Gold Extending Gains On Realization Fed's Only Option Is CTRL+P

Tyler Durden's picture




 

Update: $1700

As for those confused why EURUSD is back at 1.31, here is a reminder from 3 days ago: "Poor Mario apparently fails to grasp that for Germany a plunging Euro, and thus a surging export market to offshore trading parterns, is the only thing that matters now that its endogenous mercantilist import, pardon, trading partners of the past decade, the PIIGS, have no more debt capacity to buy German exports. Although even a technocrat probably understands that one does not get a weak currency by bailing out the weakest links over and over. Expect the European crisis to be with us for a long time. After all, that's precisely what Germany wants (of course, the Chairsatan may have other views on the matter)." It appears he did have "other views."

Presented with little comment, Gold is now at $1693, about to take out $1700 and the best performing asset class of the year: YTD: Gold +8.2%, S&P +4.9%, 30Y TSY price -1.44%. Furthermore, since this FOMC statement implies more easing imminent, it simply delays full blown LSAP so its "effectiveness", read max Russell 2000, peaks with Obama's reelection campaign.

 

Chart: Bloomberg

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Wed, 01/25/2012 - 14:08 | 2096824 GeneMarchbanks
GeneMarchbanks's picture

It's over.

It's all over.

Wed, 01/25/2012 - 14:11 | 2096844 Corn1945
Corn1945's picture

It is over. Even Kyle Bass mentioned that once you start ZIRP you can't ever stop without blowing yourself up.

ZIRP is the end game of any financial system. Look at Japan. If rates rise to something like 3%, they immediately implode. Is that scary or what?

And it gets to the point that even with incredibly low rates, you can still blow yourself up because you are increasing your debt so fast! A small percent of a really big number is still a big number!

Wed, 01/25/2012 - 14:21 | 2096895 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

It did not take long for ZH to get on this, what 15 minutes or so since the vertical spike started.  Bravo ZH!

Now let's see if gold keeps going up.  Maybe this is just another spike-ette that means little longer term.

Yes, Corn1945, there are few ways we can make any income as savers in a ZIRP environment.  And if/when we leave ZIRP: kaboom!

Wed, 01/25/2012 - 14:40 | 2096972 Silver Bug
Silver Bug's picture

Wow who would of guessed! Of course they have no choice except QE to infinity. Look out hyperinflation.

 

http://silverliberationarmy.blogspot.com/

Wed, 01/25/2012 - 14:59 | 2097050 nope-1004
nope-1004's picture

Silver is 19% + YTD.  Wonder how high it would be if our wonderful regulators didn't beat it down at 2am last night, and also where it would be if the COMEX didn't need 5 margin hikes in 9 days to bail itself out last May.

This entire economy is a joke - corrupt and bleeding badly.  Metals need to be beat down to hide the extent of this ponzified POS.  Good luck Benocide, Timmay, and Osama......

Wed, 01/25/2012 - 15:20 | 2097156 BGO
BGO's picture

Watching platinum, the price ticker went beanzo a while ago. Check the H. 

Wed, 01/25/2012 - 16:25 | 2097470 trav7777
trav7777's picture

if you understand WHY ZIRP happens and how the Fed *does not* SET interest rates (they follow), then you understand why ZIRP never ends.

There is NO DEMAND FOR CREDIT.  This is because the forces of CONTRACTION are up on us, not expansion.  Everyone is facing no choice but to decrease borrowing.

Wed, 01/25/2012 - 16:54 | 2097562 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

NO ONE I know wants to borrow.

Wed, 01/25/2012 - 19:06 | 2098056 Zero Govt
Zero Govt's picture

"no one wants to borrow" except the bankrupt gambling bums on Wall Street and the insolvent cretins in Washington

America is sinking as fast as Europe and Japan yet all the drunk-stupid elites are demanding the central bankers keep bailing with yet more credit/debt ...just keep piling on the dynamite bankers, the fireworks will be all yours

Wed, 01/25/2012 - 19:49 | 2098154 DaddyO
DaddyO's picture

 

 

I just love ZH! Look at all the comments of those who really get it. The fuse is getting short and still burning, in fact the CB's of the world are fanning the flame.

