"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


Wednesday, October 22, 2014

HUI to Gold Ratio Collapsing

There is only one comment that I can make based off of what I see from this chart; either the gold mining stocks are tremendously UNDERVALUED compared to the price of the metal or the gold price is way too high.

This ratio just touched a level last seen in DECEMBER 2000! That is FOURTEEN YEARS AGO!

Perhaps some more of these gold miners need to head to bankruptcy but with the ratio at current levels, and with the HUI itself trading at a SIX YEAR LOW this month ( refer to that chart I posted previously today) I am leaning to the view that the gold price is too high.

Talk about a disaster....


  1. Casey research recently halted all buy recommendations on all of their stocks. Most of them are higher now then the Dec 2013 lows but they still did this. And initiated the 5th GLD short over the last couple years. All of their GLD short recommendations except one were closed with 1 to 200% gains.

    Even the bulls are making money shorting gold.

    Maybe gold really is going to zero.

    1. couldn't agree more , bulls are shorting this sector like there is no tomorrow ... I made good money with Casey , in fact I started shorting GDXJ based on his reccomendation , now he is out shorting GLD , working quite nicely so far , good call in my view , if this thing turns around , the miners will surely make an aggressive move . There are lots of theories on GLD , the bottom line is , it doesnt pay owning it , so , good call in my view ... I doubt gold will go to zero , the banksters said they don't want a strong USD ... so a strong USD means they are loosing control . What a charade these whole thing has become .

  2. For all of you "blood on the streeters" , is this not your moment ?

    Right here.. Right now... ?

    1. It'll be interesting to see how low they sink from here. Yesterday was a brutal day for the miners for sure.
      At some point the low valuations will be tough to ignore.

      But as TD stated...is gold still overvalued at this point relative to the miners?
      We're going to find out.

    2. @M - "right here, right now" - Hegel, right? I don't think anyone posting (regularly) on this board now is going to chase blood on the streets without a set of solid technical indicators to help increase the odds--those haven't come yet, or if they have, they have been weak.

      The lack of updraft in the miners on any gold bounce suggests that the last of the speculators are moving on.

  3. Hi Dan,
    Thanks for bringing this to our attention.
    On my charts, I don't think that gold has much upside potential left (if any), as if it makes it towards 1270 and the downwards resistance of the weekly time unit channel, most of my cyclical indicators will be at their top and about to reverse (ex : see where is the stochastic momentum index on daily time unit and what happened at those levels before).

    On short time units (1h , 4h) the MACD is going up, so in terms of timing it might be still just a little too early to attempt a short, especially as long as 1240 is holding, so I put a short stop order at the moment under 1239, let's hope the noise won't take me during the day as I won't monitor anything :(

    I'm waiting for gold around 1270 maximum or for MACD on 1h / 4h to reach their top and reverse down to get in short position anyway, regardless the price.

    But you also said that the Fed was not pleased by too low a gold price.
    So maybe "they" will actually defend the historical lows this time?
    If we stall, I see 1200 as a possible nice support area because of the configuration of inf bollinger bands 20 / 100 periods on the 2 day time unit.
    Maybe gold will linger there forever...
    Have a nice day :)

    1. I once thought it was impossible to do a trade with a close stop and not be stopped out everytime. But you have proved that its not only not impossible, but you do it everytime. Pretty amazing. If Marie Antoinette had you as her advisor, she would still be around today.

    2. You can put a stop loss as close as you want from your entry point.
      That's the 2 only things a trader can control.
      The questions are : how often are you getting stopped out and do you make a profit overall?

      I was stopped out from my short CAC40 at 4100 yesterday at 4120 this morning :)

      See, it's not 100% success game at all.

    3. so I'm getting stopped out sometimes, but you are correct that it is my objective, and how I think T.A is useful : identify potential reversal areas with a close support / resistance in order to put a stop loss just behind my entry point. It means getting stopped out more often. But it also means very small losses and a large enough risk reward ratio to compensate for the times I am wrong;

  4. hey Dan
    Whats yr thoughts on the meats FC LC charts look higher to me

  5. I see silver reached the $16 handle briefly in Asian/London trading and gold is still on the move...down.

    Looks like an interesting day on tap overall with oil trying to bounce away from $80 again.

