"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


Monday, February 20, 2012

China to the Rescue Once Again

While the markets are closed for the President's Day holiday here in the US, the futures are open for trading in some markets. Those markets are reacing to overnight news that China is lowering the Reserve Ratio Requirement for its banks after having spent most of last year raising it.

Market watchers are interpreting this as a loosening of the monetary strings in China and reading it as bullish for the commodity sector as a whole while the equity guys (who never need a reason to be wildly bullish) are using the news to goose the S&P futures higher.

Risk aversion is getting tossed out on the news with the Dollar getting whacked lower, gold and silver moving higher and the long bond getting sold off and moving closer to the bottom of that multi-week trading range.

At the rate these guys are chasing stocks higher, we are going to see the S&P 500 over 1400 before Spring arrives. Ah yes, nothing like more liquidity to take care of everything. I really think we need to throw out all the old economics textbooks and rewrite them. Matter of fact, it would be a very short book containing only 4 words that one would need to know to become a world class economist: "LIQUIDITY CAN FIX ANYTHING".

Debt good; Savings bad.

Next question.

Gold has resistance that can be seen on the price chart near the $1740 level. That has held the metal in check for last few days. It ran to this level overnight but could not penetrate it so let's see if it can push through Monday evening here in the US or Tuesday morning. If so, it will set up a run towards $1750 which is where the next test will be. Bulls MUST clear that level and HOLD it above there to set up the critical challenge of the next resistance zone.


  1. Dan,

    I love your post. I received a degree in Economics in the early 80's along with a Finance Degree. Two degrees that our President thinks are useless. He has publicly said that a couple of times. Rockin Ronnie was President. My father obtained a PHD in the 60's. Both of us are completely clueless to what these guys think they are going to accomplish. Especially..ok here it goes again....Romer.Summers,Goolsbie,Banks, and finally the last and remaining economic planner of this REGIME..Geitner, the wonderful Turbo Tax man himself. I guess that everything we both learned are worthless, now that "Central Bank Planning in the United States is in full bloom". Mass media puts everyone to sleep, and god forbid that the statistics for what people pay for do not include..fuel, food, life. It is so rediculous I would think it was funny. But, then again, it is not. It is sad. Goodbye yellow brick road. Now if they could only control those Arab springers and everything would be OK. Haaaahhhaaahahhaahh. I even heard that Goldman Sachs chick start yacking about how terrible the Iranians are. It is not funny.

  2. We need some help from our friends in Asia. They have been of no help as of late. But let's see if that changes.

    The cartel's attempt to keep it pinned at 1735/33.50 isn't going to hold after the Greek announcement later tonight, but they still have the bots on at 1735/33.5 tonight, so who knows. The Cartel has already started getting long gold as per the latest COT, so hopefully the next bull cycle is going to begin, the question is will they shake the tree a few more times first?

    Dan - any thoughts on the impact of silver lease rates sitting at -.40%? There seems to be differing opinions as to if this can be used constructively as a tell for a future bear raid. Jesse has done some good articles on this, but it is something that is still baffling to me, and I want to learn more about it - especially if it can be used as a tell, and if so - what variables to look at in the COT, etc.

  3. Instead of opening up our own resources, putting Americans to work, lets start a war. Yeah, that's the ticket. No one in the US understands Economics, or god forbid, knows that we are shoving trillions into our own large 5 US banks, European Banks, so that they can weather this next storm while Americans starve. I mean that makes a whole lot of sense. I could go on, but rather than take a beating from Mr. "Godtrader", I will end tonites rant with a link. I watched this prophetic video last nite. Wow. I also have been asleep until my parachute was cut by none other than JPM and Mr. Diamon. Bear Stearns closed our window.


  4. I could not help this last one, recently posted, it is a great one. Are ever more Americans simply preparing to take "the law" into their own hands? Based on a couple of the graphs it appears that if I was a government employee, maybe an IRS kind of guy, I would stay far away from the "middle of the country". You know where most of the individuals are property owners, who farm, can take care of themselves in the advent of skyrocketing food and fuel prices. Where the welfare state is not giving all the votes to this admistration. Just something to think about before you go taking that job offer for the IRS in the Mid West, South West or North West.
    Titled the Greatest Gun Salesman in American History..
    Here is the link.


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