"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, August 28, 2014

Foreign Custodial Holdings of US Treasuries continuing to Climb

Just a short set of comments this evening. They deal with the usual, "The world is going to move away from the Dollar any day now" chatter.

If it is, it sure isn't showing up in the Foreign Central Bank holdings of Treasuries that are in custody at the New York Federal Reserve.

Here is the chart.

Look folks, I am just as concerned about the US Dollar as the next guy but when I look at the competition, I see one set of assorted problems or another. What that means is that the idea that the world is going to drop the Dollar and move to some sort of as of yet undefined currency in which to conduct the bulk of its trade simply does not carry much weight with me at this time.

Could this happen - yes, it could at some point but I have no idea what it might take to make the world move en masse away from the greenback and to some other currency or basket of currencies. We have all read the stories and heard the talk for years now. The problem with the talk is that there is not yet a viable substitute. If one does arise, hopefully we will be able to see it.

For now however, the US Dollar is still moving higher against several of the majors and US Treasuries seem to be finding willing buyers, even as interest rates move lower over geopolitical uncertainty and safe haven buying.

The world - at least as foreign central banks are concerned - seem more than happy to continue buying US Treasuries. Given the size of the US national debt, that is somewhat consoling for now.

One quick look at the inflation expectations chart or TIPS spread - it continues to move lower. Those buying gold are not buying it out of fears of inflation - they are buying it over geopolitical concerns.


  1. Gold: Point and Counterpoint:
    Never has an innate object created so many Lovers and Haters.


    For me I just play the multimonth once per year trend in GDX and then sit back........thanks to the annual of buying in anticipation of the Chinese New Year and the Hindu festival of Deepavli and the marriage season........these events will come every year, irrespective of the winds of Inflation or Deflation

    1. Wolf, you must be DAMNED good at this - I take my hat off to you, because everyone else invested in the Gold market in the month before these religious festivals has historically taken a bath

      Chinese New Year

      2014: 31 January
      Gold 10 January: $1256.44
      Gold 30 January: $1267.25

      2013: 10 February
      Gold 5 January: $1669
      Gold 14 February: $1582


      2013 November 3rd

      Gold 12th October: $1315.72
      Gold 11th November:$1247.31

      2012 13th November

      Gold 7th October: $1749.47
      Gold 16th November: $1750.55

      All prices taken from: https://www.bullionvault.com/gold-price-chart.do and matched to the closest recorded date

  2. Some perspective


  3. GDX buy it for that stated period in 2012 at 54.18, now printing 26.46 bleeeeeeeeeeech.

    ZB the dec contract looking at a high up there at 153, looks like the safe play that the world needs our usa dollars to get into.

    Ags will reopen monday nite which is a bit unusual, as most holidays this year they have reopened the tuesday morning. Ag bulls have some items to try and force short covering monday nite if the weather and putin prints. ZW also has the first bad weather news hurting yield from australia and rain is hurting usa crops. ZS ZC have frost in north now starting about 9/15 and will too much rain flood out and bring diseases.


  4. Thanks Dan
    Eventually some of the gold trols wiill see the facts and abandon their cult belief system. It just takes a LONG time and lots of repetition.

  5. Anyone who has been betting against:

    - U.S. Treasuries
    - Junk Bonds
    - Corporate Debt
    - PIIGS Debt
    - U.S. Dollar
    - JGB's

    Have seen their investment accounts utterly destroyed.

    That includes guys like Kyle Bass, Doug Kass, Jimmy Rogers, etc.

    And what about that guy "David P"?? He's a nobody. He doesn't even count.


    1. Some good advice from Warren.




      “Why do you think gold bugs get so irate? Because they really do come out. If you go on CNBC and say that bonds are kind of a poor investment, people don’t get mad at you. You don’t hear from the Treasury. You can knock almost any investment and nothing happens. But when you talk about gold it’s different. Of course that says something about their motivation for ownership. They want people to agree with them. They want everybody to get so scared they run to a cave with gold. Caves might be a better investment than gold. At least they’re not producing more caves all the time. So they want people to be as afraid as they are. Incidentally, they’re right to be afraid of paper money. Their basic premise that paper money around the world is going to be worth less and less over time is absolutely correct. They have the correct basic premise. They should run from paper money. But where they run to is the mistake.”

  6. CRB Index once again "Teetering on The Brink"

    DBC is now touching the 20-day MA from underneath.

    If it fails, well then there is going to be "Global Collapse" in prices which will cause a meteoric rise in XLY and XRT.

  7. My sentiments echo Dan's and I've felt that way for several years now regarding a sudden or relatively quick USD/UST collapse globally.

    When the EU eventually institutes some form of asset purchases or OMT's (due to an impending Italy and/or France meltdown) and the Euro goes sub-1.15 the USD will strengthen substantially relative to other currencies weakness.

    Mike above references the blind faith belief systems of many perma-bull gold worshippers lacking any objectivity in market trends or PM sentiment.
    The emotional investment in a belief system can be tough for some to recognize that they need to look at trends or sentiments with cold objectivity.

    For instance, (and totally off topic) when will some 'bugs realize that their personal conversations have been monitored for YEARS in order to guard against enemies from within?
    An objective person whould realize that they're being monitored for no good reason except to feed someone else's paranoid insecurites or curiosities.
    Does anyone "over there" really think that practice will actually ever stop and that it hasn't gone on from the beginning?

    To each their own. Ignore the trend at your own expense.

  8. Trends are wonderful while they last, but have a nasty habit of screeching to a sudden halt, and then reversing course. The trick is knowing when to get off. Most will not get it right and be sucked down in a vortex of financial annihilation, especially if they have entered the market at the tail end of the trend. These investors will often think the initial fall is just a correction and will 'stay the course' until it is 'too late' to sell, and then indeed there is still much more to go. As Dan says, markets go down usually far quicker than they go up.

  9. Not a lot of fundamental debate on this blog when it comes to gold and the dollar debate. Just gold haters and gold lovers going at each other.

    Perhaps the debate should be around the central banks and their QE money printing policies.

    Ex. If the Fed has the economy back on the right track now and does not have to print money any more and the debt is under control then gold is not needed as the USD should be fine.

    This is what the market seems to believe, so no need for gold.

    The case for gold would look to be if the Fed and other central banks find they can't stop printing money/ doing QE or everything deflates idea.

    Then the debate becomes does one continue to hold the USD if they can't stop doing QE/ money printing.

    So it seems like a simple enough debate here, will the QE have to continue or not?

    1. Not a lot of fundamental debate on this blog when it comes to gold and the dollar debate. Just gold haters and gold lovers going at each other.

      I disagree: I don't think any of us "hate" Gold - PCB and I currently have a little over 30kg of the stuff - but what we do hold in utter contempt are the charlatans who obsessively claim it is about to skyrocket and then bleat about manipulation when it doesn't

      "Fundamental debate about gold" has atrophied into a series of stock memes, which can be debunked in about 5 bullet points:

      1. The Gold market is no more manipulated than any other, has pretty much always been the way it is now, and nobody is forcing you to invest in Precious Metals rather than any other asset

      2. There is no structural shortage of Gold - and especially not of Silver; the vaults are not "empty" as COMEX inventories, GLD and other inventories have held up and in some instances increased over the past 18 months; the analysis of cobasis over at www.monetary-metals.com has proved to be both insightful and accurate in terms of supply/demand dynamics. There is no apparent prospect of a COMEX default (and there is Eligible metal available for delivery in abundance), there is no 100:1 leverage in paper Gold, and there is neither any reason why nor any prospect that the Gold:Silver ratio should collapse down into the teens: such are simply myths which are regurgitated by the ill-informed and the willfully misleading

      3. There is no meaningful correlation between Asian demand for precious metals and the current price of Gold / its short term trajectory: in 2013 the price tanked and the Chinese loaded up on the stuff, during 2014 the price has risen and Chinese demand has slackened slightly

      4. The same is true of geopolitical drivers: in 2014 we have seen Ebola, ISIS, Ukraine, Gaza, the collapse of Bulgarian and Portuguese banks and the worst US GDP print in living memory, and yet the Gold price is still $100 below where it was in March

      5. From a chart perspective Gold - and particularly Silver - is rangebound and currently going nowhere, with a bias towards the downside; there may indeed be consequences from massive expansion of the Money Supply, there may be economic hardship and unemployment, there may ultimately be a collapse of confidence in the USD, but there is no indication of any of these things occurring any time soon, and even less of them having a benign influence on the price of Gold

      You conclude by noting that "it seems like a simple enough debate here" but, with respect, there is a difference between being "simple" and being just plain dumb: why is QE the only factor to consider - when they finally announced the taper last year, Gold prices rebounded

      With respect, therefore, we are not "Just gold haters and gold lovers going at each other". - we are, by and large, a group of seasoned investors and market professionals who have grown weary of the excessive hype and misinformation continuously pumped by a number of other websites, tired of the invective and ad hominem abuse directed towards anyone with a contrary opinion who does not believe that "TPTB" are continuously trying to "cap, cap, cap" the market, and disappointed that the naive and the avaricious continue to be duped by Snake Oil Salesmen into buying their newsletters, limited edition Silver Rounds and dreams of infinite unearned wealth

    2. Great rant but just one problem and that is that you are wrong about point #1. So either you are not as smart as you seem, or you have a dog in the fight or you are perhaps blind.

    3. you're right, Don, dammit, YOU'RE RIGHT!

      It's the darned Commies - they've got a gun pressed against my kneecap, and they are forcingme to play in "their" sham market....

      Well, Don, I'll let others form an opinion on which kind of stupidity or moral turpitude I am afflicted with, but, from my own "blind" perspective, I sense that all that is really awry with my point #1 is that you happen to disagree with it. Good for you, Dr Don! Way to Go, Old Buddy! You hang on in there with your own opinions, and don't let anyone try to stop you

      but here's the dope: just because someone disagrees with you

      a. doesn't mean they are stupid, biased or blind


      b. surely makes you wonder about the validity of your own perspective

      BUT, HEY! DON! BUDDY! This is not about smartness or partiality or blindness, izzit! This is not even about gold or commodities or investments. This is all part of your therapy, right? So, come on over here and let's hug it out.......

    4. Oh, loquacious one, and leader of the pack, isn't ad hominem abuse your speciality, and exactly what Barney is complaining about? Why can't we just discuss the issues without invective?

    5. "Leader of The Pack"

      wow! I like that one. praise indeed! "Leader of The Pack!" VERY "Shangri-La"!

      I'll add that to my other Proper Titles: No.6, "Leader of the Pack".

      to be frank, I think you need to focus on the distinction between ironic banter as a means of highlighting absurdity and ridiculing mendacity (on the one hand), and ad hominem abuse as a proxy for having any original insights or valid analysis (on the other)

      we do, indeed, discuss issues without invective and without personalising the discussion - I hold pretty much all of the liars and charlatans in equal contempt, and do not single an one of them out on the basis of their personal, racial, mental or political characteristics.

      however, if you are in the market for tightly-reasoned critique's of popular myths & legends, then, yes, the gloves are off. if, of course, you're man enough for a bit of robust dialogue

    6. This comment has been removed by the author.

    7. He, he, I do have to admit you can be quite funny, even when brandishing your literary prowess for all to admire, like a mental version of Charles Atlas the bodybuilder, especially on financial blogs, where standards of literacy can be a very low priority, with posts boringly repetitive and unimaginative. Ironic banter you call it, or w(h)ithering personal attack? So you say that your quixotic mission is to highlight absurdity and ridicule mendacity. Fair enough, but isn't this like swatting flies around a rotting corpse - to coin a Zhangism, - that will end up going absolutely nowhere?

