“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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Thursday, January 3, 2013

Commodity Index Back to Where it Started the Year

Don't you just love the Fed? Are you not glad they provide such a calming, soothing, effect on our finanical markets? Are you not glad they are there to provide balance to the unruly animal spirits that send prices careening wildy in one direction or the other?

The above questions are obviously meant to be highly sarcastic, filled with a strong measure of contempt and disgust towards these pestilential meddlers.

I submit that the Federal Reserve is the source of the all the wild volatility and the cause of these nearly incessant mad buying and selling binges that have left the general public suspect of the US stock market and opting against investing in it.

The Fed simply cannot keep its mitts off of the market as it announces one thing or another, resulting in panic buying and panic selling by traders/investors as they seek to protect themselves from adverse price movements based on the whims of a few unelected bureaucrats who supposedly have our best interests at heart.

In my opinion, what we are witnessing has nothing to do with FREE MARKET CAPITALISM and everything to do with taming markets that have the audacity to go in a different direction than that which is desired by our Central Planners.

I have been opposed to this idiocy known as QE ever since the word found its way into our modern vernacular for the one reason that it is nothing but a device employed by a privileged few to oppose the market forces that are necessary, nay, essential, to clearing excesses built up in an economy (which by the way were created by the same Central Bank interest rate policies in the first place).

The Fed blows the bubbles and then spends the rest of its time trying to deal with the fallout from its own stupidly shortsighted policies.

In so doing, it is constantly interfering in the process that the economy must go through in order to wring out excess or malinvestment and provide some stability and normalization.






12 comments:

  1. This comment has been removed by the author.

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    Replies
    1. have a question. The Fed is doing 2 kinds of QE. QE3 is Mortgage Backed Securities purchases of $45 billion. QE4 is $40 billion of Treasuries, which replaced the Twist.

      It seems to me that Mortgage Backed Securities purchses could be stopped, while QE4 could continue, or even be expanded. Thoughts?

      Delete
  2. Hi Dan, thanks for you blog, I have followed it (and your commentaries at KWN) for a long time, and I will keep doing so!

    I wonder if there is a chance you could do a quick comment on the gold price in SEK. Not because I'm Swedish (which I am) but because I think gold has been in a very stable and predictable uptrend since mid-2008 (more perfect than the trend in USD for example), and I had expected it to reach 14000 some time around mid-2013 . However, now it seems it might, or already has, breaked down. And if so what this means for the price of gold - if anything. The reason I think it is intresing is because I think the trend in SEK is more of golds rising real price, than SEK unstability.
    If you somehow can find the time and inclination, I would very much appreciate your quick/brief view on the technical view on GOLD/SEK.
    Thank again for your commentaries!

    ReplyDelete
  3. This is very informative site. I am really impressed your designing and its posting accurate about commodity market.

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    Gurleen Singh

    ReplyDelete
  4. Dan

    I have just read your blog. It is nice to read someone who isn't blinded by cycles. May I ask what price you expect gold to be a year to 18 months from now? Guys like Jim Sinclair and Alf Fields are calling for 3500-4200 as are all cycles writers. They all think the same thing. 1 big rise to 3500 level, a shake out then final parabola to 10000. What are you general long terms thoughts? Is Gold a good buy and hold investment to you?

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  5. Pestilential meddlers...indeed!

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  6. Thank you as always Dan for your unbiased insight into the mess that we call the stock and commodities markets. Love your blog!

    ReplyDelete
  7. In a market economy, resources like labor and machinery (capital) are distributed on the basis of supply and demand. In such a system, prices serve as the mechanism by which resources are allocated to their most productive uses. For instance, suppose a reduction in the supply of crude oil creates a gasoline shortage, causing gasoline prices to rise. Those firms or individuals that are more sensitive to price changes will decide to use less gasoline, while those who are less sensitive to changes in gasoline prices will purchase about the same amount as they did before. In this manner, the change in price ensures that the reduced quantity of gasoline will go to those users who value it the most.

    Regards,
    Paul
    www.profit.biz

    ReplyDelete
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