesn't matter what The bernank does.  The charts run this bitch.  & the pinch decides what happens.  & tbh, based upon the historic correlations and where we are now, I would expect us to break up and out of the pinch.  However, it is the wise man who lets overwhelming sentiment decide when the pinch is broken.  My job is to short it until then.


Wed, 07/25/2012 - 11:04 | 2649369 fuu
fuu's picture

"You could have just let the banks short it into oblivion and bought again at super low prices, sold off, let bank's short again into oblivion, and buy again at super lows. "

They can't get it under $1500 and you expect it to be shorted to oblivion? That's your suggestion?

Wed, 07/25/2012 - 09:12 | 2648716 DosZap
DosZap's picture

GOLD $50K.

Funny, I have been thinking a lot about this lately, and whatever the price Au attains,it doesn't mean shit,because the fiat price means the paper backing it sucks the big one.

So,as stated Au is INSURANCE.

Once Au gets to 4-5k,the Feds are gonna call it all in.

So,prepare accordingly.

Or sell before they do, take your profits and buy real assets.

Wed, 07/25/2012 - 10:23 | 2649105 Theosebes Goodfellow
Theosebes Goodfellow's picture

I agree with one of your points DosZap. When gold goes to $50k a loaf of bread is going to be $100. As far as the Fed trying to pull an FDR and confiscate gold, let me ask you this. Haven't you been boating recently? Mine tragically sank yesterday. Truly dreadful. I was barely able to swim ashore.

Wed, 07/25/2012 - 10:52 | 2649296 eaglefalcon
eaglefalcon's picture

Take it from my dead, cold hand.

Wed, 07/25/2012 - 12:41 | 2649790 PiratePawpaw
PiratePawpaw's picture

"As all my friends can tell you officer; I am in the habit of taking all my guns and PM's with me on my boating trips. Sadly they were lost in a storm along with my boat; which I clearly no longer have. Sorry" :)

Wed, 07/25/2012 - 10:33 | 2649173 midtowng
midtowng's picture

Gold just broke above its 50DMA. I'm just waiting for confirmation before buying some more.

Wed, 07/25/2012 - 10:48 | 2649280 Temporalist
Temporalist's picture

Don't tell Nouriel Roubini.

Wed, 07/25/2012 - 11:09 | 2649390 ParkAveFlasher
ParkAveFlasher's picture


Wed, 07/25/2012 - 08:55 | 2648596 Deep79
Deep79's picture

You guys have been saying QE since last June.

We ain't getting it here, it's simple as that.

When the whole market is waiting for QE to jump on board and "get a 20% return easily", it aint happening.

The Fed will keep jawboning QE, but they are scared to launch, if it fails and we sell off, they are done, they would have lost all control.



Wed, 07/25/2012 - 08:58 | 2648603 agent default
agent default's picture

No QE before the election, that's certain.

Wed, 07/25/2012 - 09:09 | 2648688 casey13
casey13's picture

The latest rumour making the rounds is that the next QE anouncement will be open ended and allow the FED to buy whatever assets they deem necessary. This will solve the problem of it wearing off but not the posible eventual loss of confidence in the dollar.


Wed, 07/25/2012 - 09:11 | 2648705 dereksatkinson
dereksatkinson's picture

It's about "flow"..  It always has been and always will be. 



Wed, 07/25/2012 - 09:15 | 2648735 bdc63
bdc63's picture

"We'll buy whatever we want with as much as we want for as long as want"

Damn, it's a darn good thing we have audit rights over the Federal Reserve or this could really get out of control ... oh, wait ...

Wed, 07/25/2012 - 09:41 | 2648888 Doubleguns
Doubleguns's picture

So what if the fed goes belly up the treasury can start printing again. The end of the fed could be happening.

Wed, 07/25/2012 - 09:48 | 2648926 eclectic syncretist
eclectic syncretist's picture

They wouldn't be "buying" anything because they don't print money.  They issue imaginary debt from nothing.

What they would do is erase debts, not your debts, the big banks debts, so that the banks would be in a better financial position to screw you even further.  It's accounting fraud pure and simple, but it's a legal way to "boost the economy" in Fedland.

Now in effect, it is printing money in the sense that if I loan you a billion and then forgive the debt you've essentially gotten a billion free, but the set-up is more roundabout and entirely based on debt.  This is not a semantic point either, because the whole purpose of the central banking system is to be able to skim interest on debt issued from nowhere out of nothing, all off the backs of the citizenry.

Wed, 07/25/2012 - 10:26 | 2649131 Moe Howard
Moe Howard's picture

Benjamin Shalom Bernake says "stop smartening up the chumps".

Wed, 07/25/2012 - 09:29 | 2648823 agent default
agent default's picture

That's not QE, that's operation kill the FRN. 

Wed, 07/25/2012 - 08:59 | 2648611 ATM
ATM's picture

The Fed will have to do QE becasue that is all there is left. If it's today, tomorrow, Sept or next Jan doesn't matter. It will happen because it has to happen. When debts are unpayable and money can be printed the answer is always to print, and print they will.

Wed, 07/25/2012 - 09:03 | 2648643 duo
duo's picture

Don't assume QE will be announced on Fed meeting day.  It will be on a Sunday  night or early on a Friday of options-expiration week.  Whatever will burn the shorts the most.