    8. Zhang Lan
      Very good points. Love your writing.

    9. Lots of points you make Zhang but notice you did not comment on what I was saying,
      the so far endless QE/ Money printing that the Fed and other major central banks do not seem to be able to stop now?

      Endless QE/ Money printing would seem like the main fundamental reason to buy gold.
      Endless run up in national debts around the world a close second perhaps?

      Or is QE3 it, no more money printing after QE3 ?

      Any comments?

    10. When Bernanke announced QE3, Gold was at $1733; by the time he started to taper, it was down to $1230 - a loss of 30%. That offers precious little evidence for any direct correlation between loose monetary policy and a buoyant "flight to safety" Gold price

      Since the Fed started to taper, Gold has risen in price. That offers precious little evidence for any direct correlation between a marginally tighter monetary policy and weakness in the gold price

      Frankly, I too believe that, in the long run, this kind of thing will not go unpunished: http://research.stlouisfed.org/fred2/series/AMBNS but it has famously been noted that the market can remain irrational for a lot longer than you can remain solvent, and, personally, I wasn't planning on hanging around for the next 5,000 years waiting for Mean Reversion to kick in and save the day.

      My observations are consequently that, over any meaningful trading horizon, the market price of Gold (and especially Silver) are

      - not driven by observable macroeconomic factors
      - largely insensitive to geopolitical concerns except for speculative froth
      - not influenced by Chinese investment demand
      - neither conspicuously nor uniquely manipulated by "TPTB"
      - mandatory in any investment portfolio. (If you can't stand the heat.....)

      Unfortunately, what with it now being almost 11.00 and all, unlike the London Gold market, our XVS 1100's clutch is not yet "fixed" and so I will once again bid you farewell and go mope around a bit while I wait for the workshop to put the iron stallion back together again after we wore it out.

      and Peter: how's the Mandarin coming along? I was born https://www.google.com.sg/maps/@45.5724694,126.972418,15z?hl=en during the ass-end of the Cultural Revolution, and my dad was a locomotive driver shunting timber. I have things to prove in my life - what's your excuse?

    11. Guess people have been educated to believe in the Fed and central banks policies almost like a cult now perhaps?

      History says otherwise and it did not take 5000 years of QE / money printing to make Germany's currency worthless around 100 years ago right?

      Maybe this time is different Zhang? To quote the famous words from the Nasdaq crash before it happened?

      Or are you saying QE can be ended with no risk of deflation any more perhaps? The Fed has licked deflation right?

    12. I don't have any. I was born with a silver spoon, and educated in the best private schools in England. My ultimate aspiration has been to do as little work as possible, living off the fat of the land, thanks to good fortune, or what the socialists would refer to as being a parasitical leech.

      However, I have no doubt you will do very well in life, and probably have already, as you have the distinct gift of originality and an acute intellect. It was good that you somehow got to Singapore. Lived there myself for some time, and also Hong Kong for a few years, where you could make oodles of money with the utmost ease.

    13. yes, we have fond memories of the British upper classes; and long ones too.

      what people in the West need to get their collective head around is that there are upwards of a billion erstwhile serfs like me who are not going to take it any more, and are determined that, if Life dealt you a fairly shitty hand, the thing to do is go out and get some different cards.

      I feel no envy for people born into affluence; I do, however, know quite a few - especially Brits - who harbour immense feelings of self-doubt and experience occasional crises of personal worth as a consequence of never having achieved anything for themselves

      the focus of discussion in this thread has been on the notion that some of us have not learnt the lessons of history, and cannot see what is coming down the tracks at us; I wholeheartedly subscribe to that analysis, but whereas you may be referring to monetary policy, I am talking about socio-economics, and the longer you fools keep believing that the Chinese merely a fiendish horde of corrupt and ignorant peasants, the better, quite frankly (for us, if not necessarily for you and your descendants)

    14. Fortune is a wheel and karma will strike :) Zhang Lan's background seems to prove that the "American Dream" is quite achievable beyond the USA.

      Anyway, Dan : most blogs can be polluted by a few trolls, but the opposite which I strongly believe seems also true. Be patient enough, ignore the trolls, and people with brains, arguments and wisdom will eventually attract each other and bring nice conversations, just as candlelight dispells darkness.
      Not to say I'll always agree with Zhang Lan (hope I won't, especially about Fibonacci levels :)), but doesn't it feel great to have a real conversation? (you know, this strange thing which consists in listening to each other instead of caring only about what you have to say and repeat it endlessly without any argumentation to sustain your convictions).
      Nowadays the mutiplicity of blogs allow every narrow minded person to hind his own "community of thought" in order to repeat the same thing over and over again with the warming feeling that everyone around thinks and writes exactly the same. I hope this blog will keep attracting both "gold lovers" and "gold haters" because if not, it would be beneficial to noone. What would any side learn from the other one if there was only one side left?

    15. What really counts is not the hordes but the individuals. I find the idea of nations as contemptible, and one might equally as well talk about flocks of sheep. The individuals are the real elite: they are the motive force, whether as inventors, thinkers, artists, writers, musicians, and leaders; they change the world for good or evil. Good and evil are dialectically opposed, but each needs the other to create the synthesis that repeats the cycle endlessly, and so both are essential to human development and survival.

    16. The real meaning of good and evil is conflict, which means one force opposing the other; as it is in the human world of thought, it is in the physical world itself. Out of conflict comes change which Hegel called the synthesis. For example, Singapore is the synthesis of British and Chinese culture; but it is not permanent, and is already forming its own thesis to be opposed by an anti-thesis, and out of that another synthesis. Hegel thought this was a force called Geist, virtually a predetermined force, very similar to Indian Vedic philosophy. One does not know whether to be depressed by the seeming ineluctability and futility of it all; or elated by its astonishing beauty and elegance, even as we look on helplessly. If you want to be uplifted by extreme pessimism, try reading Schopenhauer, who develops this Vedic theme in terms of Western philosophy in the World As Will And Representation.

    17. Meanwhile, down here on earth, in our Lilliputian world of self-struggle for survival, we are playing our little investment game. The Hegelian forces of dialectics are still at work: one opinion against another, one belief against another, a winner against a loser. A few succeed and most do not but we struggle on blindly, for what? For the fun of the game perhaps, for the illusion of independence, and maybe some extra shekels. As it says in the Rubaiyat of Omar Khyyam:

      The moving finger writes, and having writ,
      Moves on, nor all thy Piety nor Wit
      Shall lure it back to cancel half a Line,
      Nor all thy Tears wash out a word of it.

    18. Peter, you should read Paulo Coelho :)
      The purpose of the fight is not to win, but to participate in the "good fight".
      Or buddhists : The purpose of the trip is not the goal, but the trip itself.
      I agree about the power of individuals.
      Have a nice weekend,

  10. Another world record high for SPY.

    The gloom and doomers trading on the news spewed forth by KWN, Zero Hedge, USA Watchdog, jsmineset have lost so much money they will never be able to recover.

    Even if we have a sudden flash crash, the amount made on the short side will pale in comparison to the failed attempts to short stocks, short bonds, short USDX and go long the CRB.

    Never before in history have so many been bamboozled.

    1. I would say there was more bamboozled in the .coms and 2008 housing crisis.

    2. I recall in Argentina they printed their currency into oblivion and their stock markets made world record highs too.

      Congrats to the ones who have made profits here though. You have made a good trade.

    3. I'm sure Mark will have a hard time believing this, but since the start of the year there have been two sharp rallies in the GDX and GDXJ which if played correctly would have left his broader market returns in the dust.

  11. Nice bounces off support for oil and gas. War, booming US economy and coming hard winter as per the Old Farmers Almanac should take O & G into the rip your face off hulkamania rally I've been prophesing.

    1. Prophet; Surely you jest when referencing the Old Farmers Almanac?

    2. No. Is that a bad one? I just got the email today and went all in on natural gas

    3. 6 years range bound in your nat gas; to me looks like there is nothing to do here

    4. Prophet, just made a nice return on UGAZ. Friends in the biz say there is talk about lots of exporting to come..... We'll see.
      Certainly at a bottom range for now.

  12. Dan,

    Could you please explain Belgium's wildly increased holdings of U.S. Treasuries, an amount that is absurdly out of line with its GDP? Who is the real buyer?

    1. http://www.investopedia.com/terms/c/custodian.asp

    2. Dan doesn't know and Dan doesn't care.

      All he knows is that somebody is buying and the trend is up.

      That's how you make a living as a trader, riding with the trend and not second guessing it.

    3. http://www.reuters.com/article/2014/05/16/usa-treasuries-belgium-idUSL1N0O20Q220140516

    4. Paul Warfield don't ask these guys hard questions they get confused when presented with facts. Just look at the chart because nothing else matters especially the man behind the curtain burst selling fiat Au.

    5. Hello Don

      what "facts" are we being confused by today, pet?

    6. Tut, tut, Zhang. What do they say about sarcasm being?

    7. Paul Warfield;

      Thanks for the question....

      Zhang Lan supplied the answer to that with the link provided but let me add just a bit to that.

      I can remember some years back that the same claims taking place about Belgium being a front for the Fed ( or the ECB) buying Treasuries in lieu of curtailing QE were circulating through the gold bug community although back then it was Caribbean Banking Centers. We had many people authoritatively claiming that the Fed was using those banks to secretly buy Treasuries which no one in the entire world supposedly wanted. Turned out that was not the case.

      Then a year or two later, it was back to Great Britain. Then it was the same claim - the Fed was using banks in London to secretly buy Treasuries, ( again, because no one supposedly wanted to own them).

      I wrote a piece way back then attempting to explain this. What happens is that when foreign investors buy Treasuries, the sale is booked ( for initial reporting purposes ) to the country in which the sale was transacted. Once a year however, the Treasury department will sift through all that reporting and move the Treasuries to the COUNTRY of ORIGIN.

      We used to have this big drop in Great Britain holdings for the June reporting period which saw a large chunk of it then moved to China. In other words, Chinese investors, institutions, businesses. etc. were buying US Treasuries through banks in London but Great Britain was not the source of the buying. It was merely the nation in which the buying occurred.

      My thinking is that the exact same thing is going on in Belgium. We will have to look for the adjustments from Treasury to see where the country of origin is when they get around to doing that. I have not had time to check into as of yet.

      What is so bewildering about the goofy claim " the Fed never really stopped buying Treasuries, even though they claimed to be tapering those purchases. You see - they are really buying them but doing it through Belgium so the QE is actually continuing"

      In other words, the Fed lied to us all.

      There are some who claim that the ECB is the one buying Treasuries to work to suppress the Euro at the expense of the Dollar. That claim has more going for it than the conspiracy claim noted above. However, I tend to not think so for the reason that the Euro does not need any help weakening against the greenback right now because of the interest rate differentials.

      Hope this helps you understand the reality on the ground.

      Something to keep in mind - within the gold perma bull camp you will see one NEW THEORY OR CLAIM come up one after another. Think BACKWARDATION, JP MORGAN CORNERING GOLD on the LONG SIDE, Negative gofo rates, shrinking comex inventories and of course, secret FED buying of Treasuries. Each time one of these wild claims arise, they are all the rage for a short period. Then, as the price of gold goes nowhere, the claim is dropped, goes into hibernation or whatever, and the next and new claim/theory pops up and the process repeats itself all over again.

      The main thrust of the claims however is very simple to understand and therefore easy to spot and avoid. It is always somehow wildly bullish for gold and further evidence of a price suppression scheme or it is wildly negative for the US Dollar, which by inference is wildly bullish for gold.

      the proof of the pudding is in the eating... just remember that and you will be fine. It is actually rather entertaining to see what these people will come up with next.