DaddyO

Phyzzz, it's whats for stacking!

Thu, 01/26/2012 - 01:08 | 2098877 Freddie
Freddie's picture

Thank the Democrats and their golden Muslim.

Wed, 01/25/2012 - 15:18 | 2097142 kito
kito's picture

what qe are you talking about?!? what printing?!? another trough of fed promises, and only promises, filled with imaginary pig slop that the investment flock is running to.......nothing has changed today. another year of zirp to accommodate demand that doesnt exist (yes thats thanks deleveraging and very deflationary)? there wont be hyperinflation.....the world cbs are doling out just enough to keep things level at this point...........

Wed, 01/25/2012 - 17:43 | 2097812 Raymond Reason
Raymond Reason's picture

I wouldn't bet on deflation.  Reverse fractional reserve lending does not strengthen the dollar, it only reduces banking revenue.  The deficit must be funded.  USD will lose reserve status.  All inflationary. 

Wed, 01/25/2012 - 19:06 | 2098055 akak
akak's picture

Why do you clueless deflationary flat-earthers ALWAYS love to throw out that red herring of hyperinflation as the ONLY possible alternative outcome to your never-before-seen fiat currency deflation?  Oh yeah --- because your arguments are laughably weak and historically nonsensical.

We may not see hyperinflation in the USA or Europe, but we most definitely WILL see a significant fiat currency depreciation --- just as we are experiencing currency depreciation today, all disinformation from Bernanke and Trichet to the contrary.

Thu, 01/26/2012 - 01:10 | 2098880 Freddie
Freddie's picture

I love these deflationary trolls.  You go to the grocery store and see poor older people on fixed incomes with empty baskets and terror in their faces. Meanwhile, the muslim's voters have carts filled with junk food with their golden muslim's food stamp credit cards.

Wed, 01/25/2012 - 17:13 | 2097652 SomethingWicked
SomethingWicked's picture

ZIRP is more like a desperate attempt to stop (price) deflation.  Hyperinflation is a political. . . blah blah blah. . .

The FED is attempting to keep credit from contracting.  This is a big no-confidence vote in the economy.  It is also dollar negative - in keeping with the 'talk about strong dollar while do everything to weaken the dollar.'  The irony: Europe is more broken, so this is a losing game.

I totally agree that once the FED embarked on the ZIRP Heroin binge, the fate of the economy for the next 20-or-so years was sealed.  We are the new Japan.  Cash is king, with some PMs for hedging against the possibility of TPTB taking a big misstep and flying this plane into the ground.

Equities? Please.

Bonds? Toxic mortgage sludge securities may be the best short term performers, but only because the FED is telegraphing the desire to buy them all up as part of expanding and deepening the ZIRP Heroin binge.

Real estate?  Look what Japan for the last 20 years.  Possible exception is farming/gardening so you can save on groceries (the one area where prices ARE inflating).

Fuck it - pay off all your credit cards and buckle down.  Tell the wife that the summer vacation is now a staycation.  Oh, and remember that this time we have no gold standard to go off of (unlike FDR in 1933).  There is no fix for this.  There is only delay.

Wed, 01/25/2012 - 14:40 | 2096973 Manthong
Manthong's picture

Can we get on with the correction, now?

.. or is the S&P just going straight into hyperinflation?

Wed, 01/25/2012 - 15:19 | 2097150 tocointhephrase
tocointhephrase's picture

Carlsberg?

Wed, 01/25/2012 - 14:43 | 2096988 DoChenRollingBearing
DoChenRollingBearing's picture

@ DoChen  

Up $5 or so more since I wrote at 13:21.  $36 is a NICE MOVE.

Wed, 01/25/2012 - 15:57 | 2097333 DoChenRollingBearing
DoChenRollingBearing's picture

Spike back on, $1706, up $40.

Wed, 01/25/2012 - 22:51 | 2098597 StychoKiller
StychoKiller's picture

Au options expiry tomorrow...

Wed, 01/25/2012 - 14:21 | 2096896 Master_Blaster
Master_Blaster's picture

I guess this wasn't "priced in"...... love me my bullion!

