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SocGen Sees $600 Billion QE3 Starting In March 2012 Sending Gold Up Between $1900 And $8500/Oz
SocGen has released its much anticipated Multi Asset Portfolio Scenario/Strategy guide titled simply enough "Patience: bad news will become good news" where, as the insightful can guess, the French bank makes the simple case that the worse things get, the stronger the response by global central banks will be. Here is the key quote for those worried that : "A major liquidity crisis should not occur this time, as we think we are on the eve of major QE in the UK, US and (a bit) later on in the EZ." We don't disagree and if there is anything that can send BAC higher it will be the announcement of QE3. Of course, BAC will first drop to a $2-3 handle so question is who has the balance sheet to hold on to the falling knife. The next question is "How big will QE3 be"? Well, according to SocGen, the Fed will preannounce it in the January 2012 FOMC statement, the monetization will last from March 2012 until the end of the year, and will buy a total of $600 billion. We believe the actual LSAP total (not to be confused with the "sterilized" QE3 known as Operation Twist) will be well greater, probably in the $1.5 trillion range as the Fed will finally say "enough" to piecemeal solutions. As to what to do, besides going long some financial stock and hoping it is not the one that is allowed to fail, SocGen has some simple advice: "Buy gold ahead of QE3 as money creation has a strong impact on prices" - in other words just as we suggested yesterday courtesy of the Don Coxe correlation chart. Why gold and not BAC? Because, "Gold is highly sensitive to US QE, as every dollar of QE goes into M0, triggering the debasement of the USD. Gold = $ 8500/Oz: to catch up with the increase in the monetary base since 1920 (as it did in the early 80s). Gold = $1900/Oz: to close the gap with the monetary base increase since July 2007(QE1+QE2)." So go long a bank that may well go bankrupt and return nothing before it at best doubles, or go long a real asset, which will always have value and may quadruple in short notice? The answer seems simple to us...
From SocGen:
A combination of weak Q1 2012 GDP and softening inflation could push the Fed to another round of monetary expansion.
SG economists look for a two-step easing process:
1) In January 2012, a major announcement with the Fed promising to keep rates at zero until unemployment falls below 7.5% or inflation moves above 3% on aa sustained basis.
2) In March 2012, the announcement of another round of QE. We expect the next round of QE to be concentrated on MBS purchases and be worth about $600bn over six to eight months. This would increase the Fed’s securities portfolio from currently $2.65trn to $3.25trn by the end of 2012.sustained basis.
The specifics of what to expect from the Fed:
And why gold:
And the full presentation:
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$2 trillion so far, well nevermind the other $16 trillion Audit The Federal Reserve Reveals 16 Trillion in Secret Bailouts | Ron Paul 2012 | Sound Money, Peace and Liberty or the other $27 trillion on top of that back in 09.
I tried to switch from stacking silver to gold. My coin dealer said he would save any nice jewelry for me which came in. I just called him and he got burgled last night - wiped out two cases of jewelry. Oh well, I'm headed into town right now and will pick up three more silver dollars...
Not just the 10X production ratio. In bullion, there is LESS silver above ground than gold. Why that ratio is 55:1 Ag:Au floors me.
Dont forget to say your thanks to FED and JPM when you buy some cheap silver coins.
What's your point, Walcott? Silver DOUBLED during that time ... kinda an odd definition of "whacked."
Imho it doesn't make sense to sweat the Ag/Au ratio while they are denominated in paper. Focus on your acquisition rate, it'll brighten your view of things.
There's a combined total of $60 trillion in government, financial and private debt, a lot of which is going to default. LSAP's are a peashooter against this. Gold will be sold, just like every other asset, in a futile attempt to pay this debt.
Yes it will be sold at a smal discount from people that can no longer hold it to people that have the means to, from weak to strong hands, as the price rises from lack of supply.
There is no rule to where QE goes. Even where QE went before is not a sure roadmap for where QE goes again. There is a scenario where QE can go almost nowhere. There is a scenario where it goes straight to commodities and bypasses stocks.
Last experience we had with multiple rounds of this lunacy was the mid to late 1970's. The stock market held up well. But that did not help Ford and then Carter who got killed because of the price inflation, even though we had wage inflation to match.
This time we live in free-trade-agreement-outsource-nation, so there will be no wage inflation. The only thing benocide has going for him is that this time, the mainstream media would cut out its liver with a rusty butterknife before making Banker and Chief look bad, so unlike the 1970's when the media harped on inflation every 10 minutes, instead they'll twist every disaster into some kind of green shoot if it kills them to try and prop up the Kenyan-Corporatist.
So gold will be 500% higher. Will gas be 15 dollars a gallon too? If so, I don't know if Haliburton built enough FEMA camps to house all the people who will be broke and homeless and ready to slit someone's throat for a can of Spam.
Who cares what price gold/silver rise to, we only know they are going up.
So Soc Gen is following the BUY short-end EM bonds rec. and BUY gold. Jesus, they could have gotten that from the Primary Dealer survey posted on Bloomberg today. This report reads like a redux of Primary Dealerdom wisdom.