Wed, 07/25/2012 - 09:12 | 2648715 dereksatkinson
dereksatkinson's picture

Most likely a day or two after Goldman puts out a huge bearish note.

Wed, 07/25/2012 - 09:16 | 2648737 EscapeKey
EscapeKey's picture

It's a good thing the major investment banks have Chinese walls and segregated accounts, otherwise it'd be fairly trivial to write a script which automatically determines the best time to rip their customers off.

Did I say rip their customers off? I meant present them with opportunities and experiences.

Wed, 07/25/2012 - 09:43 | 2648898 Doubleguns
Doubleguns's picture

Should have said rip muppets off.

Wed, 07/25/2012 - 09:46 | 2648918 malikai
malikai's picture

Your "your money and our experience -> our money your experience" line is still giving me a chuckle.

Wed, 07/25/2012 - 09:09 | 2648686 Deep79
Deep79's picture

Ya the concensus is they will print print print and print some more

When has the concensus ever been right?

I have always stated, the FED will fight hard to keep the US dolar as reserve currency, we will get a depression, but the elites will still have money to scoop up things when they get crushed.

All this talk of hyperinflation is fantasy, they will not let it happen. 

We get hyperinflstion, everyone loses, the guy worth 10 billion is no better than the bum on the strret.

Ya like they will let that happen. Have a 60% correction, the guy worth 10 billion is now worth maybe 4 billion, the he scoops up evrything on the cheap and the cycle starts all over agian.

Wed, 07/25/2012 - 12:46 | 2649811 PiratePawpaw
PiratePawpaw's picture

I have spent my life watching what the herd does, then quietly walking the other way.

Right now the herd is expecting QE.

Wed, 07/25/2012 - 16:15 | 2650607 HungrySeagull
HungrySeagull's picture

No QE?


Still, It's good to have some Silver on hand.

Wed, 07/25/2012 - 09:10 | 2648699 agent default
agent default's picture

And so does the ECB.  So the question is who will initiate QE first, and who will respond with more QE from his side.  Given how politically charged QE was the last time, and the situation in Europe, I would say that the ECB will QE first, with the FED responding after a while.  At least that way the Bernank will be able argue that he was dragged into it, or at least have somebody else to point to and fudge the issue.

Wed, 07/25/2012 - 08:59 | 2648614 zero19451945
zero19451945's picture

I agree. They lose all credibility with the Dow above 12,000.

It confirms that the stock market has nothing to do with the real economy if they print now.

Wed, 07/25/2012 - 09:03 | 2648626 fonzannoon
fonzannoon's picture

I am tired of hearing these "they won't print" arguments and then getting into a stupid debate about it. I cut and pasted (below) someone's reply to one of these arguments a few months ago because it stood out to me. I don't know who wrote it but whoever you are this was one hell of a take on things...

"Hope you didn't put much money on that bet, Dawg. These fuckers are going to print hard enough to wake the dead. They'll print like mo'fos, print like mad men, print like fly pimps. Print until their eyes bleed. They will print via the swaps, via bank bailouts and mergers, via fixed Treasury yields, via real honest-to-God negative interest rates, via loans to banks on no collateral, via payroll tax reductions, and in the end via actual fiat paper instruments which they might very well drop in bails from actual mutherfucking helicopters. They will not give two figs what anyone thinks. Here is why. Because this is the Goddamned end of it my friend. There is no accounting beyond this point. There will be no history of it. No one to take notes of rates of exchange, or of the graft and violence, nobody to worry about the deficit or the GDP or the national debt of any nation large or small under the blazing Goddamned sun. End. Of. It. Does anyone bitch about how Rome totally debased their coinage at the end? Hell no. But whoever did it had enough to hand and grabbed some land with a nice vineyard and sat back and waited for the Middle Ages to start 700 years further on. And that's what a singularity is about. Anything that passes through is striped of all meaning. Nothing we think is important now will remain so beyond the event horizon. Nobody will remember, nobody will write about it, nobody will be held to any standard. Ever for evar. So yeah, they'll print like the mad crazed terrorists they are. Because they have nothing to lose, and maybe something to gain. Maybe a dollar. Maybe a day. Maybe a slim chance to escape with some of the loot. Whatever the fuck advantage they see in it, for themselves and their elite crap wanking buddies, they will full-on-full-time-fucking do it to advantage. Watch for it, Dawg. It's totally on this time, on like Donkey Kong. And when the dust is settled in a generation hence it's going to have become another unbelievable episode among the ages of men."
Wed, 07/25/2012 - 09:05 | 2648659 zero19451945
zero19451945's picture

Hope you aren't taking investment advice from that crazed lunatic because last time I checked, people are still writing about Rome debasing it's currency.

Wed, 07/25/2012 - 09:11 | 2648707 fonzannoon
fonzannoon's picture

I don't take investment advice from anyone on here nor do I dispense it.

I have an opinion about the fed though. I think it's hysterical that QE which put a floor under the market during a collapse and QE2 which sent the market rocketing higher is supposed to be considered a failure in the eyes of the fed when all they actually care about is the "wealth effect" of the markets.

Yet after convincing the market they are going to do more they will just admit failure now.

