"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, January 26, 2012

HUI higher but showing signs of selling pressure coming back in

Take a look at the following chart and you will see what I am referring to. The mining shares gapped up today on the opening trying to catch up a bit with the overnight surge in gold and in silver but after that, most of them went nowhere. That is not a bullish sign for continuing their move higher. They did attract some dip buying later in the session but the shares are reflecting a lack of confidence that the rally in the metals is going to continue tomorrow. We will see whether or not they are prescient.

The Party Continues

The binge continues unabated in today's session as both gold and silver bulls are giddy with delight over the FOMC statement from yesterday while bears are still trying to locate what is left of their trading accounts. Both metals are pressing higher as the US Dollar continues to plummet now that the Fed has basically given it the kiss of death once again.

Lost in this stupid euphoria over zero interest rates for the next TWO YEARS is the pathetic fact that the Fed has just consigned the savings accounts of all of our retired citizens and the elderly to the wastelands. How in the hell are they supposed to live off the fruit of their labors and enjoy their retirement SAFELY and without concerns when the monetary masters have just laid them on the altar and sacrificed them to the hedge fund gods?

This is the price we supposedly have to pay in order to watch the stock market rally - namely turning our entire generation of senior citizens into a band of wild-eyed speculators if they are to hope to obtain more than a pitiful 1% on their one year Certificate of Deposits in their local banks.

I wish that some one of these Republican presidential candidates besides Ron Paul would actually begin to deal with this madness head on. After all, we are talking about a primary in Florida, a state loaded with senior citizens and other retirees who were hoping to live off the interest yields on their savings and other CONSERVATVE investments. My view is that what the Fed is doing is downright criminal in the sense that it is plundering the wealth of those who have saved in order to prop up the rotten house of Dagon.

As a trader I have to deal with what the market gives me and what that is at the moment is a veritable orgy of risk asset buying by hedge fund managers. As a private citizen however I have to shake my head in dismay that this is now what passes for sound monetary policy and is conducive to lasting prosperity. Have we lost our collective minds?

As I stated yesterday, the end result of this FOMC green light to the speculative community is to borrow all the "free money" you can get your hands on, leverage that up at least 10:1, and plow it into commodities and other risk assets and have at it. Bring back that carry trade and let's get this party going as we are in an election year and we cannot have a sagging stock market or actually deal with the real problems associated with $16 trillion in debt.

Quo vadis America?