"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


Thursday, February 27, 2014

Fed Chair Yellen gives Gold Bulls Reason to Cheer

Yes indeed, the Dove of Doves is living up to her reputation as far as the gold market is concerned:

"Low inflation gives Fed room to pursue full employment".

What further, besides personally buying gold futures, could she have done to spook gold bears?

The spin being put on this is that the Fed will hold off on the tapering as they wait to see if the recent poor economic data is an anomaly due to the harsh, frigid winter weather or if it is becoming a trend.

Gold bulls are betting it is the latter.

For that matter, Dollar bears are too because back down the Dollar is going this morning and back up are going commodities in general. You could not have asked for a statement that would better clip yesterday's Dollar rally than that which Yellen supplied this morning. I sometimes get the idea that the Fed would love to see the Dollar even weaker - after all - they are not getting the inflation that they want to produce.

I have said it many times, the markets no longer are interested in fundamentals - they are interested in what the Fed may or may not do. I guess this is what free-market capitalism has degenerated into. Then again, with the rest of the decline in this nation, we should not be surprised to see this sort of thing.

America is rotting internally. Any observer from outside of the nation ( and those within who are attuned to these things ) can observe its rising degeneracy and ignorance. We are fast becoming a nation given totally over to hedonism at the expense of discipline, ethics, virtue and morality. Our national character is deteriorating and with that, so too are our various institutions. We are short-term oriented; the longer term consequences be damned.

The Fed's answer to any economic hiccup or slowdown, especially under Yellen, has been and always will be to pump liquidity into the system and artificially suppress interest rates in the hopes of spurring increased borrowing and further indebtedness. They have to because ours is a debt-based economy.

In the process of so doing however, they have created more misallocation of capital than all of the bone-headed decisions of hedge fund managers combined throughout our modern financial era. Big specs cannot be blamed for going with the Fed -  after all they exist to make money from speculating. But if the Fed, particularly this Yellen-led Fed, is not careful, they are going to end up ruining the Dollar with this idiocy. Only the Dollar's reserve status has allowed the US to continue with its reckless spending and incessant borrowing. The more those authorities who are charged with maintaining its "value" undermine that value, the greater the possibility that the financial quality of life for the average US citizen comes under attack.

We are talking about the future of our children. Those who foolishly squander their birthright for a bowl of stew to satisfy the immediate lusts of Wall Street, are doing no service to the next generation.


  1. Hi Dan, In my last blog I mentioned you

    just copy paste this:

    in Translator:

  2. Because America is irreversibly rotting internally the more impotent the Fed becomes. And because the greatest source of global liquidity has been China for the past 4 yrs, the more important becomes the role of the PBOC in levitating financial assets. What the Fed does from here on out is going to more into a sideshow, a rerun, a distracting opiate, or shadows cast upon the walls of Plato's cave. If all investors do is watch the reruns and stare at the shadows in Plato's cave without watching what the PBOC is doing or not doing, they are going to be significantly hindered by their blindspots.

  3. did you all put your order in for a Jason Collins t-shirt before they all sell out? oh, I guess I know what rotting and what Nikita Khruschev meant now, 45 years ago; yes, sparks

  4. This comment has been removed by the author.

    1. Alex; Could not agree more; Homosexuality is one step away from cannibalism and that is the truth from sparks; swb

    2. This is a trading and economics blog. Please keep your narrow-minded lifestyle opinions out of it. There are other forums and blogs for that. If you can't talk trading, please don't talk at all.

    3. Give it another 50 years they'll be saying pedophile is ok, I mean if someone is born with an inclination for liking kids then heck we can't "discriminate" against such natural actions.

      We can only hope for the second coming before things go that far.

    4. Elijah:

      We both know that modern man rebels against the very concept of the word, "sin" as being an outdated concept from an unenlightened age. Yet God changes not in spite of the protestations of modern man against His authority.

      Fallen man needs redemption and only the timeless gospel is the remedy for his plight and yet he rejects it time and time again because it first shows him his sickness in order to apply the cure. That strikes a blow at his pride and self-conceit which he cannot tolerate.