      The point to it all however is that is becomes a convenient reason to remain in an asset that is going nowhere in price while other good and solid investment opportunities are then missed while we wait "for the system to collapse any day now".

    8. Communist?
      Weak & feeble swooning girlie?
      Soft target?
      Gullible moron?

      I don't know, Peter: what do they say? (and, in passing, who are "they"? - I hope its not TPTB, cos I've had it up to the back teeth with that lot...

    9. "Paul Warfield don't ask these guys hard questions they get confused when presented with facts. Just look at the chart because nothing else matters especially the man behind the curtain burst selling fiat Au"
      Don, when you start admitting this is not true, as Zhang Lan and Dan answered and keep answering despite the contempt, you will be able to enlarge your horizons.
      Zhang, Dan, I, and I suppose many other on this blog do hold physical gold (what?? how come??!!), do care about technicals AND fundamentals, so maybe you start listening to what they have to say instead of rejecting if from start because it doesn't fit your point of view which, as you are modest, has to be the right and only one.

  13. Right now, the "Rip Your Face Off Rally" is occurring with the USDX.

    In fact, the more cross border trade deals announced in Rubles, Yuan, Euros, etc., the more "scarce" and "coveted" the U.S. Dollar becomes, thus creating a buying panic.

    At the rate the U.S. Dollar is rallying and the U.S. Treasuries are skyrocketing, Yellen will be able to start printing another $4 trillion and instead of parking it in "Fed Reserves" that go nowhere, she will simply start handing it out directly to small business owners.

    Then you will see the most spectacular economic boom ever recorded.

    Never before has Central Banking been so easy, with markets accomodating.

    1. You can just see Obama handing out $4 trillion dollars to small business. He hates small business, and anything to do with entrepreneurialism; nott to mention individuality, and self-suffiency.

    2. Hey Zhang I have a better idea than hugfest. Let's just all hold our cards and see how this baby plays out. Perhaps you are smarter than 5,000 years of history or maybe it's different this time. But sorry pal it looks like a giant con to me with very very high stakes. If you do study monetary history or interview survivors of hyperinflation what you would learn is the speed at which it wrecked lives. Confidence is lost in an instant and that is why the banks have planned out how to control every market they need to. Do you think the repeal of Glass Steagall was an accident? Dark Pools? HFT? Deep Capture? Well Dr. Z the chickens are coming home to roost and we will reap what we have sown. Wall Street and Washington have been "deep captured" and if you don't recognize this you are getting ready to learn a "historical lesson".

    3. Thankyou, Dr Don; I had for many years been troubled by the conundrum of how to actually suck eggs, and I am grateful for your insights.

      I had often wondered what those quaint pieces of paper in my collection of Hungarian Pengo Banknotes were supposed to remind me of, and why the dates on my $1 and $100 trillion Zimbabwe banknotes were only a year apart, and now, at lat, I know. Phew!

      My concern is this; I cannot really go around living every day as if it were the End of Days and, if I tried to, I probably wouldn't make a lot of money on my investments. For my sins, therefore, I am condemned to live in - and to invest in - the Real World as it presents itself to me right here, right now

      My local corner shop, my electricity supplier and my local supermarket won't accept Gold, and have difficulty making change. I tried Silver, but I found parking the wheelbarrow was a real hassle. So, for the time being, I am compelled to do the majority of my day to day business in paper money.

      One day paper money will fail; it always does, and that's why my husband and I, and my extended family back home, always have and always will hold Gold. But, as with fire insurance, the last thing we want to ever have to do is encash it - in fact, as "an investment", it sucks. In the meantime, we are a) continuing to live and enjoy our lives as best we are able - and that means using the local currency and b) preparing for our eventual retirement, and that involves acquiring productive assets and income-generating investments. Gold is neither of those things

      And you might be well advised to hold off pontificating about historical lessons until you know a little about the background of the audience you seek to preach to: PCB's grandparents left Germany in 1932, having experienced a very interesting couple of decades as a couple of Jewish left wingers

  14. Sounds like you have it all figured out so best wishes.

    1. Thankyou Don; its now 0830 and we have to take the bike in for a new clutch today, as we burnt it out touring Malaysia last weekend

      The story of the Hungarian Pengo is far more interesting than the Zim$ or the Reichsmark, and to date the largest denomination note I have been able to get hold of is the blue 100 million billion (20 zeros) one http://www.tomchao.com/eu/hung1f.jpg : there was a 1 billion billion one (21 zeros), but I don't think it was ever circulated


      Have a good weekend one & all, and for those of you with Monday off, I hate you, ok ....

    2. We will send you a USD B-Note

  15. Barney on QE;

    Lan replied

    "You conclude by noting that "it seems like a simple enough debate here" but, with respect, there is a difference between being "simple" and being just plain dumb: why is QE the only factor to consider - when they finally announced the taper last year, Gold prices rebounded

    1. Not sure if you are new to this but the Fed after QE1 said that would be it for QE and then they would unwind their balance sheet.

      What are we on now, QE3 or QE4 ?

      You don't see the pattern here?
      History seems to show once a country starts money printing its almost impossible to stop QE.

    2. Barney, please see my reply to Peter et al above; yes, PCB and I are total novices in this game, woefully ignorant and, in my case, not even Caucasian. What's to be done with us?

      To be clear with you; yes, I believe that loose monetary policy is the Road to Hell, but No, I don't think it is "tradeable" over any retail investment horizon, and its consequences are not only unpredictable in terms of timing, but often contradictory over the short term.

      Precious Metals are just one asset class, and nobody is forcing you or anyone else to invest in them; there are other asset classes too, and as part of a portfolio, some of them have characteristics which from an investment and trading perspective are preferable to Precious Metals.

      And are you really either troubled or surprised that people in public office tell lies? Really? And you ask if I am a newbie?!

    3. And I agree Zhang, hard assets are not the only alternative here.

      Other paper currencies that are not doing endless QE are alternatives too perhaps?

      Its hard to say how this all plays out.
      Just bringing up other thoughts on this blog that seems like a constant battle between the gold haters and gold lovers.

      It looks like a choice by the central banks might have to be made between deflation and inflation soon or later from the TIPs charts Dan is posting lately.

      Can they sell another round of QE if things keep deflating on the TIPs? Or does TIPs deflation not matter?

    4. barney, I have answered you at least twice on this point, but let me try again:

      1. Macroeconomic factors - and QE in particular - appear not to be the driving force behind the directional movement in the Gold & Silver prices; over any "tradeable" investment horizon these inputs are not meaningful as indicators of trend or momentum, and in the past few years have in fact been negatively correlated with price

      2. Neither I nor anyone else actually knows how this is going to play out (although many of us see the possibility of an extreme "tail" event occurring); however, in order to make headway - and profit - in an uncertain market, we need to be disciplined in our investment decisions, and not to rely upon emotions, "belief systems" or long-shot End of the World scenarios. As such, Gold and Silver are not attractive propositions right now, because these markets are essentially trendless, whilst others - in my own case, the Hong Kong Hanf Seng Index - are (for whatever reason, valid or otherwise) fairly directional and consequently more appealing. That is the difference between Trading and Investing.

      3. The myth of Central Bank omnipotence is only slowly unraveling; these guys have no more clue than the rest of us, they just have a wider audience, and consequently their views and opinion carry more sway. As a consequence, the notion that they might be able to "make a choice" between inflation and deflation is unrealistic - the EU ad Japan have been trying to light a fire under inflation for half a decade, and they are clearly not in proactive control of the situation.

      You have said before, and you have repeated once again, that "this blog ... seems like a constant battle between the gold haters and gold lovers. and I hope that you can now see that this is not the case; moreover, there is no scope for "love and hate" when it comes to an asset class - investment decisions need to be made with objective sobriety, and the biggest demons which most retail investors face are their own Fear and Greed

      It is, in fact, my honest opinion that Fear and Greed are the primary drivers behind the price of precious metals, and that these are best proxied by either Volatility (as in the VIX index and its equivalents) or, more correctly, in the "Smile" curve which models the difference in Implied Volatility between "At" - and "Out of" - the Money options. At present, observed (historical) volatility in Gold is at very very low levels http://ceo.ca/wp-content/uploads/2014/04/GVZ.png - around 14% annualised http://www.cmegroup.com/apps/cmegroup/widgets/productLibs/esignal-charts.html?code=GVF&monthYear=Z4&venue=0&title=DEC_2014_Gold_Volatility_Index_%28VIX%29_&type=p&exchangeCode=XCEC - and I believe this correlates closely to muted transactional volumes, declining Open Interest and languishing prices http://monetary-metals.com/monetary-metals-supply-and-demand-report-24-aug-2014/

      4. Inflation is corrosive, and can be observed in the purchasing power of the USD over the past century http://pricedingold.com/charts/USD-1787-log.png ; however, destructive Hyperinflation is a different beast altogether, and has not so much to do with economic policy, but with a crisis of confidence. With respect, the latter is of far greater Black Swanliness than the former, and whilst Gold may indeed offer some comfort if the worst really does come to the worst, in a more prosaic world equities will outperform Gold over time, every time

    5. please take a few moments to look at http://investingwithoptions.com/blog/2010/05/12/trading-gold-volatility-skew/

      it was written 4 years ago, but gives some excellent insights into Smile and Skew as indicators of sentiment in the Gold market

  16. Here you go PCB and Zang the whole elaborate CON laid out for anyone with eyes to see.


    1. Don,
      Zhang, Dan answered in an extensive way.
      Don't just throw a single link at them full of 10 pages of babbling like a bone, I think they deserve better if you want to make your point.
      So what exactly, in this link, makes a point to you?
      Name it, write a few bullet points why it is cristal clear to you that in the visible very shortest term, gold should explode to the moon?

      It is impossible to discuss through sending links. I can send you ten links speaking about the opposite case.

    2. and better still, you could read their answers and explain us why they don't make sense to you.

    3. Its makes sense for someone that doesnt do his own thinking to let some link do the talking.

    4. Hubert I see you didn't read the link or understand it. The point is that it is not one point but the whole link is true. Our system has been completely taken over by central bankers. I have intuitively know this and painfully watched markets that made no sense based on 25 years experience. You probably don't want to believe this or want to believe that the chart is the truth but the truth is that they control any market they choose to. We live in a Matrix that is not what it seems and only a few will recognize this and get out. If you don't recognize the truth in the article it will hurt you at some point IMO. So I wish everyone here the best in their trading but keep your eyes open and your hands up. The fictitious Dr. Don is leaving Trader Dan's blog but thanks for the banter. In the old days on the floor the traders wore a patch that said "Free Markets For Free Men" sadly today we are losing both freedoms. God Bless

    5. Never mind, doc, think of it this way, like King Henry V on the eve of the battle of Agincourt, hopelessly outnumbered by the French, his army decimated with disease, and his cause hopeless, and yet he won one of the most stunning victories in British history. Goldbugs unite for Harry and St George!

      We few, we happy few, we band of brothers;
      For he to-day that sheds his blood with me
      Shall be my brother; be he ne'er so vile,
      This day shall gentle his condition:
      And gentlemen in England now a-bed
      Shall think themselves accursed they were not here,
      And hold their manhoods cheap whiles any speaks
      That fought with us upon Saint Crispin's day.

    6. Peter Dykes;

      Just a short comment and a bit of advice. This is not meant to be an attack but rather some counsel.

      It is one thing to have capital tied up in an investment class. It is another to draw on historical battles and poetry to justify "keeping the faith". It is a sure fire way to either lose money or to watch your capital sit and do nothing for you as far as making some sort of return.