If you are talking about the fed's impact on the real economy that is another story. Why people can't seperate the two is beyond me.

Wed, 07/25/2012 - 09:37 | 2648860 kito
kito's picture

Yes fonz, wealth effect...and as long as the fed rumors keep the dow levitating, it will only be rumors....nothing the market has more hope until september....another month or so for the hopium addicts to sit back on the couch, glassy eyed and zonked out, their qe needle tracks getting longer every day.......

Wed, 07/25/2012 - 09:49 | 2648937 fonzannoon
fonzannoon's picture

Kito how many 3:50pm false starts are they going to leak before one day the market calls complete BS on them?

Believe me I am not advocating that QE will work. They are totally boxed in now. The rumors will lose the effect more each time and eventually their hand will be forced and when that happens either you will have unlimited orders of ham sandwiches waiting for you at your local deli from all of us or you will probably be on your way to Zihuatanejo,

Wed, 07/25/2012 - 12:51 | 2649822 PiratePawpaw
PiratePawpaw's picture


But not untill the rumors lose all credibility and the herd turns.

Wed, 07/25/2012 - 09:12 | 2648711 SheepDog-One
SheepDog-One's picture

Yea he was writting to me.

Wed, 07/25/2012 - 09:18 | 2648763 fonzannoon
fonzannoon's picture

I don't know who is writing to who anymore. I will shut up now.

Wed, 07/25/2012 - 10:53 | 2649304 emersonreturn
emersonreturn's picture

wow! thank you fonzanoon for saving and sharing that deserves a pulitizer, equal or better than sam shepard.  a piece, a fragment i hope surfaces after the fall like a shard  from euripides.

Wed, 07/25/2012 - 09:11 | 2648701 firstdivision
firstdivision's picture

Don't worry, they'll crash it ~20% here in the next week or so.

Wed, 07/25/2012 - 08:58 | 2648602 dereksatkinson
dereksatkinson's picture

Gold has been correcting for a year so it's not like this should surprise anyone.  We haven't even broken the DT from June so today's action isn't really even that big of a deal.  The real battle is going to be around 1670 where there is a downtrend going back a full year.  Going through there would be quite meaningful. 

Wed, 07/25/2012 - 08:58 | 2648607 zero19451945
zero19451945's picture

I was reading an article (I think on Fidelity's website) where some dumb fuck fund manager said they like Treasury bonds for the "consistent yield."

What "consistent yield" are you talking about? The coupon payments don't even cover inflation. Eventually, you won't even get capital gains when the front running ends!

Are these people totally incompetent? Who is buying this garbage?

Wed, 07/25/2012 - 10:52 | 2649297 Temporalist
Temporalist's picture

Lou Holtz had to take a job as a Walmart greeter?  Damn times are tough!

Wed, 07/25/2012 - 09:02 | 2648634 ATM
ATM's picture

They are consistent because we know that Treasuries will always pay their coupon, no matter what. So what if that coupon is a negative real return to some dumbass fund manager. To him knowing he will get his 1% is far better than betting on some AA company that can and will end it's dividend at any moment because that AA rating is a phantom. They are actually broke. He knows the government will always pay even if it's with worthless paper.

Wed, 07/25/2012 - 09:18 | 2648761 EscapeKey
EscapeKey's picture

He was probably talking about his 2 and 20.

And if he sits on treasury bonds, he can go down the golf course that much earlier.

Wed, 07/25/2012 - 09:00 | 2648612 Moe Howard
Moe Howard's picture

The FedRes has two options - print or not. They have been printing - the only question is will they be opening the spigot more.

Go on a personal gold and silver standard. Convert your FRNs to Gold | Silver; convert back when you might need to spend. Not that complicated - think of it as a CD with less restrictions and more wealth preserving qualities. Plus no counter-party risk.

Wed, 07/25/2012 - 09:14 | 2648724 TheSilverJournal
TheSilverJournal's picture

Said a different way, the Fed can either stop increasing the rate of printing and allow the entire system to collapse now, or they can postpone the collapse by increasing rate of money creation. Something tells me they'll postpone.

Wed, 07/25/2012 - 10:35 | 2649197 Moe Howard
Moe Howard's picture

Yes, I agree. They will wait to the last possible moment to really crank it up. Like when they pass a few trillion FRNs to the European Bankstas in secret when needed. We will be informed many months later. 

Wed, 07/25/2012 - 09:15 | 2648734 DosZap
DosZap's picture

The FedRes has two options - print or not. They have been printing - the only question is will they be opening the spigot more.

Moe, it doesn't matter how much they digitize,if it just sits in the Banks with the rest they have already QE'd,nothing changes.

Wed, 07/25/2012 - 10:37 | 2649209 Moe Howard
Moe Howard's picture

I agree with you, from down here at the bottom. However, it does change for those banks - they are seeing a profit for holding that money. Someday they will spend it - and so crashes the FRN $.

Wed, 07/25/2012 - 08:59 | 2648616 ThunderingTurd
ThunderingTurd's picture

The world has an very uneasy feeling at the moment.  It is as if we know what the end game is and everyone is afraid to blink.  My new term is 'Controlled Collapse'.