  6. Here's an article that applies to this conversation, though somehow the author (Steve Saville) tries at the end to put a somewhat bullish spin on it. The title of the piece is "Why is gold mining such a crappy business?".


    Personally, I see no reason to be positive on miners any time soon, like for years and years, as I explained on this blog recently.


  7. Grain Open Interest Changes: #corn +3,113 #soybeans -15,104 #wheat +3,698 #kcwheat +2,405

    USDA's daily export reporting system today notes that China bought another 4.3 million bushels of current-year soybeans.

    Brent crude jumps on Saudi oil cuts in September.

    Eurozone Debt to GDP 2014: 94%

    diwali is today hey hey!

  8. I think there are some bargains in the Goldminers. That's for private equity buying them out of bankruptcy.

    1. Lots have no debt and tons of cash in the treasury

    2. M.

      Sincere advice. Take trx. No debt because noone will loan it money. 1.5 million left of the 45 million raised and spent since 2010.

      Thats the company run by "mr gold".

      If gold goes to 1000, 4 times the 2000 price, the shares could easily be priced at a similar ratio.

      The average junior will not survive. The ones that will, will likely lose another 50% from here.

    3. There is companies making profits , with no debt and money to spend.

      Plus , how many of the miners went under in 2008 ? Not that many. People have been predicting mass bankruptcies for the miners since 2008. It's not happening. There will always be liquidity around to keep things rolling. It's happening right now.

      50% lower from here ? Funny how ppl get bearish at the bottom.

    4. WHAT!? I read that the gold miner industry is among the most in-debt on earth. They took on MASSIVE amounts of debt during the bull run between 1999 and 2011. This "M" guy is feeding everyone yet more goldbug B.S. Amazing how these charlatans NEVER EVER give up on worshiping their golden calf.....

    5. Lol. Well you read wrong.

      If it's such a bad business , they how did the business model manage to sell so much debt ?

    6. The bottom is in, sais "M", (from europe ;)

  9. US dollar on the highs, grains on the highs, stocks on the highs, meats on the highs.

    as we see again and again the hedgies moved off shore and moves happen while america sleeps.

    wheat: russian wheat going into dormancy in worst shape since 2009...brazil wheat assn says crop to be 1mil tons smaller than previous outlook.

    NQ new high o move 3986.75 still key pivot around july high and 4000 round number. let's see how SPX does if it can hit the 1950 round number big option strike.

    AAII bulls (50%) already back to an extreme. Bears (22%) just +1% from an extreme low. Spread at an extreme too.

    wowo usd/jpy 108


  10. Looks like the 3:00 pm London Fix, along with the EUR testing 1.26 again, is going to take gold below $1220 pretty soon by the looks of it.

  11. Thank Dan for pointing out gold bearishness. I have listened to Larry Williams for pending long gold. He based on small speculator overshot and seasonal. For 2 years, large speculator extreme short has signaled long gold as well. This month not different, the level of extreme short bigger than that of last time so conclusionly gold would be up.May I salute you. Otherwise my account could be gone by 25%.Thank again.Btw how do you know 1240$ is exactly a critical level for gold ?

    P/s: Im a student of Larry Williams. To be fair, his recommendation shorting BIG Sp500 on Monday Sep 22 pretty awesome. However I out at the day of FOMC early due to volatility and my position so big as well. If I stayed I could have doubled my account.

    1. Linh H Le, please be careful. If you are making bets so big that you could have doubled your account in a few days, you will eventually be wrong on something and your account will be gone. And once it's gone, it's gone. There's no tomorrow's trade at that point.