      This is what I mean when I write about becoming emotionally attached to an investment. It is evident from your post ( and again, this is not meant to be an attack) that you are of a mindset that while you are losing the battle you will eventually win the war.

      Investing/trading is not about making comparisons to Henry V; it is about finding an asset class that will pay a return on your capital.

      What are you going to do if gold goes nowhere but within a broad range for the next 5 years? Are you going to tie all your money up in it while you wait for Henry V to emerge victorious?

      Please try to be more objective about your investments and above all, stop getting emotionally attached to them.


    7. Dan, I was trying to be drole, as in ironic. In England we sometimes call it 'taking the Mickey' out of someone.in a nice way.This seems to be the current style, or what I have referred to before as Zhangisms. It is just a different way of expressing the silliness of a situation, the silliness being that one could just BELIEVE in something like gold, or any other material thing for that matter. Gold is an investment, maybe even a good long-term investment at times such as these, and it has served me very well over many years in the past. It can also be used as a kind of protection for a worst case scenario. It's short-term merits are more debatable, maybe up or maybe down, who can be sure?

    8. Peter;

      Thanks for clearing that up. My misunderstanding... and yes, gold should definitely be in everyone's portfolio in some percentage in my view for protection. We are in total agreement on that. Best wishes to ya...

      I am off to enjoy some bar-b-q cow flesh and swine flesh along with some cold beer! It's a holiday weekend over here!

  17. Enjoy your trip down the rabbit hole.

  18. Happy weekend to all. To those who have to work Monday by condolences.

    Maybe burn some red meat as prices are coming down.

  19. Here is a blatant piece of Western propaganda: Russian Rouble Falls To New Low http://www.bbc.com/news/business-28986360

    here is the truth: in April 2014, 1 €uro would buy you over 50 Russian roubles; right now it will buy you 48.7 of them.

    Go figure

    1. And I suspect the euro ruble will go to 42

    2. It all depends on where you live.
      Euro weak rouble strong.
      Dollar strong rouble weak.

      Maybe more about headline seeking and ratings ($) than propaganda. The media has gotten so venial I have to add that filter to the stack when I read.

  20. Wow...Eur Usd closing week under 1.3150 on the lows.
    Call it an acceleration.
    At this pace, we could see sub 1.28 by the end of september.
    Germany being impacted by sanctions vs Russia + anticipations of even more sanctions? Europe seems to be signing its death warrant with joy. Incredible.

    But then I wondered, what about USD vs an economy which is weaker than Eur, and could be affected by Russian sanctions even harder? You got it : Poland. Poland and its -30°C winters, dependant on Russian gas.
    Go take a look at USD PLN.
    Now, that's a trend...probably headed to 3.30 pretty soon as well.
    Want to play?
    I think I'll give it a little try.

    1. Here is the chart :

      It's too late to give it a try right now imho.
      "The trend is your friend"...yeah, well, that is, if you can find a nice entry point, isn't it?
      If I say "wow look at this trend" now and buy crazy, where do I put my stop loss, huh? What is my target? What is my risk/reward ratio?

      So...if the market would correct towards a more friendly area, such as the previous top of the range 3.00-3.15, then it would be a much nicer spot to try to go long.
      I'll monitor 3.15 / 3.16 for a long USD PLN is the faster time units tell me the market is likely to reverse upwards towards 3.30.

      Ah, mein gott! Poland is Kaputt! Let's short the bloody currency :)

    2. Thats what I love about your trading. It has to be an entry point that you are comfortable with, it has to provide you with a close stop, it has to fit your indicators and it has to "feel" right. No one could ask for anything better when it comes to trading.

    3. arnie, because the only two things you can control 100% with your trading is your entry point, and your stop loss. Everything else is probability and monitoring. Even the target.
      That's the mantra of people like Gilles Leclerc and many other traders I know. So I tried to made it mine as well.

  21. My simple and light hearted observations for the week are as follows:

    1. The skunk pissing match here I think made at least a short term blow-off top here this week.

    2. Don't bring a knife to a gunfight.

    3. A man has got to know his limitations.

    4. On a different note, what came first? Groundhog Day or KWN?

    For all the Yanks here, have a great and safe Labor Day Weekend! For the rest of you, have also a great and safe weekend.

    P.S. September is the worst month of the year for stocks, followed by October. As for gold, September has also made some serious tops over the years. Stay tuned and we will all no doubt be surprised at what unfolds!

  22. In thirty-odd years of watching the gold market, the only "new" buzzword I've seen come along is the "Bail-In". Tailor made for the scaremongers. Perfect for selling more coins, P.O.S. penny miners, and whatnot. You could just picture the busy boilerrooms full of guys saying "This is great! We can scare the pants of off people with this. "Bail-ins coming to you soon! Yee Hawww!" And, sure enough, the sheep were lapping it up and peeing their pants.

    Bail-In Fever peaked in March 2013, just weeks before the collapse in metals in April of that year. I thought the timing was pretty funny.

    Nowadays, the Bail-In is part of the standard script.

  23. Hmm...looking at SP500, seems to me that it has the potential to make it to 2015 pretty soon.
    Actually the only time it corrected recently (to 1900) was when BOTH CDur (daily and weekly) were heading down in the same time. This is not the case now as the weekly CDUR is going up.
    So your question is : why are you short?
    Well, that's a good question.
    So...I'm going to rebuy my last short (2000) on monday, so 50% of my short position, so that my short position is really insignificant (1 short CFD, lol) and wait for the market even higher, around 2015, and depending on what happens up there, try a stronger short with a stop loss close above my head, around 2020 +.

  24. Gold.

    Gold managed to break through the mlh sup of the short term downwards andrew's pitchfork, daily time unit. It is capped by its ma20, but some other indicators indicate it could try to break through. On prices, red resistance at 1310 (triangle) then range up 1320.
    It's impossible for me to guess where gold wants to go.
    So I'll put my orders in relation to my position :

    I went short at 1314, made a 1/3 profit on 1276, so now I'm buy stop for the remaining 2/3 at 1301 and that's it. Won't let that little beast make a loss. Only profit possible for now, small, but still there.

  25. I just pulled up a long term chart of XLY, and now confirmed that it has had the longest, steepest rally ever recorded rising from $15 to $69 in 5 years and 6 months.

    Never before has the consumer ever been stronger, emboldened by constant and chronic CRB Index crashes, cheap energy and food, 0% financing on just about everything, soaring 401(k) accounts, and most of all, an "activist" and "accomodative" Fed.

    Based on the resounding, unprecedented success of this program, whereby the "Central Planners" printed trillions of Fiat Money, yet suffered absolutely no adverse consequences whatsoever,

    Any and all crises in the future will instantaneously stopped with more of the same.

    Why deviate from a formula that has created the most spectacular financial market results ever recorded?

    And now with the CRB Index at multi-year lows, interest rates at or near record lows, and some sections of the economy still weak,

    I suspect that the next wave of money will come from direct cash handouts to small businesses. Forget QE and increasing "Fed Reserves" that just sit there.

    The economic boom that would follow would be the greatest in history.

  26. Attn: Steve Brassey

    Happy Labor Day my friend.

    Palladium closed at $906 on Friday

    Please send contact info I'm ready for my juicy steak dinner.

  27. Hey Mark, I sent you brassey07@yahoo.com a month ago. So, you were right and I was wrong. Send me your address and we settle up. BTW, I am curious and think that you are up in New England area? Have a good Labor Day Weekend also. swb

    1. As I recall, Mark said he resides in southern california.

    2. thanks Arnie and if I have to lose it is ok to lose to a fellow Californian; btw, where are you?

    3. When the polar vortex hits this year, I will be in florida. But in the summer, chicago is a very nice place to live along the lake. But I lived in Los Angeles for many years before moving to chicago.

  28. http://wolfstreet.com/2014/08/30/home-flipping-collapses-in-san-francisco-losses-spread/

    This fellow is pretty good I think. I also know that things in Orange County, Vancouver and Vegas have abruptly turned down. The bulls always go silent when things start southward.

    My question for Lan, Hubert, Mark, and others around the world, regarding their former hot real estate markets, is, of course, "what do you think?"

    We constantly have churning, ebbing and flowing cross currents of inflation vs. deflation going on, but real estate is imho a vital gauge for the big picture, and thus worth paying attention to , as opposed to the NAR perma bull donkeys. Thanks again, and we'll keep the light on in Sparks.

    1. Steve
      The red hot Orange County CA market has cooled off this spring and summer.

    2. I met the No. 2 producer at Keller-Williams in Brentwood, she said the "Buy/Rehab/Flip" market was on fire.

      Said the housing and land prices were going through the roof, and getting contractors to perform remodels was becoming increasingly problematic because they are so busy.

      She is hoping for the market to cool down a little, many of her investors are too nervous paying these high prices. They will buy en masse when things settle down a little.

      Yes, I live in Los Angeles, I've been here since 1987 and hands down the city is in the midst of the biggest building/construction boom I've ever seen. Projects, both residential and commercial going up everywhere.

  29. The superior man does not set his mind either for anything, or against anything; what is Right he will follow. Confucius

    Enjoy the weekend all...

  30. Confucius said "Do not walk behind me, me, for I may not lead you in the Ways of Righteousness

    Do not walk beside me, for the Path to Enlightenment is narrow

    Do not walk in front of me, for i may not follow in your footsteps

    In fact

    Why don't you just shove off and leave me alone?

  31. someone was going to post this. might as well be me. do not shoot the messenger. i don't even know if this is real. but if it is, it's is pretty damning.


  32. i want to know if this can be real. am i missing something? wtf?


  33. Quick update a propos nothing in particular: http://www.globalresearch.ca/facts-withheld-regarding-the-mh17-malaysian-airlines-crash-dutch-government-refuses-to-release-black-box-recordings/5398571

    1. I am sure the Ukrainian government has real fears of Russian aircraft supporting the rebels, hence the anti-aircraft batteries around the rebel area. The recent reports of Russian artillery and “volunteers” in the rebel held areas would serve to reinforce this fear. Contrary to global research’s position I don’t see these batteries as evidence that Kiev shot it down. Not aware of the aircraft being diverted over the area by Kiev ATC and even if it was, there are many possible reasons beyond the nefarious ones. This needs much more research and evidence before such an accusation is warranted. The conspiracy buffs only need the flimsiest excuse to make such a charge though. Don’t know “Global Research” but this seems it might be their meme.
      On the other had the continued silence is not a good sign. So many have a political stake in the results that I can only begin to imagine the ebb and flow of pressure.


    The Catholic Church has been opposed to contraception for as far back as one can historically trace, and the Church's position on contraception was formally explained and expressed by Pope Paul VI's Humanae Vitae in 1968. In brief, artificial contraception is considered intrinsically evil http://www.vatican.va/archive/ENG0015/__P86.HTM

    Now, whilst it is in the nature of things that everyone in the precious metals markets gets forked from time to time, most of us are able to deploy some form of protection - whether that be timing our market entry and exit, or just simply refusing to make deposits - one way or another, we muddle through

    Pity therefore, the poor penitent Catholics amongst us who - let's face it, are no more and no less virtuous or sinning than the rest of us - and who are unable to benefit from Jesse's latest market observation - the phenomenon of "Caps and Coils" http://jessescrossroadscafe.blogspot.nl/2014/08/gold-daily-and-silver-weekly-charts-cap_29.html

    Now some of you may think that such religious metaphors are inappropriate - what with it being Sunday and all - but I would merely caution you this: those amongst my friends who are Catholics (a surprising number of ethnically Chinese in Hong Kong and Macau, due to the historical influence of Jesuits) appear not to be unduly burdened nor indeed troubled by these constraints upon their ability to "party" in the Gold markets, much less do they appear in any way handicapped in their pursuit of worldly goods.