Wed, 07/25/2012 - 09:00 | 2648619 monopoly
monopoly's picture

Mid 2015, shit, why not 2025. Makes no difference. The system is broken, and this is not the way to fix it. Just keep hammering those senior citizens and baby boomers who did everything right and "saved" for their retirement years. And no one gets indicted.

Wed, 07/25/2012 - 09:02 | 2648637 GMadScientist
GMadScientist's picture

Why are you getting hot and bothered over a near null set?

Boomers that saved?! LOL

Wed, 07/25/2012 - 10:40 | 2649236 Moe Howard
Moe Howard's picture

They put their savings into a McMansion, looking to sell it at a massive profit at retirement. Right when all the other boomers are retiring. You know, sell it to an up and comer who just is starting a career and family. That unemployed college grad, for example. Or that employed illegal alien.


Wed, 07/25/2012 - 09:00 | 2648623 GMadScientist
GMadScientist's picture

"Shit sandwich for all in perpetuity." - Ben

Wed, 07/25/2012 - 09:01 | 2648628 txsilverbug
txsilverbug's picture

Margin calls, get ready!!

Wed, 07/25/2012 - 09:01 | 2648631 JustObserving
JustObserving's picture

Give it a few hours - they will suppress the price of gold and silver.  Silver should be up another 40 to 45 cents given its volatility in relation to gold.

So silver is already muted now.


Wed, 07/25/2012 - 10:42 | 2649245 Moe Howard
Moe Howard's picture

That's an accurate observation, JustObserving.

Wed, 07/25/2012 - 09:04 | 2648633 JPMorgan
JPMorgan's picture

Greece up and get those printing press engines revving... it's going to be one hell of a smoke show when they decide to hit the pedal.

Wed, 07/25/2012 - 09:03 | 2648641 Everybodys All ...
Everybodys All American's picture

What a bunch of losers we have at the Fed. Until we get rid of the Geithners, Yellens, Bernankes, Dudleys, etc at the Fed this shameful destruction of the US will continue. At no point will any of these assholes admit they have been failures. That should tell you something.

Wed, 07/25/2012 - 09:12 | 2648708 Vince Clortho
Vince Clortho's picture

Yes, we have pathetic problems at the Fed, and Bernanke, Geithner, Yellens & co. need to disappear from the scene.  But they are just the water carriers for the real power behind the central banks, and when they leave, they will be replaced by other puppets who will be just as onerous.


Wed, 07/25/2012 - 09:04 | 2648649 SheepDog-One
SheepDog-One's picture

'Day of Printing nears'....uh huh yea sure it is....wheres any need for printing? Just add back any losses during pre-market. Bunch of BS is what it all is.

Wed, 07/25/2012 - 09:19 | 2648772 malikai
malikai's picture

I'm just wondering. When did "the day of printing" end?

Wed, 07/25/2012 - 09:20 | 2648775 Confundido
Confundido's picture

Why? You think the printing is to support the stock market? Who the fuck made you believe that? If the don't print, who the fuck is gonna buy the fucking Treasuries? Did you check the percentage of gross issuance the Ben Bernanke bought this last year only? Do you really think that there is a flight to safety in the US debt space? If so, call me. There's a bridge I'd like to sell you...

Wed, 07/25/2012 - 09:04 | 2648650 caimen garou
caimen garou's picture

will someone please get some imodium AD for these idiots diarrhea of the mouth! i have a roumor, timmy and ben are drag queen prostitutes by night and jamie is their pimp or the other way around.

Wed, 07/25/2012 - 10:45 | 2649263 malikai
malikai's picture

Dude, rumors are supposed to be false in the New Normal.

Wed, 07/25/2012 - 09:05 | 2648652 kito
kito's picture

Tyler falling for the rumors. Man, hopium is strong.....

Wed, 07/25/2012 - 09:12 | 2648710 SeverinSlade
SeverinSlade's picture

I fail to see how ZH is "falling" for anything.  The day of "reckoning" is approaching.  Market participants are seeing it as the "day of printing." 

It's exactly what ZH says.  It is the day of reckoning.  If the market doesn't get the juice it craves and is expecting, then expect the market to falter.

Wed, 07/25/2012 - 09:17 | 2648756 SheepDog-One
SheepDog-One's picture

Right, so now markets can just chill out near all-time record highs, but might throw a tantrum if theyre not injected with more of the free moneez.

Wed, 07/25/2012 - 09:05 | 2648654 juujuuuujj
juujuuuujj's picture

Gold will be $ infinity eventually, just like it's infinity Rentenmark now.

Wed, 07/25/2012 - 09:05 | 2648657 monopoly
monopoly's picture

Yes, you are right. Might as well just play in the garden. And agree, miners should be up 4-6% on this ramp. Silver up less than 1%. I smell a rat. First hour is a tell. Patience.

Wed, 07/25/2012 - 09:07 | 2648664 BLOTTO
BLOTTO's picture

'They' are going to use gold against the masses.

'They' love gold.


The illusion and the TRILLIONS of dollars spent in this financial CRISIS is NOT to PSYCH OUT us 1-3% 'commoners' that hold and stack PMs...


The ILLUSION IS for all those unassuming, ignorant, not capable of independent thinking - MASSES...who are in total denial.

Consider yourself lucky - those that own PMs and are aware of the global fiananical sitiuation - as your brain is vibrating at a higher level or something...