$3476 is our 'all in' entry point.
So silver gold will be 250 to 1? :)
I'd rather think that will be maybe 20 to 1 as silver will be the only PM common people will still be able to buy and which will drive it right into the silver claws :)
Yep... at 400 or 500 per ounce I'm selling most of my stach and.... retire young :)
Methinks the "common people" will not be buying much (if any) gold or silver.
They will be directing 100%+ of their rapidly dwindling purchasing power and miniscule assets towards food, energy, shelter and clothing.
..and interest payments
And Wal-mart towels @ $1.28 which they tried to obtain covertly, but it all went wrong.
I'll drink to that.
I am looking for big funds to have their feet held to the fire for not participating in the best investment asset over the last decade in PMs and that will lead to a long term and sharp spike.
How can someone justify managing money and not participate in what has been an annual 25% avg. yoy increase on average? Of course that doesn't apply to stocks yet, but will, because the miners are being intentionally ignored for some obvious reasons. If Apple's products sold at a 25% price increase yearly traders and analysts would be frenzied with their projections.
Those mines can always be nationalised in the interest of ..........
This is why we have been suppressing the price of gold since the 1920's, it would be $8,500 an ounce. Who could afford gold at that price? Only the bankers not the public.
You're Welcome!
When gold hits 8500, a loaf of bread will be $20 so the ratio of 400 to 1 will be maintained (currently 1700/4)
You're very welcome
When gold hits 8500, a loaf of bread will be $20 so the ratio of 400 to 1 will be maintained (currently 1700/4)
You're very welcome
Alright big man you want to make some big bucks?
I have 2 kilos of silver I want you to trade for 1 oz of gold.
$32 bucks an ounce Who do you think we are baggage hounds?
http://www.youtube.com/watch?v=gluCtAiPzbo&feature=related
"between $1900-$8500" -- do people actually make money saying stuff like this?
Yes, people do make money saying stuff like that! I beleive they make somewhere between $190,000 and $850,000 per year.
precisley $6669.99 on 6-9-12
...thanks walcott, I really appriciate that: now I can budget accordingly!
Life will be so simple from now on.
So the acronym "PIIGS" spelled sideways (or with lipstick applied;) is referred to as the accronym "GIIPS"? How nice. Missing an M I think?
For all the hard core conspiracy therorists out there, know that Burl Ives was a 33 Degree Scottish Rite Mason - so what did he mean with these famous words? http://www.youtube.com/watch?v=oMlqn_Hjyi8 "every" christmas tree? "EVERY" ... sounds pretty socialist to me. Its probably a warning about the enevitable confiscation and redistribution that will come later.... Bwahhh ha ha ha. (evil laugh). All in jest. All in jest. TTGOTGAOTU
must look at everything as opposite so acutally and move a zero around here and there
so ala kazam! poof! $850.00 - $1,900
And silver will be some where in the neighborhood of $66.66 and $69.69 around the the calander day of 6/6 or 6/9
the tea leaves have spoken.
actually my eltist friend Mr. Ken Frohm on his death bed these were his last dying words
"666 oh wow silver 666 oh wow silver 666 oh wow."
"And gold? I don't fucking know! how 'bout $1900 - $8500"
And an hour or so later, Gold sits price wise where it did prior to the announcement. My greatest fear is that Zero gets it Half Right. No doubt, and the returns on my hedge fund will agree, the banking system is blown up as our short positions beginning way back in late 2007 have out performed the market by 261%, that gold, while it was a great trade on the QE in the US, if that doesn't occur, we'll see the PM down to $1200 before it recovers. I hope not but for now we're asymetrically short our pile of gold bars...
tkinfo,
we'll see the PM down to $1200 before it recovers. I hope not but for now we're asymetrically short our pile of gold bars...
Pray it does, and your fast enough to get your hands on as much as you can pay for, and/or charge.
With a JPM CC.....................LOL
Quite likely the last chance to get on the train leaving Sheepletown....
I tell folks and they look at me like I'm speaking Icelandic.
I got a new kid at my business of just back from Turkey signing papers on an inheritance....yesterday he's back some 20 minutes and he's talking about he's lined up to invest it all in a local shithole tavern.
WTF can you say to something like that??
Fuck...maybe he's right??
But for now I'll spare my liver and stack the shiny stuff.
Bitchez.
the worse, the better
Those numbers may be correct if he was trying to estimate the number of worn out milfs
Herman Cain was having unprotected office sex with.
Come on Tyler. You may have just Jumped the Shark! 1.5 Trillion? What do you want oil to be $250 dollars a barrel! I really hope that happens because after the initial rally the financial world is gonna end because the US economy is going to implode.
If the Fed do QE3 then prepare for war. There is no infinity, just the endgame. The Fed will need to do a trillion to trump volatility anyway
Europe economies are F*cked + Asia still suffering from the last QE (stagflation) + oil goes to 120 = total war
I still say, go long on pussy. Gold just helps maintain the ability to go long on pussy. Get your priorities straight, bitchez !
One of those items has a much longer shelf life.