    However - and here's "the rub" (to combine literary allusions to Shakespeare and Onanism) - it appears that the canny Irish in particular have responded to this restriction on their participation in Precious Metals by diversifying into less-active secondary markets, apparently drawing inspiration from Exodus 30:34:

    "Till the day doth break forth, And the shadows have fled away, I will get me unto the mountain of myrrh, And unto the hill of frankincense."

    and have now effectively cornered the market in these less-favoured commodities. Now, you probably think I'm joking, right? (and perhaps in dubious taste) but I am not: take a look at this http://www.investmentu.com/article/detail/34986/gold-frankincense-myrrh#.VAJvihaorLQ and this Dublin-based outfit https://www.facebook.com/thefrankincensemarket

    Call this "principles-based" investing, if you will, but this apparent afflatus stands in stark contrast to the belief-based cults practised by the heathen Goldbugs, which, as Aaron found out in Exodus 32, will lead to no good end.

    And my conclusion, therefore is - what with all the smiting going on around the world and the increasing weeping and gnashing of teeth amongst the downtrodden 99% - we should take a leaf out of our Catholic cousin's books, and maybe "pulling out" of the Gold market just in time might indeed be the way to go

  35. Doc, I read the article you provided the link for. It's good stuff.

  36. Poor David Stockman.

    How old is he?

    Probably old enough to ignore economics and politics and simply live it up and enjoy life.

    Yet he's still beating the drum about an "Unprecedented Global Wipeout".

    Very sad.

    He really should spend some money, travel the world, enjoy life, buy what he wants, and ease up. Poor guy is on track to go to his grave crying wolf about a catastrophe that won't even happen in my lifetime.

    1. What a troll you are Mark, but will comment anyway.

      You sound like one of the same guys that said PEs don't matter any more with the Nasdaq and then it eventually crashed and burned.

      The Fed has printed trillions of dollars to prop this thing up.

      It goes like this:

      Nasdaq bubble, then crash, prop it up with cheap money

      Housing bubble, then crash, prop it up with even cheaper money and trillions of dollars of QE.

      And today we have the same bubbles again just reflated.

      Printing money just hides the broken financial system, it does not fix it.

      This thing is built on a foundation of sand.

      Why do you think Bernanke got out early and did not see his QE plan through till the end and unwind it like he said he would?

      This has been tradeable for profit but nothing is fixed by the 0% interest rates and trillions of dollars of QE.

      Eventually the Fed's music will stop or fail, unless they have created some new economic nirvana when you can just print money.

      No need for savings and investment any more, just print trillions.

      As Dan's TIPs chart shows things are already deflating as QE is reduced.

      Lets see how the real world looks without QE?

    2. So far QE has been reduced by more than half yet the dow advanced. So there is more than QE driving it

    3. Barney,

      Right now, the trend is up.

      Summation Index is up.

      McClellan Oscillator is up.

      I could care less about theories, ideas, and platitudes, I'm only interested in which direction the tape is going.

      I can tell you this.

      After such an extended run up and with bond yield ultra low, it will take a very, very, long time for the market to top out.

      In fact, the topping process could take a year or longer.

      Unless, of course, the NY Composite does something unusual like start going parabolic like silver did in 2012.

      Meanwhile thousands of folks lost huge opportunities and in some cases lost a lot of money following the gloom and doomers.

      Yet none of the charlatans have fessed up, admitted they were wrong, and said they were sorry for getting it completely wrong.

      At least David Rosenberg was wise enough to stop fighting the trend and he's now bullish although cautiously so. He at least saved face by admitting his error.

      The other guys at KWN, well they will probably never admit their error and will go down in total disgrace.

    4. The charlatans will probably end up being the ones creating the artificial markets with QE here Mark.

      Also most people that rode the 2008 crash all the way down and then back up have not made much money at all.
      They have recovered their losses though which is good.

      So far QE is the only trend for the stock markets,

      when QE1 ended the stock markets fell,

      when QE2 ended the markets fell again,

      will it be any different when QE3 ends?

      QE is what the gloom and doomers have missed, they have fought QE all along and have been wrong for years to fight QE.

  37. This comment has been removed by the author.

  38. Update

    Our baby has its new clutch and is once again going like a rocket; just got back from a fairly interesting mini-tour around here http://alawstudentinsingapore.files.wordpress.com/2012/05/img_1866.jpg which has some of the few twisty bits in Singapore in it, including a nice spot to have breakfast http://itoursg.files.wordpress.com/2013/06/photo-71.jpg

    Secondly, I have returned to find my email box full of correspondence about my earlier post in respect of Catholic investment restrictions: apparently these apply not just to Precious Metals, but also to Real Estate, and whilst the upper-end of Dublin Residential Property sector is apparently buzzing with activity right now, most Irish punters wouldn't even consider coming inside a Condo. (I think that's what he said, anyhow).

    That's it for me & him for the weekend; hope all you American types enjoy your no-Labor-for-me-tomorrow Day holiday, and Keep Stackin'

  39. In conclusion...and off topic....yes, your private conversations were watched for suspicious or detrimental attitudes or plots.

    Besides the paranoia aspect, which there was apparently, there's the matter of integrity ( lack of) and privacy issues and there was little if none....otherwise the "peeping policy" would never have been initially instituted, condoned, tolerated and left in place....like it still is today....but just for subscribers.
    One of the benefits of membership I guess...but at what cost?


  40. How disasterous was the advice to "Get Out of The System" when Europe was in trouble and General Jim was warning about bail-in's that never happened?

    A lifetime worth of gains in stocks and fixed income missed.

    From Doug Noland this week:

    - German 10-year bund yields sank this week to a record-low 0.89%

    - French yields at an all-time low 1.25%.

    - Incredibly, German sovereign yields turned negative all the way out to four year maturities.

    - Spain’s 10-year yields traded to record low yields, ending August at 2.23%, down 62 bps in three months and a stunning 524 bps below July 2012 highs.

    - Despite national public debt surpassing 130% of GDP (and rising!), Italian 10-year yields (briefly) traded below Treasuries before ending the month at 2.44%.

    - Italian yields were down about 50bps in three months (down 470bps from 2012 highs). Portuguese yields dropped another 30bps this summer to 3.22%, increasing 2014’s y-t-d yield decline to almost 300 bps.

    - The value of global equities this week rose to a record $66 Trillion.

    - The S&P 500 has now rallied 57% off of June 2012 lows.

    - Over this period, the Nasdaq 100 (NDX) has gained 67%

    - MidCaps 63%

    - Semiconductors (SOX) 87%

    - Biotechs (BTK) 131%

    - European equities (Euro Stoxx index) have rallied 55% from 2012 lows, led by gains of 81% in Spain and 67% in Italy.

    1. Mark, I can see you are on a rip here. Nothing can go wrong and all signals are up, up, and away. Meanwhile, gold is doomed, and anybody investing in it is an utter dolt.

      Reminds me of the year 2000 when CNBC was beside itself, talking endlessly about the market having 'legs', 'putting lipstick on pigs', and gold being an anachronism which we no longer needed because our fiat money systems had been perfected. We were even told that the Nasdaq was not overvalued because 'there was a new paradigm', and 'the trend is your friend' even when the trend had become parabolic. Greenspan was referred to has having virtual god-like status, with one word from his mouth setting the markets alight, and how he must have chortled to himself. He was even knighted by the Queen of England. We all know what happened after that - the markets plunged, and gold soared to unbelievable heights.

      Now, here we are back again, but this time it is different. Your certitude that 'the market will take a very, very, long time to top out' is wonderful, if it were not for the fact that you could not possibly know that, and I fail to see what you base it on. Your scathing remarks that anyone who is not in this market is a nincompoop, only encourages me all the more to be exceedingly cautious. I thank you for this.

    2. Actually, in terms of sentiment, it is not ANYTHING like 2000. That was truly a classic, giddy, party-on, blowoff top. In addition, the leading indicators were looking worse and worse. You didn't need to be Warren Buffett to see the writing on the wall.

      The present is nothing like that. In fact, in 35 years in the mkts, I have never seen such an unrelenting Wall of Worry.

      I have no idea how any of this is going to end--and neither does anyone else, because no one has a working crystal ball. What I can see is what the tape is telling me right now, and the wild excesses of 2000 are nowhere in evidence. In addition, although it is causing endless pain in the TEOTWAWKI camp, the indicators are consistent with slow improvement, and no bear mkt has EVER started in the face of an improving economy.

      The real source of the endless bitterness and negativity in the PM camp is that most ugly of human tendencies: envy

    3. Rice, I don't think 'envy' is the apposite word. If one was envious one can still join the supposed never ending party, and be blown to smithereens just like you. It's the improving economy bit that I can't get my head around, so if it is not in fact improving, or is just at the tail end of a QE heroin rush waiting to crash back to earth, then it is in fact just levitating in defiance of reality, you would agree?

  41. On topic... finally. ;-)

    Gold at $2000 and the USD remaining in demand and on top for the "foreseeable" future.
    M.A.'s 2nd last paragraph says it all.


    Sure, times are changing and the increasing use of China's yuan can't be discounted as being irrelevant, but is it a game changer anytime soon?
    I think not.

    All the chronic USD bashers (lots of crivkets lately) who have been circling like buzzards for years (since the Fed's inception!) and waiting for it to plummet and collapse (so that gold soars!) will tire themselves out before that "imminent collapse" ever occurs imho.

    Ask just about any country or person on earth ( besides Putin or China and some ME sheiks) who is in need of capital if they'd refuse a $1bln USD aid package and I'd bet you would be hardpressed to find someone who would decline it.

    Personally, I'd like to have a lot more USD then I now have. My point isn't that there aren't some warts of concern on the USD but instead that it's not going anywhere anytime soon.

    As evidence, just remember all the moaning from most of the emerging market economies (and advanced one's also) about how the Fed's policy of QE tapering and tightening up monetary policy scares the crap out of them. Why?

    Because they can't get enough of the USD, that's why.
    Just ask Argentina, Venezuela etc. or the majority of the worlds citizens if they have enough USD on hand or if they'd turn it down.

    Not likely nor anytime soon.

  42. DarkPurple; the spellcheck man is very dangerous because he does know a few things, while at the same time, his ego is unbridled. Has an opinion on everything and anything and time framed from her to eternity. My favorite is 2032.75 , which I of course use every day in my trading. LOL, but the sad thing is that people do not want to think on their own, so they buy his sorry drivel, as they do at zero and kwn. Best to make sure you have your airsick bags handy if you indeed visit their lame sites. sparks of course and move along everyone

    1. I hear what you're saying Steve.

      I don't buy everything he opines on but he does have some interesting views on current events that seem relevant.
      All the long term historical comparisons and facts are interesting but I don't see many of them being relevant in a cyclical way that he categorizes almost everything as being historically repetitive and predictable.

      Some of the market cycles vs. historical events/ war are interesting though.
      Inflation or deflation comparisons from 100 A.D etc. to todays markets seems like a stretch albeit an interesting one.

      Can't knock him on his spelling though because I'm gramatically and phonetically challenged/unorthodox at times myself. :-)

  43. U.S. Dollar making new highs for the move as FX trading opens up.

    James Turk and Rubino's book on "The Dollar Collapse And How to Profit From It written over 7 years ago now a total bust.

    Amazon will have that book available for 79 cents soon.