Just makesure you are a good person too... Their is way more to this then meets the eye - i think a lot of you would be shocked (as i would be) that this is more strange and sinister than you can imagine...whats taking place on earth.


Wed, 07/25/2012 - 09:06 | 2648669 thetruthseeker
thetruthseeker's picture

I am getting so sick of these cowardly money managers who cannot invest intelligently but require a perpetual Fed backstop. It makes me want to throw up,and in a sick way I even hope for an epic collapse, if only to teach these guys a lesson. We all know that QE does virtually nothing for the real economy aside from driving up commodity prices and further destroying the middle class. So seeing these New York shysters take huge losses in the absence of a new QE would actually be beneficial to the rest of America. And fuck Kudlow, Cramer, Mittens Romney and any other fake conservative or so-called believers in small government who really espouse central planning as they cry for Mommy's (the Fed) help. As a result of the continued criminality, I am afraid that when all is said and done this society will be destroyed. And all for a bunch of cowardly Rothschild banksters.

Wed, 07/25/2012 - 09:16 | 2648689 dizzyfingers
dizzyfingers's picture


James Turk: A short history of the gold cartel

By cpowell Created 2009-05-04 01:44

By James Turk, Editor
Freemarket Gold & Money Report [1]
Sunday, May 3, 2009
Copyright 2009 by James Turk. All rights reserved.

This week Bill Murphy and Chris Powell, co-founders of the Gold Anti-Trust Action Committee Inc. ( [2]), will be in London, England. Their trip is part of GATA's ongoing effort to raise awareness of the gold cartel and its surreptitious intervention in the gold market.

Bill and Chris will meet with the British news media to explain GATA's findings. They will also attend an important fund-raising event being held in support of GATA's work. Their trip is another important step by GATA aimed at creating a free market in gold, one which is unfettered by government intervention.

Governments want a low gold price to make national currencies look good. Gold is recognizable the world over as the "canary in the coal mine" when it comes to money. A rising gold price blurts the unpleasant truth that a national currency is being poorly managed and that its purchasing power is being inflated.

This reality is made clear by former Federal Reserve Chairman Paul Volcker. Commenting in his memoirs about the soaring gold price in the years immediately following the end of the gold standard in 1971, he notes: "Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake." It was a "mistake" because a rising gold price undermines the thin reed upon which all fiat currency rests -- confidence. But it was a mistake only from the perspective of a central banker, which is of course at odds with anyone who believes in free markets.

The U.S. government has learned from experience and has taken Volcker's advice. Given the U.S. dollar's role as the world's reserve currency, the U.S. government has the most to lose if the market chooses gold over fiat currency and erodes the government's stranglehold on the monopolistic privilege it has awarded to itself of creating "money."

So the U.S. government intervenes in the gold market to make the dollar look worthy of being the world's reserve currency when of course it is not equal to the demands of that esteemed role. The U.S. government does this by trying to keep the gold price low, but this is an impossible task. In the end, gold always wins -- that is, its price inevitably climbs higher as fiat currency is debased, which is a reality understood and recognized by government policymakers.

So recognizing the futility of capping the gold price, they instead compromise by letting the gold price rise somewhat, say, 15 percent per year. In fact, against the dollar, gold is actually up 16.3 percent per year on average for the last eight years. In battlefield terms, the U.S. government is conducting a managed retreat for fiat currency in an attempt to control gold's advance.

Though it has let the gold price rise, gold has risen by less than it would in a free market because the purchasing power of the dollar continues to be inflated and because gold remains so undervalued notwithstanding its annual appreciation this decade.

These gains started from gold's historic low valuation in 1999. Gold may not be as good a value as it was in 1999 but it nevertheless remains extremely undervalued.

For example, until the end of the 19th century, approximately 40 percent of the world's money supply consisted of gold, and the remaining 60 percent was national currency. As governments began to usurp the money-issuing privilege and intentionally diminish gold's role, fiat currency's role expanded by the mid-20th century to approximately 90 percent. The inflationary policies of the 1960s, particularly in the United States, further eroded gold's role to 2 percent by the time the last remnants of the gold standard were abandoned in 1971.

Gold's importance rebounded in the 1970s, which caused Volcker to lament the so-called mistakes of policymakers. Its percentage rose to nearly 10 percent by 1980. But gold's share of the world money supply thereafter declined, reaching about 1 percent in 1999. Today it still remains below 2 percent.

From this analysis it is reasonable to conclude that gold should comprise at least 10 percent of the world's money supply. Because it is nowhere near that level, gold is undervalued.

So given the ongoing dollar debasement being pursued by U.S. policymakers, keeping gold from exploding upward to a true free-market price is the first thing they gain from their interventions in the gold market. The other thing they gain is time. The time they gain enables them to keep their fiat scheme afloat so they can benefit from it, delaying until some future administration the scheme's inevitable collapse.

So how does the U.S. government manage the gold price?

They recruit Goldman Sachs, JP Morgan Chase, and Deutsche Bank to do it, by executing trades to pursue the U.S. government's aims. These banks are the gold cartel. I don't believe that there are any other members of the cartel, with the possible exception of Citibank as a junior member.

The cartel acts with the implicit backing of the U.S. government, which absorbs all losses that may be taken by the cartel members as they manage the gold price and which further provides whatever physical metal is required to execute the cartel's trading strategy.