I hear it's rather difficult to go short on pussy --- pussy don't like "soft patches", in the economy or in anything else.
Pimps are always short pussy.
May I humbly suggest applying Doc Johnson's Body Butter (any flavor with Strawberry Shortcake a personal flavor) and go DOWN on it. Get back to me for unforeseen complaints or additional support.
So the brokest bank in Europe is publicly suggesting to buy something NOW on premises that it will go up in 5 months?!?!?
Sounds like they have a large short position and expecting gold to trend down in next 30 days.
I hope I can pick someone brain on the following topic...
I'm quite surprised (I woul say shocked) at the ability of this printing money environment to keep going as it has done so far.....the US is running a 12% a year deficit, our public debt is steadily rising, our political system is completely disfunctional, out trade deficit is horrendous but despite all of this we are still viewed as the safe heaven and now we should actually even "save" the Euro...interesting....Italy, the 7th largest economy in the world, is blowing up at a public debt level of 120% of GDP and a projected deficit in 2012 of less than 2%...
Gold is currently firmly nailed, hovering at 1600-1700 and it won't budge.
- If I recall corretcly, the Fed monetized over 70% of new treasury issuance during the QE phase....the bond market barely budged (after all the QE exercise is to keep a lid and depress long term interest rates).
- The S&P downgrade actually sent treasury rates lower.
- The US will never have a failed bond auction because of the 3 card monte system of primary dealers and many captive players in the bond market (pension funds, etc...)
So what are the "mechanics", the specific breaking points of this current environment and of the Fed potentially monetizing indefinitely US public debt?? What happen??
- The currency eventually collape in the face of the farce of a Fed driven public bond market?? What I mean is yes we could have extremely low rates because of the Fed and its stooges but your dollars are worth toilet paper....plausible??
- How long the dollar can last with the Fed being basically the most important player in the bond market?? What if the Fed monetize 100% of new issuance?? Can the Fed really keep a lid on interest rates as much as they want no matter what??
- I suspect the collapse of the dollar could require some sort of "igniter", for example a large resource supplier (Country/group of companies) to say "no mas $$$" right?? I guess having the strongest military could help in this case.....plausible??
- How long genuine bond buyers will keep ignoring the printing press?? Ignoring that you may get your dollars back but you assuming significant exchange rate/purchasing power risk.
So, again, how long the charade can keep going and what are the system potential breaking points in detail....we know it will not be a bidless bond market....treasuries will always have a bid..
I would lvoe for Zero Hedge to post the potential scenarios of the blow up with the "technical" (what happen to what) details...maybe they did already, in this case I hope someone can post a link.
Thank you!!!
Well... we're all shocked at what has gone on.
Regarding the printing of money, the question becomes where else does the market go? FOR NOW, the pm market is illiquid and manipulated. When the Euro comes to an end... money will pour into the US$. But.. if the precipitating event is a country going insolvent... and it pulls down banks... and starts to pull down over here... then all bets are off on the US$. You'll see a wave of selling that will be breath taking. Then IMO, is when you'll see pms going to the moon because once the US system starts coming down... there's very little left as a storehouse of value except pms and other commodities.
If you believe any banker,your messed up .
If his/her lips moved, he/she lied.
Once again the Fag is going to bailout Europe at the expense of the Americans. First it was Tarp or Talf or whatever the fuck it was called handing out money to European banks and now its this QE shit. Everytime they do this QE shit they devalue the USA and send the Euro higher. No wonder why Germany and the ECB doesn't want to print, they don't have to the Fag will do it for them.
Soc Gen is total crap. Jerome Kerviel and crew are crap bankers. Make them work make them pay. This is America not a Socialist banker puppet for Europe.
an empty bullion box
makes the most noise....
...And won't all this printing send food and gas pricing soaring? Won't that kill even more jobs and discretionary spending? Fed is already fighting core inflation and didn't really get anything for QE2. What's the benefit of QE3?
You say that as if the Bernank (and every other sociopathic central bankster) actually cares how their corrupt and Ponzi monetary manipulations affect the common man.
Thanks for the laugh!
How can the Fed be fighting that which it is CREATING and solely responsible for in the first place?
That's my point - the fed knows (but will not admit) zirp and QE sends inflation higher - any further printing at this point will kill whatever recovery they are trying to create. All QE2 did was hold up the S&P for a year. I think he fed will buy a boatload of MBS to free the banks to lend (assume anyone wants to borrow) and hope for the best. Out and out QE3 (or 4 if you count twist) is well "out" imo.
I don't think that the Fed and TPTB were ever trying to create any real "recovery", whose putative existence is laughable and insulting to the intellect. Bernanke's main, if not sole, goal I believe has been to continue to levitate the stock market, as otherwise the value of almost every US pension fund goes into the toilet and the Ponzi finally collapses as pension payments are radically cut or cease altogether.
I agree his goal was to hold up the S&P - but I do believe TPTB do WANT a recovery they just have no idea how to create one. No accurate price discovery, no moral hazard...no recovery.
They will print until the are forced to stop and we're just not there yet.
Forget every investment, just buy gold.