      "This is the judgment" says our Lord Jesus, "that light has come into the world and men loved the darkness".

      Men, in every age and in every generation seek to drag God down to their level and reduce Him to an image, a figment of their own imagination to assuage their consciences.

      the Psalmist in chapter 50 says it best:

      "These things you did and I remained silent; you thought that I was just like you; but I will reprove you and state the case before you".

      Isaiah said it long ago in chapter 44: 6-20 wherein he reveals the utter foolishness of those who attempt to remake the Most High in their own image and worship the work of their own hands, instead of Him to whom we must all answer.

      At one time America was referred to as a "God -fearing people". I think we can safely say that was a long, long time ago.

    5. Alex. Which empires are you talking of? Rome: Gay emperor--Augustus- empire went on 450 years thereafter. Hadrian-empire went on another 300 years. The hellenistic Greece didn't do so bad underAlexander the Great, etc. etc.

      The moral decline = empire decline ala Gibbon is not substantiated by fact. The last three emperors of the Julio-Claudian line, Caligula, Claudius, and Nero were some of the most decadent/immoral ever. That was in AD 68 (Nero's suicide). Yet the empire expanded and reached its greatest territorial extent under Trajan 70 years later.

    6. MDLGTO;

      Just a quick comment - those of us who take the Scriptures seriously understand that there is a connection between righteousness and the ultimate well-being, prosperity of a nation or kingdom.

      The Scriptures are replete with instances of a Divine judgment bringing an end to one kingdom's greatness and power and allowing the rise of another.

      The verses are too numerous to cite but a cursory reading of any of the prophets and the connection between sin, lawlessness and hedonism and the demise of world powers are more than abundant.

      Homosexuality is just one of many sins. Others are rampant adultery, greed, selfishness, abuse of innocent children, etc. In that sense, the Scriptures teach that all have sinned and fallen short of the glory of God.

      That is why men need to be redeemed. Men's souls live on forever and that is why they are judged in the next life.

      Nations however have no afterlife. They are temporal institutions and thus Providence judges them in this life.

      As Christians we believe what the prophet Daniel stated to an ancient Babylonian king named Nebuchadnezzar said thousands of years ago:

      "Let the name of God be blessed forever and ever, for wisdom and power belong to Him. And it is He who changes the times and the epochs; He removes kings and establishes kings..."

      Or as Isaiah, another prophet said as well:

      "It is He who sits above the vault of the earth, and its inhabitants are like grasshoppers, Who stretches out the heavens like a curtain and spreads them out like a tent to dwell in. He it is who reduces rulers to nothing, who makes the judges of the earth meaningless. Scarcely have then been planted, Scarcely have they been sown, Scarcely has their stock taken root in the earth but He merely blows on them, and they wither, and the storm carries them away like stubble."

      There is an old saying drawn from the long suffering of God that the wheels of God's Providence turn exceedingly slow but they grind exceedingly fine.

      "Righteousness exalts a nation but sin is a disgrace to any people".

      Men so often mistake the longsuffering and mercy of God for indifference to sin and wickedness no matter what form it takes. That is a foolish mistake.

      I can understand if this offends you but please understand that many Christians hold deeply to the fact that sin has consequences. It has consequences in one's own personal life and in the life of a nation.

      I think it fair to say that Gibbons was correct in his assessment that Ancient Rome's decadence eventually brought about its ruin. Of course there were other factors, its finances, its oppressive taxation, its extravagance, its overextended military, etc were all major causes of its ultimate demise - but one cannot nor should not overlook the loss of virtue and ethics in that ancient kingdom.

      Even its own philosophers who removed as pagans or were indifferent towards the gods of their time or the new Christian faith, bemoaned the loss of virtue.

      Hope this helps explain some of the views of Christians who fear for the longer term well-being of the nation.

    7. Well said,

      Matthew 7:6 (NIV)
      “Do not give dogs what is sacred; do not throw your pearls to pigs. If you do, they may trample them under their feet, and turn and tear you to pieces."

      Seems the citizens in this great country are throwing it pearls of liberty to the pig government spenders who will trample them and tear this country to bits...