How did the gold cartel come about?

There was an abrupt change in government policy around 1990. It was introduced by then-Federal Reserve Chairman Alan Greenspan to bail out the banks back then, which, as now, were insolvent. Taxpayers were already on the hook for hundreds of billions of dollars to bail out the collapsed "savings and loan" industry, so adding to this tax burden was untenable. Greenspan therefore came up with an alternative.

Greenspan saw the free market as a golden goose with essentially unlimited deep pockets, and more to the point, saw that these pockets could be picked by the U.S. government using its tremendous weight, namely, its financial resources for timed interventions in the free market, combined with its propaganda power by using the news media. In short, it was easier to bail out the insolvent banks back then by gouging ill-gained profits from the free markets instead of raising taxes.

Banks generated these profits through the Federal Reserve's steepening of the yield curve, which kept long-term interest rates relatively high while lowering short-term rates. To earn this wide spread, banks leveraged themselves to borrow short-term and use the proceeds to buy long-term paper. This mismatch of assets and liabilities became known as the carry trade.

The Japanese yen was a particular favorite to borrow. The Japanese stock market had crashed in 1990 and the Bank of Japan was pursuing a zero-interest-rate policy to try reviving the Japanese economy. A U.S. bank could borrow Japanese yen for 0.2 percent and buy U.S. T-notes yielding more than 8 percent, pocketing the spread, which did wonders for bank profits and rebuilding the bank capital base.

Gold also became a favorite vehicle to borrow because of its low interest rate. This gold came from central bank coffers, but central banks refused to disclose how much gold they were lending, making the gold market opaque and ripe for intervention by central bankers making decisions behind closed doors. The amount lent by central banks has been reliably estimated in various analyses published by GATA as between 12,000 and 15,000 tonnes, nearly half of total central bank gold holdings and four to six times annual gold mine production of 2,500 tonnes. The banks clearly jumped feet first into the gold carry trade.

The carry trade was a gift to the banks from the Federal Reserve, and all was well provided that the yen and gold did not rise against the dollar, because this mismatch of dollar assets and yen or gold liabilities was not hedged. Alas, both gold and the yen began to strengthen, which, if allowed to rise high enough, would force marked-to-market losses on those carry-trade positions in the banks. It was a major problem because the losses of the banks could be considerable, given the magnitude of the carry trade.

So the gold cartel was created to manage the gold price, and all went well at first, given the help it received from the Bank of England in 1999 to sell half of its gold holdings. Gold was driven to historic lows, as noted above, but this low gold price created its own problem. Gold became so unbelievably cheap that value hunters around the world recognized the exceptional opportunity it offered and demand for physical gold began to climb.

As demand rose, another more intractable and unforeseen problem arose for the gold cartel.

The gold borrowed from the central banks had been melted down and turned into coins, small bars, and monetary jewelry that were acquired by countless individuals around the world. This gold was now in "strong hands," and these gold owners would part with it only at a much higher price. So where would the gold come from to repay the central banks?

While the yen is a fiat currency and can be created out of thin air by the Bank of Japan, gold is a tangible asset. How could the banks repay all the gold they borrowed without causing the gold price to soar, worsening the marked-to-market losses on their remaining positions?

In short, the banks were in a predicament. The Federal Reserve's policies were debasing the dollar, and the "canary in the coal mine" was warning of the loss of purchasing power. So Greenspan's policy of using interventions in the market to bail out banks morphed yet again.

The gold borrowed from central banks would not be repaid after all, because obtaining the physical gold to repay the loans would cause the gold price to soar. So beginning this decade, the gold cartel would conduct the government's managed retreat, allowing the gold price to move generally higher in the hope that, basically, people wouldn't notice. Given gold's "canary in a coal mine" function, a rising gold price creates demand for gold, and a rapidly rising gold price would worsen the marked-to-market losses of the gold cartel.

So the objective is to allow the gold price to rise around 15 percent per year while enabling the gold cartel members to intervene in the gold market with implicit government backing in order to earn profits to offset the growing losses on their gold liabilities. The gold cartel's trading strategy to accomplish this task is clear. The gold cartel reverse-engineers the black-box trend-following trading models.

Just look at the losses taken by some of the major commodity trading managers on their gold trading over the last decade. It is hundreds of millions of dollars of client money lost, and the same amount gained for the gold cartel to help offset their losses from the gold carry trade -- all to make the dollar look good by keeping the gold price lower than it should be and would be if it were allowed to trade in a market unfettered by government intervention.

As I see it there are only two outcomes. Either the gold cartel will fail or the U.S. government will have destroyed what remains of the free market in America. I hope it is the former, but the flow of events from Washington and the actions of policymakers suggest it could be the latter.


James Turk is founder and chairman of, editor of the Freemarket Gold & Money Report, co-author of "The Coming Collapse of the Dollar," which was recently updated in a new edition as "The Collapse of the Dollar" ( [3]), and a consultant to the Gold Anti-Trust Action Committee Inc.

* * *

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Wed, 07/25/2012 - 09:10 | 2648690 johnnymustardseed
johnnymustardseed's picture

More of the same JPM bullshit, take it up $50 to $75 and then smash it down. Just more of the rigged shit. Same for silver.