    2. Thank you for your concern. Actually it got a tight stop just 5% of my account so risk controlled. Combined with Taylor Trading Technique, I shorted even the day before, right on the top of Friday. Larry just said on the weekend later then I confident to short more at Asia Opening. It was a nice short but the result not so good. `The day of FOMC I must be out. I never seen such volatility in the market. The day of Sp500 I tried to long bottom as well but it moving so fast . I guessed anyone the same, few could catch the level around 1830 but I knew the one, he longed at 1837 . Even before shorting, I believed SP500 will make All time high again but actually I just scalping because the market going too fast

    3. P/s:actually to be correct I could have tripled my account not doubled. Goodness, the first 2 weeks of Oct so crazy, wasn't it ?

  12. Hubert, I saw your post about the sale in gold at 1239. Just another of fabulous trades. Works almost immediately. Like the 1314. That is not just lucky. Its like watching DaVinci paint the Mona Lisa. Its a work of art.

    1. Unfortunately I was not listening Linda Raschee Bradford to short gold at DNC20 1250$ . Her strategy is trading oppositely the way of Turtle trading. Oct 21 was a flying Buddha and gold has been above 5SMA for consecutive 12 days. Warning overbought ! But I was so obvious and still tried to long. Thank Dan for giving me a second idea. I quit long yesterday then and pending short, instead

  13. Hucksters are everywhere, in every facet of investment, and wherever there is money or striving for power. The vast majority of people are susceptible to this sort of manipulation by the unscrupulous, whether it be someone promising you a fortune if you only follow his advice, someone who can read the future if you cross their palm, someone who can create a new future for you if you vote for them, some dictator who will lead you into battle to protect your country and family, or some extreme religious leader who can give you eternal life and happiness in the next world.

    Nevertheless, belief is one of the most potent driving forces in our existence, and without it we could not survive. But it is a two edged sword, one of great upliftment that can lead on to great things, or one of enormous destructive power, especially when controlled or directed by malevolent characters on the susceptible, for the benefit of the former.

    According to Hegel belief creates a force called the thesis, and that force will inevitably conflict with another force which he called the anti-thesis, out of which Hegel said was engendered a new force called the synthesis. The synthesis then becomes the new thesis, opposed by a new anti- thesis, and then a new synthesis. Thus momentum for unending change is set up by conflict of beliefs.

    Thus in a paradoxical and bizarre way we see that opposing beliefs are intrinsic to human survival, that without conflict we could produce nothing. Therefore, the hucksters and liars and cheats, strangely enough, also play a vital role in the development of humanity.

    1. @Peter Dykes--speaking of hucksters, I sold 1/2 my TRX Jan $2 puts today for .55 today (bought .25). Small beer,but beer nonetheless.

    2. Where would we be without Sincliar.

    3. Possibly not involved in the PM's enough to venture down the rabbit hole he and others provided.

      Live and learn...and move on.

    4. Funny how all you guys think the most marketable good is being peddled my hucksters. Central banks seem to be buying into the hype . Wonder why..

      And nobody's taken more losses then the hucksters themselves

    5. This comment has been removed by the author.

    6. I bet you never checked sedar to see hiw many millions of shares Sinclair sold into 2011.

    7. Ps, the exeption may be Tekoa da Silva. He had to take a job with Sprott.

    8. Have the hucksters actually taken more losses then anyone else?
      How so?

      Loss of credibility, certainly so.

    9. Since you all love Sprott so much , he is the biggest share holder of some of these miners.

      Hate-on all you want. Just because you can't handle the mauling of the bear , doesn't mean the guy who convinced you is a huckster.

    10. He is not. His funds are. Ans his funds are owned by the public.

      Sprotts business is selling gold and miners not investing in it.

    11. This comment has been removed by the author.

  14. http://www.businessinsider.sg/paul-tudor-jones-and-druckenmiller-panel-2014-10/#.VEkmIxl1HqD

    Maybe Jim was right and "This was it" IN 2011!

  15. Thanks Jasper...that was as close to being spot-on as anything I've seen from back then.

    The only thing I would've agreed with him back then was that the USD is far from dead.
    I wouldn't have accepted the commodities going into a steady downtrend back on 2011.