Wed, 01/25/2012 - 14:32 | 2096945 greyghost
greyghost's picture

well i just realized that i now use zero hedge and the tyler boys as my go to news source for financials. was searching property in calif when i bounced into my trading account and saw my agq and uslv taking off and went straight to zero hedge to see whats up. sure enough top post is fed statement. go zero hedge

Wed, 01/25/2012 - 14:25 | 2096917 blindfaith
blindfaith's picture

well thanks God we have Gordon Norquist to keep us safe from economic collapse.

By the way did all the Republican congressman who signed his oath on taxes at the expense of their oath to the America Oath of Office that this gentleman also is the co-founder of the Islamic Free Market Institute?

 

Thu, 01/26/2012 - 01:24 | 2098893 Freddie
Freddie's picture

It is "Grover" Norquist and the majority of conservative Republican voters, not AH's who think Newt is a conservative, hate Allah's stooge Grover Al-Norquist.  Norquist is a piece if sh*t.

F him.

Wed, 01/25/2012 - 14:33 | 2096949 ilovefreedom
ilovefreedom's picture

So what you're saying is if all the unemployed people buy a house and an iphone everything is going to be alright?

APPLE! APPLE! APPLE!

Too bad you can't eat your phone.

The New American Dream: Not wanting your kids to grow up eating bugs

Wed, 01/25/2012 - 14:55 | 2097033 AL_SWEARENGEN
AL_SWEARENGEN's picture

"Gold is your chance.  Gold is every man's opportunity.  Why do I make that argument?  Because every defect in a man and in others' way of taking him, our agreement that Gold has value gives us power to rise above...And for your effrontery at our meal a moment ago, I'd have seen you shot or hanged without second thought.  The value I gave the Gold restrainded me, you see...your utility in connection to it.  And because of my Gold, those at the other tables deferred to my restraint.

Gold confers power.  Power comes to any man who has the color."

 

-George Hearst - Deadwood season 3

Wed, 01/25/2012 - 15:12 | 2097054 DavidPierre
Wed, 01/25/2012 - 15:12 | 2097107 AL_SWEARENGEN
AL_SWEARENGEN's picture

Thanks I forgot to throw a cocksucker in there..

Wed, 01/25/2012 - 15:21 | 2097161 tocointhephrase
tocointhephrase's picture

Gold $1700 Gold $1700 (PAPER MALFUNCTION PAPER MALFUNCTION) Show me the physical BITCHEZ!!!

Wed, 01/25/2012 - 15:48 | 2097291 docmac324
docmac324's picture

Spot on.

I literally have folks coming in the clinic daily wanting freebies.  They cannot affor to eat, they cannot afford their meds, et., etc., but boy they sure can sport that new iphone 4S!!  Keeps them occupied while waiting to be seen.

 

No shoes, no shirt, just utter consumerism.

 

Hopeless state.

 

 

Wed, 01/25/2012 - 14:40 | 2096976 grid-b-gone
grid-b-gone's picture

President Obama just told me last night that we've turned up for the foreseeable future. Now Bernanke tells me there will be no sustainable upturn for another three years.

So which one is the honest one?

Wed, 01/25/2012 - 14:49 | 2097006 Chief KnocAHoma
Chief KnocAHoma's picture

This is an excellent question! I think the bearded one is painted into a corner and is basically saying..."don't fucking look to me for help... all I can do now is print and pray."

Wed, 01/25/2012 - 15:16 | 2097133 DoChenRollingBearing
DoChenRollingBearing's picture

I think you are reading it right Chief!  The Fed really does not have much power to change things now other than to print.  Pretty soon it will be politicians who start coming under scrutiny.

Did Obama say last night that it was George Bush's fault?

Wed, 01/25/2012 - 15:40 | 2097253 Chief KnocAHoma
Chief KnocAHoma's picture

Did Obama say last night that it was George Bush's fault?

I only heard him say that about ten times before I finally gagged and began throwing up violently. I think the thought of living in a country that has an electorate dumb enough to elect him made me sick to my stomach.

But please understand - the Republicans are not right, they are simply less wrong.

Wed, 01/25/2012 - 15:46 | 2097281 weinerdog43
weinerdog43's picture

the Republicans are not right, they are simply more wrong.