Wed, 07/25/2012 - 09:11 | 2648694 EL INDIO
EL INDIO's picture

This could be a real break out or a setup (barbeque season is here)

I noticed that before major moves, there is an initial loading move on the opposite direction (probably to lure muppets) then …Fiiiiire.

At this point, it has become a binary thing, if QE breakout else Breakdown.  

Wed, 07/25/2012 - 09:13 | 2648696 SeverinSlade
SeverinSlade's picture

Yes QE will happen, but the question is WHEN.

The market has been frontrunning the QE3 trade for about a year.  If everyone is frontrunning it and its announced, it will have little to no effect (since equities are already overvalued, most market participants will sell into the strength).  As TrimTabs, ZH, etc. have all said, at best, QE3 will provide a very brief 10% rally, followed by a massive sell off and new lows for the year.

The Fed has its hands tied.  Launching QE3 before November creates the image that the Fed is playing politics and is no longer an "independent agency."  Plus as other people have pointed out, if the Fed launches QE3 when EVERYONE expects it and is frontrunning it and it doesn't do jack shit, then what?  QE4 within a month? 

We are coming up on the end of the road.  The Fed has pretty much lost control.  The only reason why the market has shown any strength these past few years is because of brainless headline scanning HFT algos that buy any headline that contains "Hilsenrath, Bernanke, QE, LSAP, etc."

Remember, QE has NEVER been launched when the market is strong.  People have to be panicking and begging for it for the Fed to act.

Wed, 07/25/2012 - 09:33 | 2648844 Freebird
Freebird's picture

No QE before lunch

Wed, 07/25/2012 - 10:58 | 2649332 Moe Howard
Moe Howard's picture

No swimming for one hour after QE.

Wed, 07/25/2012 - 09:10 | 2648698 gjp
gjp's picture

Economic impact may be nil, but the impact to the portfolios and incomes of the 0.1% is quite material and in the end isn't that all this is about?

Wed, 07/25/2012 - 09:11 | 2648700 Confundido
Confundido's picture

Yo wanna know how's it all gonna happen? What will it take to get gold to 10k?

Here's how:

-US Fiscal cliff is exposed, not just discussed

-Ratings agencies, under death threat, refuse to downgrade US debt

-Egan Jones proceeds with downgrade

-Under financial repression, the USD repo curve inverts

From here on, two alternative paths:

a) (50% chance)

-Fed intervenes easing, targeting rates

-Inflation spirals


 b) (50% chance)

-Regulators enforce 0% risk weight on US debt in clearinghouses/m mkt funds

-Market reacts lowering repo volume

-Some big commodity naked short is forced to take delivery and finds no physical

-Gold enters backwardation, the clearinghouse faces counterparty risk

-The counterparty risk involves a big bank

-Futures market blows up, a clearinghouse is bailed out, gold can no longer be supressed. Spot prices in any commodity are king.

-Huge repression on physical holdings: Taxes on mining, nationalization of mines in Latam/Africa, capital controls, wallets with coins get to be scanned separately at airports.

Wed, 07/25/2012 - 09:14 | 2648727 diogeneslaertius
diogeneslaertius's picture

Thou shalt print fiat with NWO banker debt attached

Wed, 07/25/2012 - 09:17 | 2648739 Jlmadyson
Jlmadyson's picture

UK; Double dip recession longest in 50 years as the economy shrinks a shocking 0.7%.

This makes for one ugly chart let me tell ya.

Europe is screwed and clearly that is spilling over into the US numbers now.

QE all they want it will solve nothing just like all the various easing and printing they have done now for 5 years. Nothing will change this course now.

Wed, 07/25/2012 - 09:16 | 2648744 LooseLee
LooseLee's picture

What MORON really believes that the Federal Reserve can spur DEMAND and HIRING? What a BRAIN-DEAD people we have become!

Wed, 07/25/2012 - 09:16 | 2648747 terryfuckwit
terryfuckwit's picture

Now let me tell you what a dollar in the bank is... it is like a dollar that is moved so fast around 50 differant tables it apperars as if it always exists on all tables ie we all own the same dollar. At one time there may have only been five tables but this was such an easy illusion to maintain and peoples wealth was growing and mattreses and metals were so out of fashion. People are slowly and surely starting to see the illusion and moving money out which slows the dollar movement even more so more can see the problem and act accordingly.

Do not be the last man in the que for your dollar.... rack and stack..and only look at your metal price every 5 year...


Wed, 07/25/2012 - 09:20 | 2648777 DosZap
DosZap's picture

The FED is not,has not printed shit.

All they have done is add zero's to the ledger.

Even if they had physically printed, it has to get into the economy or its useless.

Wed, 07/25/2012 - 10:33 | 2649165 graneros
graneros's picture

Though perhaps not true of the general population at large, I'm pretty certain that the vast majority of ZH'ers understands that the term "printing money" as used here in reference to the FED, is a conceptual metaphor.

Wed, 07/25/2012 - 09:24 | 2648793 yogibear
yogibear's picture

Bernake and the fed have established themselves as money-printers.

Food and commodities should begin their price esculation upward.

Food should be going up very shortly with the drought.

The middle east should be cutting back production spiking oil prices.

It's US dollar trashing time again.