  44. What part of David Stockman's interview at KWN does not make sense? He does not sound like a senile old man to me. Are we throwing out the baby together with the bath-water?

  45. Soren, I agree that he does make a lot of sense. The problem is, he and Roubini and Rogers and Zulauf and Faber make a lot of sense also. BUT the problem always is, when does reality set in? You are a better man than me if you can make that call. However, I can say that if we had a 25% break overnite in '87, that I would not be surprised to see history repeat. In fact, in this convoluted, engineered, and broken market that we trade, anything can happen. Stops will not save the bulls when the bids evaporate and the phones go dead.

  46. Trader Dan never looks at how corrupted the information is that goes into the charts that he relies on.

    For example, his latest foreign holdings of US treasuries chart. The only way Belgium can buy $200 plus billion of US treasuries is if the FED gives them the financing for the purchase. The Belgium population is only 11 million. This chart is NOT a reflection of foreign purchases of US treasuries , it is merely a chart of the FED providing financing for Foreign purchases of US treasures. In summary, the FED is not winding down QE, it is simply re-directing its purchases through foreign entities. This is the real conclusion of the chart, not what DAN concludes.

    1. Megaprophet, I predict you will be ostracized promptly.
      That makes ME an Ultraprophet! :-)

    2. No, you're just a garden-variety peckerwood...

    3. This point has been adressed multiple times Megasuperprophet. The fact that you dont understand something doesnt make it suspect:

      Paul WarfieldAugust 29, 2014 at 2:06 PM

      Could you please explain Belgium's wildly increased holdings of U.S. Treasuries, an amount that is absurdly out of line with its GDP? Who is the real buyer?

      Trader DanAugust 29, 2014 at 4:45 PM
      Paul Warfield;

      Thanks for the question....

      Zhang Lan supplied the answer to that with the link provided but let me add just a bit to that.

      I can remember some years back that the same claims taking place about Belgium being a front for the Fed ( or the ECB) buying Treasuries in lieu of curtailing QE were circulating through the gold bug community although back then it was Caribbean Banking Centers. We had many people authoritatively claiming that the Fed was using those banks to secretly buy Treasuries which no one in the entire world supposedly wanted. Turned out that was not the case.

      Then a year or two later, it was back to Great Britain. Then it was the same claim - the Fed was using banks in London to secretly buy Treasuries, ( again, because no one supposedly wanted to own them).

      I wrote a piece way back then attempting to explain this. What happens is that when foreign investors buy Treasuries, the sale is booked ( for initial reporting purposes ) to the country in which the sale was transacted. Once a year however, the Treasury department will sift through all that reporting and move the Treasuries to the COUNTRY of ORIGIN.

      We used to have this big drop in Great Britain holdings for the June reporting period which saw a large chunk of it then moved to China. In other words, Chinese investors, institutions, businesses. etc. were buying US Treasuries through banks in London but Great Britain was not the source of the buying. It was merely the nation in which the buying occurred.

      My thinking is that the exact same thing is going on in Belgium. We will have to look for the adjustments from Treasury to see where the country of origin is when they get around to doing that. I have not had time to check into as of yet.

  47. Mega

    Golly we are all so wrong. B

    If the FED was actually doing this they would conceal it better.

    1. Mike, most people are like frogs in boiling water. The water is hot, but as long as they are told it is fine and not hot, they stay in the pot until they fry.

      How can anyone with more than a grade 3 math background believe that the Belgiums have the resources to buy $200 plus billion worth of US treasuries in one month? That is $20,000 plus per every Begium citizen? I find it amazing that people believe this BS and can't see the financial engineering the FED is doing to pretend they are winding down QE? The US government runs a trillion per year in debt. The treasury has to issue this new debt and someone has to buy it. The fact is there is nobody left on earth that can or wants to buy this amount of US debt and so the "Houdini" tricks by the FED will continue until people wake up and realize what is going on.

      In November, the Swiss are going to have a referendum and if successful, their government will have to repatriate all off its foreign gold and double its central bank holdings of gold. If this referendum is successful, you will see a massive re-pricing of global assets and the Keynesian fiat money printing experiment will come to an end.

  48. Mike, like 4 trillion in QE. Now that's what I call subtle.

    1. Peter / Mega
      Can't say Apples and Oranges are similar even though they are both fruit.

      QE1, QE2 and QE3 are as different from "Hidden QE" as apples and oranges are even though both are "actions of the FED".

      In the case of QE you want maximum publicity. This raises optimism and joy leading to more consumer spending, the very thing you want to stimulate and have done so poorly at with low interest rates. Therefore it's done with major press announcements, interviews on the Sunday morinng talk shows and various governors chiming in at intervals to keep the story alive.

      If you have reduced QE in public and want to continue purchasing all the T-Bills in the world with out anyone knowing ("Hidden QE") you do it differently. Transactions in the dark of night, money spread around to all the major banking centers so there is no obvious increase in volume and as many private placements as you can manage. The one thing you don't do is concentrate all the purchases in one small market to it sticks out like a tent pole or sore thumb.

      I have serious concerns about the health of the worldwide economy, the banking system, the over printing of fiat currency and artificially low interest rates. But I will not jump on the band wagon of the ammount matches so it got to be dirty FED dealings. Belgium just happens to be the banking center of the day as the EU banking system trys to get solvent. They NEED to buy our T-Bills.

      Dan explained in some detail how the Treasury assigns these purchases and then reassigns them later. Corrupt Treasury - maybe. Corrupt IRS - sure. Corrupt congress critters - some are. Total corruption - no.

      Face it, the FED boys are way smarter than this. If they wanted to do it, you and I would never know.

  49. Good morning!

    Two quick things

    1. Megaprophet: I am unsure whether your failure to grasp the point is deliberate or pathological, but here it is again: Brussels is the host for Euroclear, Custodian. Those bonds do not (necessarily) belong to "only" 11 million Belgians, but may be held on behalf of ANY non-US investors (including Central Banks such as the BOE, commercial Banks who need to post securities as collateral or to preserve Basel III Liquidity Ratios, or Pension Funds)

    2. Take a quick look at this: http://goldresearcher.com/gold-price-regression-model/ I have NO idea who this guy is, but he's not the dearly beloved Koos Jansen, RIP

    1. Hey Zhang, the amount of US treasuries that have been going through Euroclear is equal to the amount the FED has supposedly been reducing its QE program by. In other words, there is no reduction in QE and never will be since the US government runs huge deficits every month and someone has to buy this debt. The FED is the only buyer left of the massive monthly debt and they need to make it appear that someone else is buying the US debt. In a year or less , it won't matter, since the current financial engineering bubble will have burst and Keynesian economists will finally be discredited for the foreseeable future.

    2. OK, two more "for the road"

      1. Peter - forget QE, here's the problem http://research.stlouisfed.org/fred2/graph/?s[1][id]=BASE

      However, it may be a long time before the consequences emerge

      2. Seismic activity in the Napa Valley last week was apparently indicative of "massive global earthquakes" now that "the world continues to move into uncharted territory" http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/1_Massive_Global_Earthquakes_%26_A_Truly_Terrifying_Event.html

      "While we have gotten used to jaw-dropping revelations in the financial markets and geo-political hotspots around the world, Northern California received one from Mother Nature last weekend in the form of an earthquake measuring 6.1 on the Richter Scale"

      until you put it in context http://en.wikipedia.org/wiki/List_of_earthquakes_in_California#Earthquakes

      whereupon it appears that KWN are scraping the barrel for sensationalist claptrap. Anyone who didn't realise that California straddles a massive earthquake zone is living in the wrong place (I used to live in Moutainview back in the mid 90's)

      The author, Mr Fitzwilson, is apparently a 40-year market veteran, and appears baffled by the fact that How in the world U.S. rates can be higher versus comparable debt issued by truly insolvent countries is a mystery. Clearly, he was asleep during the financial crisis in 2007 - 8, when for a period of time McDonalds Corp CDS were trading tighter than protection on US Govt debt. He appears to also have forgotten the fact that the entire US Government was closed down last year due to an inability to agree a Federal budget

      and finally, he notes that "The Chinese are testing opposing resolve on the border with India as well as in the South China Sea and with Japan.. People really should shut up about things they don't understand



      or maybe outright lies are perfectly acceptable if you are trying to make a wider point, such as the inevitable kicker that "risk that can be mitigated by holding significant allocations in precious metals"

      Overall assessment: Sigourney Weaver 1 Alien 0

    3. Megaprophet - Google "Basel III Liquidity Coverage Ratio" and you will perhaps begin to understand why Banks are being forced to invest in Government debt: $200 billion is absolute peanuts in the greater scheme of things (RBS alone had a Balance Sheet 15x that size in 2008) and when you add in other recent regulatory requirements to post collateral (such as Dodd Frank and EMIR) then you pretty soon realise why there is an extreme shortage of "deliverable" paper in the market






      If your Clearing Counterparty is offering you OIS (Overnight Rate) for cash collateral, wouldn't you prefer to hold Bills or Notes, even if the yield was meager?

    4. McDonalds vs the US Govt




      That's it - some of us have Clients to visit today

    5. Hey, if everyone followed the ``People really should shut up about things they don't understand`` maxim, there would be an eternal silence.

    6. this guy Fitzeilson I think made his bones 40 years ago building subsidized housing in the Bay Area; no special story there, and if you ask him for some kind of track record of his exploits in the markets you will probably come up very empty, like I did several years ago; just another donkey, as simple as that

  50. "or maybe outright lies are perfectly acceptable if you are trying to make a wider point"
    I think that's exactly the point, and it's working pretty well, isn't it?
    Thanks for the other links.

  51. sleep tight Hubert and I will see you in the morning here; btw, which Benelux country do you reside??

    1. Benelux, Steve?
      I live in Armenia :)
      That is, for now. I'm trying to get back to France for a stable job, one year or two, so that my kids get to know the country of their father, but sometimes I wonder if I shouldn't just stay here, in The Shire. If you think Hobbitom doesn't exist, come here and pay us a visit.
      But as a consultant, I've traveled a bit those last years : Iran, Algeria, Niger...and before I met my wife, I was living in my beloved Poland. I hope someday I'll set a foot in Asia. Maybe if Zhang Lan and PCB invite me? :)
      And you, do you live in Belgium or California?
      Have a nice day,

    2. Hubert, I am a Californian but I live in Sparks, Nv now for the last 3 years.

  52. http://www.paulcraigroberts.org/2014/08/28/washington-piles-lie-upon-lie-paul-craig-roberts/

    So Zhang Lan, who do you think will win the match? The West or the BRICS? Seems the stakes are getting higher and everyone is about to go all-in for the world domination? Do you think Russia/China will be able to resist the pressure or will crumble like a sand castle?

    As a French, I'm pretty worried by all this.
    And they just named Donald Tusk, Polish prime minister, to a high position in european decisions vis à vis Russia.
    Couldn't make a better choice : polish hate russians. Due to history, occupation, Katin (plus the recent krach of their government in Smolensk).
    Our president is a shameful buffoon.
    Yeah, I'll be one of the first to go to jail for writing that, now that the NSA follows everyone on the web.

  53. Stopping a war means act before it gets momentum.


    Will people get concerned over it only when it's already too late?

  54. Amazing so many of the people on this blog believe in the Fed still?

    To take Megaprophet's grade 3 math point even further,

    the US and Japan and Europe would all be instantly bankrupt if they ever had to even normalize interest rates as they could never finance their national debts interest payments.

    Amazing how the markets just ride along believing in the Fed rate hike nonsense that they have been talking about for years and delaying year after year.