  5. You guys better watch out, Eric Holder and the NSA guys are watching for these type of anti government fairness agenda statements. Our fearless leader had a change of heart this year in order to get more votes, his morality is "everyone in the US" morality, and we all must think like him. Hi Hitler.

  6. key bounce off 1328 late in day. Can we breach 1335 back to the upside? hubert ? :)

    Dan, if Yellen was so good, and a nice pop when she started talking, what happened after that? The dollar fell and still gold fell. Confused here (not that that is unusual).

  7. Not sure more QE is bullish for gold, as it collapsed last year after the Fed moved to 85B/month from 45B.
    As Armstrong says that is a miniscule amount on a global level and it's been proven not to produce the inflation that was originally expected - let alone the hyperinflation as said by the KWNer's.

    Today's reaction in gold maybe a knee jerk,and could head lower.

    Even with the QE taper the bond market after initial volatility is getting cash flowing into it.

    Loss of confidence in government and the REAL big moves out of bonds will seek alternative safe haven shelters like the PM's - question is when, 2016ish?

    1. I think Q3 of 2015. that is it will happen by then, outside target-before Obama leaves office.

  8. Dan, I know that you are a disbeliever in the manipulation of the gold and silver markets, but would you care to comment on this? http://goldsilverworlds.com/physical-market/ft-removes-article-gold-price-rigging-fears-put-investors-on-alert/

  9. Coal: ACI and KOL ( ETF):

    Few weeks ago, I recommended buying badly beaten down coal stocks like ACI at 4 + or - 5%. Now that Nat Gas prices have doubled from their lows of a couple of years ago that may be one force which will impede the switch of coal to Gas at the utilities.

    Is the tide turning for coal ? Today's debate about the overreach of the EPA in the Supreme Court:

    All it will take is for the Republicans to gain a few seats in the house and senate in mid-term elections to provide the spark.

  10. Bulls need to clear 1360.....I could hear some blue skies singing if we do.

  11. Poor Gerald Celente must be at his wits end.

    To sit there day in, day out, and predict a "Mad Max" environment of "Gold, Guns, and a Getaway Plan" whereby the consumer is crushed and the gold hoarding seditionists are rewarded with huge riches and skyrocketing gold prices as the world crashes and burns.

    Instead, the exact opposite is happening.

    The consumer is going absolutely wild with spending and so many consumer cult stocks are setting daily world record closing highs, while the 10-year yield collapses and inflation remains subdued.

    I mean really, just pull up a chart of Martha Stewart, Under Armor, Nike, etc. with outsized huge volume moves in Target, JC Penney, Lowe's etc.

    While gun makers like Sturm-Ruger are sliding downhill from the highs.

  12. @ ezodi,

    I'm not sure, but perhaps you didn't read the post and jumped straight to the comments section. Our host was commenting on the degeneration of our country. If you're offended by our host intermixing his morality with his trading commentary, perhaps it's you that may want to seek a new blog/forum. Just saying...

    1. I did read Dan's post until the end. I just wasn't aware that he was implying homosexuality as part of the US's degeneration. I grew up in the US before moving abroad and I think I know about the reasons for its decline. There are many, but the sexuality of its citizens definitely is not one of them. I live in the Netherlands, and before that London. We have a large and prominent gay population, and the openminded nature of the people here helps to secure the nation's long-term survival. I come to this blog for Dan's excellent commentary on the markets, not to be lectured by some of the posters above about how homosexuals are ruining a country that was well in decline before gay marriage became legal.

  13. Hey Ezodi,

    Last time I checked your name isn't Dan so if you want to be the police man of the blog find another one. Sexual orientation is on the list of the many problems bringing this country down that stems from morality. The same people pushing this homosexual agenda are the same people trying to remove Christian symbols from public land, putting out despicable music videos of miley cyrus naked, glorifying drug use along with getting the public to worship these moron athletes & thug rapper degenerates. This blog is also for investors and not just traders. In the past, like in Germany and Rome, moral decadence was an indicator of a failing economy. I think that there is a direct correlation to crime rates & degeneracy. The overall health of the economy reflects both of these trends. If you fail to realize this, you are plain ignorant.


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