Wed, 07/25/2012 - 09:26 | 2648812 Kreditanstalt
Kreditanstalt's picture

CTRL+P?  We don't need that.  All I long for are the coming Recession+BIG DIVIDEND CUTS=Lower Dollar...

Wed, 07/25/2012 - 09:39 | 2648866 qussl3
qussl3's picture

Dont underestimate IOER cut, it's where all the slosh has been hiding, if that juice actually goes out to chase assets, it'll be insane.

There isnt a market liquid enough to absorb the slosh without spiking.

Wed, 07/25/2012 - 09:40 | 2648877 ParkAveFlasher
ParkAveFlasher's picture

Knock Knock.

Who's there?


Wed, 07/25/2012 - 10:02 | 2649000 americanspirit
americanspirit's picture

So strategic wizards of ZH, riddle me this. What happens to gold and silver when full-scale war involving chemical, biological and nuclear weapons breaks out in the ME in the next few weeks? No explanation needed for how chemical & biological will happen, right? As for nuclear, is there any way to 'control' Syria's stockpile of CBW other than to vaporize them in their central storage facilities with a few big boys before they are dispersed and in the hands of lower-ranking field commanders? And what happens then? Inquiring minds want to know.

Wed, 07/25/2012 - 11:02 | 2649352 Moe Howard
Moe Howard's picture

No nukes by USA - Israel is downwind. Chemical etc maybe.


No gold or silver mines in Syria. No problemo.

Wed, 07/25/2012 - 11:31 | 2649485 De minimus
De minimus's picture

Since you cannot match US capabilities you out think them. Of course that hasn't proven very hard to do, considering what we ignored in the past.

The US government now captures all electronic information, even that of it's own citizens for examination, in contravention of both the constitution and bill of rights, and have provided themselves with such powers as any dictatorship would need to act as and when it wishes, even against it's own people, on a grand scale.

The enemy, who is committed to destruction, knows all these things. Were you he, what would you do?

Wed, 07/25/2012 - 12:25 | 2649731 Conax
Conax's picture

"What happens to gold and silver when full-scale war.."

It should be fundamentally bullish for silver. Every cruise missile detonated blows many kilos of silver to smithereens.

Gold? The oligarchs will always have their gold in reserve, so it will be fine.

Wed, 07/25/2012 - 10:07 | 2649024 MajorWoody
MajorWoody's picture

And wait for comes the Comex smackdown

Wed, 07/25/2012 - 10:11 | 2649040 Fix It Again Timmy
Fix It Again Timmy's picture

ME armies - men with guns one moment, seconds later, men without guns, going home to have coffee and tea with the neighbors.  Do you see the threat?

Wed, 07/25/2012 - 10:25 | 2649125 cocoablini
cocoablini's picture

It's not a cartel if it's the government. GATA needs to stop calling it a cartel. the gold manipulation is monetary manipulation by a government approved mechanism. They may be despots, but it's not a cartel which would imply an entity separate and working underneath the noses of the government.

The government, with the aid of private banks, has triggered the biggest economic collapse in history. The problem with a pyramid scheme is that once you trigger inversion, it's all just math running backwards. Sad.

Gold is just a fiat instrument that happens to be difficult to print. It could be some other mechanism, but in the end gold sits in rooms and looks pretty. What a stupid species we are for:

-Triggering the financial math implosion

-Worshipping a dumb rock(even today the whole system looks at gold as a relative indicator.)

Somebody besides Keynes needs to figure out a new financial model not based on money supply growth. AND FAST

Wed, 07/25/2012 - 10:33 | 2649175 dash8flyer
dash8flyer's picture

How about this scenario, Bernanke lets market drop 10-15% coupled with lousy economic reports the markets willl be begging for QE time this around Sep/Oct (most expect markets to fall then anyway) then roll out QE markets soars, election shortly to follow Obama the Savior once again! All this predicated on Europe not imploding before then of course. Opinions anyone or is this a pipe dream?


Wed, 07/25/2012 - 11:24 | 2649452 Clowns on Acid
Clowns on Acid's picture

Oy dash - Bendover will never let markets fall 10% without a good printing fight. I suspect that Fed and ECB co-ordinate additional "liquidity".

Safety from the mob in numbers, while handing out candy. Suspect it happens earlier than Sept. Oct too close to US elections....must be seen as non partisan....kinda.

Wed, 07/25/2012 - 10:45 | 2649261 youngman
youngman's picture

Here comes the Treasury sale knockdown....can´t have gold up on a selling debt day.....

Wed, 07/25/2012 - 11:21 | 2649435 Clowns on Acid
Clowns on Acid's picture

The Fed and ECB (Germany) were doing a subtle staredown. Each looking for the other to add additional "liquidity".

It coming to the end game....they both willl add "liquidity" therefore allowing both to race to the bottom together...allowing for the media shills to praise their insight and indeed humanity. Bernanke and ECB head embrace on the cover of Time magazine?

Asian bond holders might not be so enamored....PMs up, Bond prices down.

Wed, 07/25/2012 - 12:38 | 2649783 I dont belong here
I dont belong here's picture

QE is a sideshow. The main event is the derivatives bubble popping. Keep stacking and stop worrying about short term price fluctuations, unless of course you are playing the paper market casino. Good luck.

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