 

fixed it for ya.

Thu, 01/26/2012 - 02:49 | 2098950 Freddie
Freddie's picture

Name the Democrat Ron Paul.

Name the Muslim Republican President

Fixed it for ya.

Wed, 01/25/2012 - 14:50 | 2097012 Ruffcut
Ruffcut's picture

Neither. It is contradiction to the top, boys and bitchezz.

Wed, 01/25/2012 - 14:56 | 2097039 sitenine
sitenine's picture

"So which one is the honest one?"

LMFAO

Wed, 01/25/2012 - 15:19 | 2097147 Poetic injustice
Poetic injustice's picture

Golden question, yes, which one of them is more honest.
I do think Bernanke is more honest as he speaks much less, and always says "tough times ahead".

Wed, 01/25/2012 - 16:23 | 2097464 Citxmech
Citxmech's picture

Niether - the only sustainable option looking forward is contraction, localization, and reduced consumption.

Wed, 01/25/2012 - 16:28 | 2097485 trav7777
trav7777's picture

that doesn't intersect well with any system that requires unabated growth, like the Fed/BOE/BOJ/etc. creditmoney systems.

Japan's credit creation hit the wall 20 years ago.  Only through carry trades and ZIRP/prints have they managed to stave off the UTTER COLLAPSE of the thing.  But, because it's only paper, they can do so forever.  Just print.  The system won't collapse.

Shit gets more and more expensive, lifestyles go down in the aggregate, but the monetary system remains.

Wed, 01/25/2012 - 19:05 | 2097775 Flakmeister
Flakmeister's picture

QOL in Japan has improved, though...

The difference is that Japan until very recently had a trade surplus and still has a modest current account surplus...

And the BOJ has US treasuries whose coupon is adequate to purchase Japan's oil imports....

You and I agree that it when the petro-dollar outlives it's usefulness will you see the full extent of your vision...

Wed, 01/25/2012 - 15:15 | 2097128 tocointhephrase
tocointhephrase's picture

+1

Wed, 01/25/2012 - 22:09 | 2098478 Buck Johnson
Buck Johnson's picture

Your correct, it is over.  I've said this a number of years now, that the system has gotten itself in a situation that they can't exit it without the whole system imploding. 

Wed, 01/25/2012 - 14:15 | 2096861 Fred Garvin
Fred Garvin's picture

Buying just a little more time… Back in 1912  when the Titanic hit an iceberg, in short order everyone was apprised of the dire situation. There were not enough lifeboats to save everyone, but there were enough to save all the women and children and many of the men. Back in those heroic days Captain and crew went down with the ship of course. Today imagine the U.S. is the Titanic, (not to difficult) and it has struck the iceberg. The Captain and crew are telling everyone things are going to be fine. They tell all the passengers to just have another drink while they fix things up so the voyage can continue. Behind the scenes they quietly gather there rich friends and pile into the lifeboats. There are still many boats left, but instead of saving the woman and children, they loot the cabins of all on board and fill the remaining boats with their ill-gotten gains. As the string of boats rows away from the doomed ship some of the passengers notice and shout "where are you all going?" "Just off to get more Champagne of course" they reply "…carry on!"

 

Bon Voyage,

Wed, 01/25/2012 - 14:18 | 2096879 j0nx
j0nx's picture

Things are only this way because we the people allow it. Don't be mad at them. Be mad at us for not sticking our foot up their asses where it rightfully belongs.

Wed, 01/25/2012 - 14:22 | 2096902 blu
blu's picture

No actually it's okay to be mad at them. We trusted them to do the right thing. Trust is not wrong in that case. It may be misplaced but it is not wrong and they should have done the right thing when they had the chance and taken their lumps if any were involved.

But instead they lined their pockets. They are high criminals and enemies of the people. They should hang.

Wed, 01/25/2012 - 14:30 | 2096939 I Got Worms
I Got Worms's picture

"Hi Mr. Frog, I'm Mr. Scorpion. Mind if I catch a ride across the pond on your back?"

Wed, 01/25/2012 - 17:04 | 2097591 Jena
Jena's picture

Never mentioned in that parable is why the scorpion wanted to cross the pond in the first place.

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