    But then imagine what would happen to the markets if the Fed or the media started pointing out this obvious elephant in the room?

    The emperor has no clothes.

    Amazing so many on this blog can't seem to do the math?

    1. Hello Barney

      I responded to you before on this point, as follows (see above)

      "3. The myth of Central Bank omnipotence is only slowly unraveling; these guys have no more clue than the rest of us, they just have a wider audience, and consequently their views and opinion carry more sway. As a consequence, the notion that they might be able to "make a choice" between inflation and deflation is unrealistic - the EU ad Japan have been trying to light a fire under inflation for half a decade, and they are clearly not in proactive control of the situation."

      but let's face it, you're not here for a reasoned debate are you - much less for any contrary opinion - you're just looking for an argument

      why do you feel the need to do this? why not just touch the teddy and show the policeman where daddy hurt you?

    2. There is no debate on this interest rate topic at all Zhang thats my whole point.

      The media never debates this elephant of how does the Fed raise interest rates when the math does not add up? They just believe blindly.

      Its no argument, just common sense to do the math for ones self.

      Thats why I feel the need to bring it up.

      Why do you feel the need to make such a childish comment like above? Not very mature on your part.

    3. Barney. These are vatic pronouncements from on high, not to be challenged by mere underlings. SHE WHO MUST BE OBEYED. I urge caution.

  55. West Texas Intermediate crude capped the first weekly gain in more than a month on speculation an improving U.S. economy will boost fuel demand.
    Commodity Intraday Tips

  56. Sanctions by the EU on Russian bond purchases has boomerang written all over it...unless it's all public posturing and window dressing and they continue to buy them through 3rd parties.


    Eventual bond warfare would seem to be a big deal on the surface if it actually happens as threatened.

  57. This comment has been removed by the author.

  58. NATO seems like it's just itching to get involved soon...

    Ukraine Defense Minister Warns Of "Worst Conflict Since WWII", Shifts Forces To "Combat Full-Scale Russian Invasion"
    Submitted by Tyler Durden on 09/01/2014 - 10:18
    Unless they are tilting at windmills, the rhetoric this morning from Ukraine's defense minister is the strongest and most actionable yet. Via his Facebook page, Valeriy Galetey accused Russia of "open aggression," and explained that:

    Earlier in the morning, US Senator Bob Menendez said he has "no doubt Russia has invaded Ukraine," and following Ukraine requests for assistance from Europe and US,

    NATO responded by noting a reaction force can be ready in 48 hours.


  59. More Propaganda

    In the USA, how 'democratic' is the selection of Presidential candidates (and how much influence does $6 billion buy in the process?) Sure, you guys can get to choose between a Bush and a Clinton, or a token Black Man or a token Woman, but who amongst you ever gets a say in whether somebody from outside the political clans gets on the presidential ticket?

    In the UK, the Prime Minister is not democratically elected: sure, he is elected as an MP, but who amongst the MP's gets to wear the crown is not a matter which can be safely entrusted to the Great Unwashed electorate: so, we get Brown succeeding Blair without any hint of a popular vote, and later we end up with a coalition government that precisely NOBODY in the entire country voted for. The same is broadly true throughout Continental Europe and in the EU itself - the notion of a popular mandate from the masses is a myth - not least because of the paltry percentage of the electorate who actually vote for the ultimate leader (in the UK, typically less than 30%) and the crushing fact that in all but a few "swing" States or Constituencies, you could vote for The Man in the Moon or Father Christmas and it wouldn't make a blind bit of difference to who becomes President / Prime Minister (especially if Jeb Bush is organising the count)

    So now, 17 years after a 150 year period of British Colonial rule during which the Chinese were never once given a vote in any election, Beijing has decided that candidates for the Chief Executive in Hong Kong will be chosen by a convocation of 1200 delegates, and then the local electorate will get to choose which of the 3 or 4 nominees they prefer. Pretty much as in the West, - driven primarily by vested corporate interests, and once they are in power, they are for a number of years to all intents and purposes an unimpeachable tyrant until the charade begins again

    But no, I am talking about China, and CHINA = BAD NEWS, so instead we get the headline

    Disruptive Hong Kong protests loom after China rules out democracy


    If I wrote that "The USA reintroduces slavery" in response to Alabama, Louisiana, Mississippi and Tennessee rejecting the introduction of a Minimum Wage, would you be any more impressed than I am with Reuters and the MSM?

    1. This comment has been removed by the author.

    2. Zhang Lan
      On Hong Kong
      Saw the story here in Southern California too. It’s publicized as a xenophobic reaction and surely easier to criticize Big Bad Communist China than to look into your own back yard. It is also somewhat populist as there are many here who escaped from communist oppression; they are a significant voting and economic block. America’s form democracy has some major defects, not the least being the two political parties who dominate the candidate selection process. The real crime here is the way Brittan crept out leaving the city/state to the tender mercies of mainland China. Would love to hear PCB’s take on this if I haven’t already offended him.
      On American Democracy
      My views are certainly not in the majority but they are mine. The founding fathers had great reservations about democracy and built the constitution accordingly as a representative democracy. Since then, it has become more inclusive by amendment, convention and executive order. There is plenty of room for improvement though, beginning with the political parties. You can’t get elected dogcatcher or anything without the endorsement of the majority party. I have a good friend who would be a great judge. He was told, “Sorry no chance I would appoint a Republican in a Democratic county”. Party (family / tribe) first, qualifications and doing the right thing much later.
      IMHO no group larger than one can be a true democracy, there has to be a pecking order. A couple (two) can work out an equitable relationship as my wife and I have done for many years, many can’t. I had the good fortune to live and work in the Commonwealth of Massachusetts for eight years on a 50% basis so got to see a couple elections cycles up close. Many small towns there are still governed by a Town Meeting dating back to the Quakers before the revolution. In short every voter in town (a really low bar) is invited to the annual or semi-annual meeting to discuss and vote on the issues before the town. In those few towns where the populace is interested it sort of works. In many others, it doesn’t due to lack of attendance. So on top of this, a state government, county government and city council elected by the voters from candidates selected by the parties does the real running of the commonwealth/state.
      Back in 1800 when most people lived their entire lives in a small town and had few concerns outside of the town, town meetings and direct elections had a chance and worked fairly well. As an example we see the remains of it in our less developed areas, one town or city might be dry (no alcohol) while an adjacent one has state liquor stores as the only place to buy and yet another has open markets. The Feds still prohibit bootlegging as they want their tax money.
      Today we have a much larger and more mobile population were people are less tied to city and town who might now even know or care what electoral district they are in. As a result of this and other factors like illiteracy, poverty, ghettos, radicalization and apathy, participation of registered voters has dropped below 20%, if one looks at the total population it’s more like 5%. So now in a country where some 50% of the population depends on the government for support the Los Angles Election Commission is considering offering an incentive to vote, free entry in a lottery for all actual voters. How can this be good? This all is background leading up to my personal opinion. We already have a de facto ruling aristocracy of professional politicians, lets convert that into an actual one made up of people who are looking out for the best of the country. They could have longer terms with reelection requiring more than a rubber stamp and be subject to impeachment.
      Enough off topic politics.

  60. Zhang. Does this mean you support China's stance on suppression of democracy in Hong Kong, or are you just saying that democracy is a farce anyway, whatever the country? Maybe so, but should one also not acknowledge the much harsher control that China will bring into Hong Kong as opposed to Western countries; whereas in democracies, flawed as they are, the addled public can sometimes get it together to exert pressure on the authorities to back down. I can see that you resent strongly the hypocrisy of the West in criticizing China, when it invariably does the same, and you have a strong point here.

    1. My point is quite simple, Peter, and it has nothing at all to do with democracy:

      the media lies to advance a particular agenda, and people in the West are being fed a distorted version of reality

      this is not about right and wrong, and whether life in even the most flawed democracy is invariably and inevitably better than life under the most benign implementation of socialism, this is about propaganda and a broader agenda, and if people can't see the common thread which runs from Libya through Syria and Iraq to the Ukraine to Hong Kong, then I sure as hell can.

      Consider this, if you will; let's work on the premise that what happened in and around Tiananmen Square in 1989 was "a very bad thing"; by the time Germany hosted the 1970 soccer World Cup, were people still holding annual celebrations of the liberation of Auschwitz and Belsen 25 years previously and complaining that, after 125 years of British colonial rule, the Hong Kong Chinese were not allowed a democratic vote? No, of course not: instead, standard 1970's fare included this kind of thing: http://www.youtube.com/watch?v=cvK-VGPocQU

      Generally speaking, I consider the suppression of democracy to be a Bad Thing (and that applies equally in Kiev, Baghdad, or Miami Dade) but you can't have everything, and Hong Kong has received so very much since it's return to Chinese governance http://www.foreignpolicy.com/articles/2014/08/21/hong_kong_inconvenient_truth_mainland_resource_dependence

    2. The FP article gave me lots to think about. I will note that Hong Kongs supply problem is not unique. Rather it is true for every city. Without the support of the surrounding countryside a city dies.
      Armies recognized this back in the Middle Ages if not before. Still a problem everywhere.

  61. As always I am a huge dollar bull. The globalists will make us energy independent (our energy needs from within NA), as planned by the end of the decade. So very dollar bullish. The globalists know that we need to be able to source much of our energy from within NA by the time the global thermonuclear war commences with its offensive strike against the US, by early-mid next decade. All going according to plan.

    Every time I read an article on domestic production, it always is an upside surprise. All the fracking lawsuits get thrown out. Millions of people's drinking water nonpotable, but that will not stop the madd dash to get domestic production up to the point necessary by the time russia/china alliance offensively strike the US 7-10 years from now. All going to plan.

    So much money being made in the energy patch. Take your pick. P&E, refiners, pipelines, trains, equipment, etc.

    gold is a currency that one can easily hide. That's all it is, nothing more. If govt starts to lose control again, look for it to rise. But I do not see that happening for a while. people have adjusted to the Brave New World of continual intervention. The laws and regs are on the books from the last collapse to consolidate all the needed power to get us to this upcoming war on US soil. Enjoy the money making machine, and keep you gold passively hedged.

  62. The "Massive Global Earthquake" and "Dangerous Endgame" has already happened.

    In the gold mining sector.

    Just pull up a chart of AngloGold, Newmont Mining, Exeter Resources, you name it.


    I don't even think that the tech bubble crash was as bad as what was experienced in the gold mining sector, in terms of % losses and the length of the bear market.


  63. Dollar up, Gold down, Aussie dollar down, Euro down.

    More puking up blood for Peter Schiff.

    What a disgrace.

  64. Mark love your comments.you sound like a very bitter ex.you must have been burned badly by the guys you bash.the gold stocks have been a great trade.contrary to your talk of the stocks being smashed its all about buying at the right time.i have been in and out of gold stocks the past nine years and believe it or not i am ahead.the key to that has been buying when my stomach was in knots because the gold stocks were getting smoked (late 2008 and dec.2013) its amazing the returns i have had on some and they have more than offset other losses in the sector.Right now you sound like the guys you are warning people about.I guarantee you people will (contrary to your constant ranting of stay in the system)lose some big money because they will be late to the party.i keep hearing this is a trading blog yet 90% of the talk is drivel.

    1. noles14 - you are correct trading the miners on short term has been very profitable. Gold's trading range since 1900 has been very well defined thus so has going long and short.
      It's kind of in no man's land right now but with recent weakness I can see it going to 1180 again before another bounce to the upside. Assuming 1180 holds that is. If not then time to pull out DUST again.

