“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

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Tuesday, February 7, 2012

Chairman Bernanke off the Administration Reservation

Someone needs to inform Ben Bernanke that he is not reading from the proper script. After all, he is employed there as head of the Federal Reserve courtesy of his boss, the President. One would think that he would get the memo to "help re-elect Obama" by spinning last week's fabrication, aka, the payrolls report, and spelling out in glowing detail how the President's policies are taking us all in the right direction and "not to muck things up".

Whoops - Bernanke went and did the exact opposite by basically confirming 100% what many of us have been saying about last week's government propaganda publication on the jobs situation here in the US. I am paraphrasing what his comments were this morning in front of the Senate Budget Committee but they were blunt and direct when he said that the 8.3% unemployment rate in January understated the real weakness present in the US labor market.

And what exactly did he say to prove this - Voila! the same thing many have been noting - it is a simple matter to manipulate this official number downwards if you stop counting people who have been dropped off out of the labor force. He spoke to the "unusually high level of long term unemployment" and noted that "we still have a long way to go before the labor market can be said to be operating normally". KERPLUNK! That was the sound of the Obama spinners' lies hitting the floor.

As I have stated before and will do so again - IGNORE all the political spin coming from the re-elect Obama friendly media and watch what the Fed does and what its members say in public. So what did they say this morning that should be noted? Interest Rates will stay near ZERO until late in 2014. That is all one needs to know about the TRUE state of the US economy. If things were improving at the pace that the Obamaites were assuring they were, we would not be getting any ZERO interest rate talk for another 2 years!

This is what got gold moving so strongly to the upside once again. Once those remarks began circulating, traders wasted no time responding in the exact same fashion they did when the FOMC first informed the hedge fund community that the speculative party was back on. Up went gold, down went the Dollar, into the toilet went the long bond and up went the commodity sector in general. What was this all about? Simple - the market took back all the losses that it incurred when fears arose that the payrolls number was so strong that it would signal an abrupt end to the FREE MONEY environment and would usher in the first interest rate hikes. That is a big no-no to these leveraged funds who want a green light to keep piling on the leveraged bets.

This news was once again large enough to overshadow any worries about Greece or any other sovereign debt problems out of Europe in the mind of traders. FREE MONEY trumps debt defaults any day.

Once the Dollar started getting thumped, gold and silver both moving higher with gold in particular loving the news. After all, there is little to no opportunity cost to hold and own gold in a zero interest rate environment.

On the technical price chart, gold had dropped into the support level I had noted on the chart and then violently spiked higher. That move has taken it right back up into the resistance zone near the $1750 level. Bulls need to clear this level and keep the price ABOVE $1750 to send it towards $1780. With the bears still reeling, thanks to Bernanke, it is going to take the deep pocketed bullion banks to stem the advance as the weaker shorts have run once again just as they did when the FOMC scared the hell out of them when it first announced the easy money policy would last for nearly another 2 years.


  1. Hi Mr. Dan Norcini,

    Even in Europe in my home country Denmark the Friday job report were BIG news. "US economy is surging", was the headline on the MOPE.

    Well I had my doubts and were ridiculed by the "I know better pack" - but I stick to the facts. ex. 1,2 mio workers suddenly disappeared ind the BLS report from dec to jan. So who is lying ?

    Well Mr. Norcini allow me to ask: Today papergold is back up - but HUI down - what's up - is the gold ratio trade back on again ?

    all the best

    Jens, DK

  2. Come on Trader Dan, next you'll be telling us that Ben is routing for Ron Paul. Maybe the Queen will make him a Knight as she did of Alan.
    Tonight is the full moon, so maybe its a good time for people to come back to their senses, but then again maybe tomorrow they will trot out Iran as the absolute "must do" and around we go again. These guys are out of trump cards, playing a game of bluff that is not working out very well. FOR ANYONE! Any ordinary guy would be forced to cut his losses to live another day - these guys just think they can print themselves whole. The real number that got no press was the last retail sales number - you can put up a great unemployment number but duh people know when they can afford to buy things - and when they can't!
    Maybe Ben will just come clean and admit that GATA was right after all - they were just trying to keep everyone Happy Don't Worry - and it just kind of got out of control after all these decades - you know its not easy managing all that gold. Or maybe I'll just have to wait for the next movie to come along to explain to me what actually happened - Inside Job II.
    Oh don't worry, as soon as they need it they (Main Stream Media) will put a photo on the web of some Greek faces with their names underneath explaining who the really important guy is - for now.
    But I have to admit, thank goodness for all the good work you guys are doing - yourself, Jim Sinclair, King World News, Gata... Thank you! Here's hoping that the Silent Majority wakes up gently, and in time to right the boat.

  3. Dan, thanks for breaking it down and giving us the skinny on the lieing MSM and the US Government. I have lost trust in the months ago, they are hopeless. Which means, any black swan that comes our way things can really go south.


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