    I've been in that deflationary camp since early last year but not so in 2011.
    Like I said earlier...live and learn and move on...and quickly!

    1. I move on and I learned how to spot psychopaths in the markets l. Ill do well.

      But im 40 and didnt lose 80% of my pension but a couple year savings only to some sick sociopath lying mining stock operator cum gold guru.

      Followed by sheep pictures with comments how the sheep "deeply enjoy their sheering" right at the june 2013 bottom.

      Magoo is right, they love him for it.

    2. I'm 30. But from Canada so I'm ok in gold cuz I bought in a dutch disease country. And I'm down 38% in my gold stocks . Big deal.

      Gold is still gold. If some thins about it were not true, it wouldn't be worth anything at all

      Just keep lending the U.S. Govt your money. Get rich

    3. Productive assets paying dividends. Hoarding gold is not investing.

      There is more in this world then gold and money.

      As to you remark that 38% down is a big deal. Do you care at all about the blue hairs jimmy recommended to sell their pensions and take delivery if goldshares, TRX in 2008 before the crash and again in 2013?

      I know a couple over 70 year old that qent back to work becauae they are ruined.

      So that jimmy can fly business class and his daughter can ride dressing horses.

      Forget about the evil goverment and evil banksters bs. There is orders of magnitude more evil in the gold bug industry.

    4. This comment has been removed by the author.

    5. Agreed Jasper, hoarding gold is not investing. I am sure you are right about some blue hairs listening to crazy Jim and losing their asses but I am afraid the bloodbath that will occur when these propped up markets crash will be far worse. Most of the people I know that invested in gold stocks are well to do speculator types who have been scratched but not cut too deep.

  16. SP500.


    Convergence of resistances around 1965...but hey, I don't know anymore where this crazy rocket is going to stop. There is now a divergence on the 4 hour time unit for MACD, but what is a divergence on this unit when you have such marubozu bullish candles on the daily time unit?
    And if we close the week at the top, this plus the hammer last week...so it is dangerous to stay in front of the train at this time.
    Plus, out of a tendance en ligne, the target can be a last upwards correction going above the last historic highs. So...2040 before the crazy train derails? Why not.
    I just see 1965-1970 as a potential strong resistance just ahead.

    1. @Hubert - looks like indeed SPX hit your resistance level today. Good call yet again! Who knows, an Ebola patient in bankers' backyard and Amazon earnings might derail the crazy train.

  17. TRX is slightly bouncing off its low today.

    GLD has bounced off its low today.

    Will TRX go below $1.50 and stay there tomorrow? I doubt it

    Will GLD close lower on Friday? Probably not.

    Which means we are probably still range bound waiting for a “real” change.

    Perhaps the big boys are still contented making money on these smaller ups & downs.

    1. Id say trx will bounce soon.

      Im almost 100% sure trx will be trading in the 50 cents to 1 dollar range in 2015.

  18. Believe or not, I see gold fluctuates accordingly to Delta Society of Welles Wilder. It predicted short term high on Oct 19. The next bottom Oct 25 with deviation of 2-3 days so it would go down for a couple of days. Usually, gold running up for 12 to 15 days consecutively above 5SMA then it turns back to the down trend. I see SP breakout. It could go to 2100-2150 easily so gold would be pushed down as well. On other hand, the last week of Oct very bullish for gold. If going against the seasonal, it need to be down fast.

    1. Seasonal hasn't been in play since 20011

    2. This comment has been removed by the author.

    3. 2013 from June to August very good seasonal and Delta predicts very well this year. You can even have profit if seasonal not fit ,just depend how you spot " seasonal divergence"

  19. Keep in mind this prediction by Jim Willie was written 2 months after the May 2011 silver massacre.

    He couldn't have been more wrong...and some people still take him seriously?

    For entertainment purposes only...