    2. Noles

      Do not waste your time on Mark's comments...bitter is a very mild analysis.
      This has been going on for close to two years.
      If you dare criticize an "F" bomb is headed your way from the other minions
      Read Dan's analysis (which is very good)and stay away from the comments section.

    3. Hey Noles 14
      Just thought I would add more.
      I too made the same observation that too of the comments are drivel...this was followed by a swift "go fuck yourself" message which was never removed and apparently a approved form of debate.
      I am sure your very own "go fuck yourself" rebuttal will be posted shortly.

    4. Are we bitter, boys? Despite making all that money flipping the miners?

      Evil evil Mark. Bad bad gold bears.

  65. This comment has been removed by the author.

  66. Maybe you guys really SHOULD go fuck yourselves--you so clearly want to...

  67. you donkeys are now plumbing the depths of civility; this is not zerohedge

  68. Hey Rico

    Welcome to the "go fuck yourself" club.
    We could have pub nights and even get discounts from registered retailers !
    Bring it on !!

    1. Dean Baturine;

      I take some time off away from the markets and away from my blog and come to find this sort of crap.

      I am giving you fair warning... knock off the vulgarity or your posts are going to be deleted. I will not tolerate that kind of language here.

    2. Hi Dan
      I respect your request.
      Where were you when one of your minions told me " you know what"
      My comments have never been offensive until I was personally attacked.
      I read your analysis daily..and for good reason I rarely bother cruising the comments.
      I just noticed that Noles 14 made the same comment I made several weeks ago when I received the "F" bomb comment.
      That comment was never corrected..it pissed me off.
      However...I crossed the line Dan.
      Running a blog is not easy, I respect that.
      I will stay with just reading your analysis.

    3. Dean Baturine;

      I must have missed that comment so I apologize as I am trying to be consistent. I do not want anyone using this blog to spout a bunch of foul language. It serves no useful purpose and just drags the entire blog downhill.

      Thanks for your agreeable spirit. It is appreciated.

  69. Thanks Dan

    Your analysis is appreciated more than you know.
    But..as you know....despite the fact we are all adults..it still reverts to Kindergarten !!
    Hard to keep the emotions in check somedays.

  70. "but that will not stop the madd dash to get domestic production up to the point necessary by the time russia/china alliance offensively strike the US 7-10 years from now. All going to plan."

    Eph, again, if you are right, where do you bloody hide from it all? Earth would be utterly destroyed by such a war, would it not? If it's going according to plan, whose crazy plan is this?

    Meanwhile, I'm ok to eat the red pill, Morpheus, but which one is it?


  71. Gold hit 1274, which may make gold bulls a bit nervous, so, to save your nerves, don't worry : Bo Polny called the bottom (for the third time lool) last week.
    And...as gold MUST end 2014 at 2000 $ +, the more it goes down, the better deal you will make. So, buy buy buy!! Accumulate! Sell your house and your mother's house and car, because you are about to become very rich.

  72. This comment has been removed by a blog administrator.

    1. Shikah bot, please keep spamming here.
      Your messages are so unsignificant that they show the value of everyone else's.
      Ah, for the newcomers, this is an automatic Bot from a spamming useless website, Capital Stars, which just want you to click on the spam link above to make money they can't make otherwise with real content.

  73. Dan, correct me if I'm wrong, or pinch me if I'm dreaming.
    This is a monthly candlechart of SP500.

    It ends at 31st of august, and I'm already counting 14 consecutive tops higher than the previous month's.
    With september opening above august highs, we now have already 15 consecutive highs on the monthly time scale.
    How often do you see this, before the serie stops, at least one or two candles?
    The strength of a market must be respected, but this...is starting to become quite rare and unusual. Not that 15 consecutive tops do not occur, but I think it's quite a rare occurence, isn't it?
    Is that enough to bet on the short side, I don't know, but I'm starting to get impressed by the length of this upwards move, without any significant pause.

    1. Hubert;

      fighting that trend has been a thankless task for anyone wanting to hold a short position more than a few days at the most. I do not know how long it can keep going up. One of the things that is contributing to this rise is the lack of alternatives to stocks when it comes to committing large sums of capital.

      Commodities in general are headed lower based on the GSCI. Bonds are at levels that make some question the wisdom of locking up large sums of money for years with such low yields.

      The leaves big institutional investment managers with little choice but to move money into equities or have it sit in cash on the sidelines ( and some in bonds). What happens to those guys is that their clients start calling and complaining to those managers about not being in the market and getting all those gains. Managers will then worry about redemptions and losing their clients if they do not commit to equities and get on the bandwagon so into stocks goes more money.

      I honestly do not know what will trigger a more aggressive sell off in these circumstances. CEntral Banks seem to have an answer for all these various economic crises ( in the minds of big investors) which to date has left little in the way of unintended consequences.

      It used to be commonly held that one could not essentially create money out of thin air without debasing a currency but that assumes it was only one country or nation doing it. What happens when nearly all of the Western Central Banks were doing it at the same time? I think we got our answer.

      Regardless of what happens, we are all going to learn something. Too bad we cannot live for another century so that the next time it happens we will be smart enough to know in advance how the end game plays out. For now we have to watch and learn.

  74. On gold, lookout below.
    Will 1240 hold? Will 1180?
    Only The Shadow knows...

    1. But...but...the vaults are empty...and JPM is cornered (I tell ya'!)...and the USD is going to collapse anyday know...and something historic and explosive is just delayed for now....and, and....QE can't end, it just can't....and even if it does...it really didn't. Just trust my version of reality and ignore the 3 year trend!

      Sounds like something The Shadow might resort to on days like this.

  75. If Silver breaks below 18, we could see sub-15 in very short order: this could turn into a disorderly rout

  76. The "Horrific Collapse" continues.

    I'd give anything to be close to Nashville, TN to attend the next Q & A session.

    Just to watch a couple of blue hairs throw their shoes at General Jim standing at the podium.

    Especially when he shows a picture of USDX and says "The Story Will Unfold Here",


  77. This comment has been removed by the author.

  78. On 23rd July Silver stood at $20.95, and this was published ~


    an 8.3% loss because The Opportunity Is Now

    (but not then, apparently)

    earlier, in the same vein -

    " the price of silver may actually be set to double in just six-weeks*** "
    I’ve been looking for something over $2,000 on gold this year, and probably approaching $50 and maybe even exceeding $50 (on silver) in the not too distant future. That would put the gold
    silver ratio down at around 25/1"



    "The paper market ultimately has to get back in sync with the underlying physical market,
    and we are at the point where the divergences are so extreme that we are going to have to get to at least $1,350 gold and $22 silver just to remove the worst of the excess froth. Given the strong physical demand that will come in once we see the $1,300s become support, the $1,400s are still too cheap to meet existing demand, let alone the sideline money yet to reenter".


    and lest anyone should consider me wise after the fact, I called it out then http://kiddynamitesworld.com/goldbug-simple-quiz-part-1/ just as I am calling it out now

    1. There was a time when I expected 2,000 / 50 but not now as conditions are much different. A condition I am glad for.

      The events that would drive precious metals to me highs by year end should not be plesent for anyone including those who have stacks and nothing else.

  79. Turk and backwardation, and Denver Dave with 15-1 gold silver ratio; sad

  80. OK, Bo Polny is a fraud and you lost 20.000 $.
    That's bad luck.
    But now, a new guru has revealed himself : Martin Armstrong is releasing his 300 PAGES document about gold, where this time, I swear, this time, you will find the future precise timing for gold lows, and gold highs when it reaches 5000 $. I swear, this time, this is for real.
    Don't give up too fast.
    You lost your first 20.000 $ investing in gold at 1900 and selling at 1200.
    You lost another 20.000 subscribing to Bo Polny.
    But now is the occasion to break even and cover your losses!
    Don't be a loser! Sell your last house.
    Subscribe now to his exclusive newsletter, and this time, the Jedi power will give you all the REAL dates.
    Good luck,

  81. Facebook and Tesla soaring to new highs on Ukraine fears.

    Meanwhile, oil and gold stocks are getting destroyed along with DBC

  82. But Hubert, you forget, Martin has charts on interest rates 400 B.C. If you don't think he is the smartest guy in the room, just ask him.

  83. New highs on XLY as the consumer is unflappable.

    When is Eric King going to interview the CEOs of Under Armor, Buffalo Wild Wings, Starbucks, etc.?


  84. You guys have too much time on your hands.why would you waste your time reading or listening to them.mark if you are right about us having an economic boom then guess what happens. Inflation !!!!
    That's is why I buy certain well positioned gold stocks.might nibble a little today but I think more selling is on the way.i think a lot of people expect a slight correction in stocks with everybody coming back from holidays.i wouldn't be surprised to see it continue to rise the next 2-4 weeks with gold/gold stocks being sold but when things turn I think it might be quick.like dan says stay nimble and quick to changing your position

  85. Thats a fairly dishonest headline trader Dan, especially since foreign central banks have only added a net 60 billion in treasuries in a year and a half. Given our deficit is about 45 billion a month I'll let you do the math. No reason o twist facts to fit your anti-gold narrative.

    OS, I took 190 pounds off my two langstroths this weekend, how much liquid gold did you wind up with?

    1. Hey Dan, It seems you are attracting all the most poker players of the world :)
      What narrative?
      The narrative is to make money.
      If gold plunges from 1900 to 1200 and you were short, you just made a profit of 700 $ for every 1900 $ you bet on the short side.
      If you were a bull, you've just lost them, which is about 30% loss.
      This is the only narrative on a speculative standpoint.
      You make money or you lose it.
      Maybe it's a nice consoling tale to hear, that central banks added a net 60 billion in treasuries while you count your growing losses, but what's the point?
      When gold will show us that it has changed trend and goes up, the narrative will change.

    2. Just a simple observation; Bernanke telegraphed everything and essentially the stk bulls that believed have been well rewarded, while at the same time the bears have been bludgeoned unmercifully. He also was constantly derided by tons of pundits. Ok, long story short, it seems to me Janet gets no respect when she says end to taper and rates are going higher next year. Well, I was wrong in thinking Christmas "08 was the blow off top for bonds and I was wrong. Looking at things today, I again think that '12 was the top and I pick my spots to sell into. Maybe I am the donkey once again and we will see. Believe or not??

    3. Stu Ungar;

      What is dishonest about reporting a fact?

      Also, you seem to be a bit confused so perhaps I can help clear things up a bit for you. If I am reading your comments correctly, you assume that it is foreign central banks who buy the bulk of our Treasury debt. That is factually incorrect. The majority of US debt is still bought internally here in the US. The last time I looked, and I have not checked in a while, it was about a 60/40 split between domestic debt buying and foreign debt buying of Treasuries. Also, out of that 40% bought by foreigners, Central Banks do not account for all of that. Private investors buy lots of US Treasuries whether it be for individual foreigners or those who buy into managed funds.

  86. Andrew maguire coming any moment now...

  87. Fortunately mules can not reproduce, but unfortunately Maguire can in another sad form.

  88. COME ON DAN,


    1. Shark;

      Dec 2012 - 2,891,366 trillion

      Aug 28, 2014 3,012,666 trillion

      Is that what you call "almost halted". I guess we learned math in different eras.

      By the way, this is only those treasury holdings that are held in custody at the New York Fed. This IS NOT THE TOTAL US treasury holdings of foreign central banks. That data is reported monthly by the Treasury not the Federal Reserve.

      I will suggest something to you but I suspect it will fall on deaf ears. Let go of your preconceived bias and try for once to be objective and see things the way they are, not the way you think they are or wan them to be.

      As long as there is such a thing as international trade, countries which have a positive trade surplus with the US are going to need to buy Treasury debt to sterilize that imbalance.


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