    Jim Willie Discusses Deflationists and Silver
    July 21, 2011

    Jim Willie is back with a scathing attack on the deflationist knuckleheads (DK’s), and an excellent fundamental silver analysis as well.


    A powerful dynamic has been at work for a few years. A Silver deficit remains a boon to investors but a plague to central bankers. The USGovt silver stockpile was depleted in 2005. Gold will continue to fight the political battles in the open fields. But Silver will run through the broken battle lines on a white horse to take triple the price gains. The march toward $100 Silver sounded like lunatic forecasts two years ago, but are more realistic with each passing month nowadays. Silver is growing in investment demand, the object of purchase by central banks as a reserve asset in allocations....(cont.)


    1. The Golden Jackass is well named, and he knows himself for what he actually is.

    2. I am thinking of producing a cover version of Marvin Gaye's classic "Heard it through the Internet"
      The inspiration for my soon-to-be-masterpiece is, of course, Zerohedge:

      First, I think a reminder would be timely. Those who seek to trade gold are at substantial disadvantage:

      - they line themselves up against too-big-to-fail banks which have the implicit backing of the taxpayer to bail them out of their trading positions;

      - furthermore markets have become so manipulated and dangerous that gold should be considered as insurance against systemic risk instead of a punt.

      and there you have it - the suspension of disbelief, the essential precursor to any work of fiction (in this case a Comedy of Errors which over time morphs into a Traged of Epic Proportions)

      and here, Ladies & Gentlemen, is the final masterpiece: http://www.zerohedge.com/news/2014-10-23/why-gold-undervalued

      Altoghether now for the Chorus "USD fiat currency is in monetary hyperinflation, which is not reflected in official price inflation"

      a catchy little riff, if ever there was one

  20. Oop's...wrong link above.

  21. This is the last night of overnight trading for #Livestock. Have fun, bid right, don't let the bed bugs bite!
    ...somebody paid 170 for oct cattle in texas, a milestone looks like from all the yelping.

    SPX closed right on the 1950 round number, NDX closed right on the 50-day MA.,,, on the SPX the high o day was the 20-week MA (1963.5) which is also the 100-day MA since there are 5 trading days in the week. SPX 50-day MA above there.

    VIX had the narrowest session in about 12, so going with the break in VIX tomorrow is the setup... of course vix down is buy stocks and vix up is sell stocks.

    every friday has been poor for precious metals futures and the HUI XAU for many many moons, can the pattern ever change.

  22. I think this was intended as a direct shot at Dan for his view on manipulation/GLD from Jesse's Cafe Americain:

    Wall Street is drawing pictures on the Comex price charts, and there are those who will keep their heads down and continue to read them as if it is business as usual. They will not look at the reports from the new markets in Asia. They will ignore the uncomfortable and the unfamiliar. They are oblivious to the approach of change.

    They do not understand what is occurring in the world's financial and monetary structures. They only know what they have seen in their short lifetimes, and in their familiar places. And naturally they do not respect what they do not understand.

    Gold is moving from West to East. And therein lies both risks and opportunity, to those who will have an eye willing to see it

    1. Well thank god we have Jesse to explain to us what we dont understand.

    2. I don't see any of that as a specific shot at Dan but I do recognize your inference as trying to twist it into something it doesn't appear to be except possibly how you feel, not Jesse.

    3. One of us... One of us... One of us...

    4. West to east... West to east.. West to east..

  23. 34,000+ (21.7k puts, 10.7k calls) options open at $10 strike in Nov14 #soybeans.
    ..another volatile op-ex week for beans, perhaps GC SI HG will show life for their op-ex next week.

    Corn eased higher throughout the session after better than expected export sales were announced. Support from fund buying and spillover from strength in the soy complex were also cited.

    wheat had dismal export sales of 11mil. HRW gains were limited by news Argentina approved 400 tmt.


  24. a trip down memory lane... gold was at 1698, silver at 33.83 at the time of this posting.


    1. That was quite a bubble in gold eh. Not. Nobody owned it. Nobody believed it. Nobody except a few gold bugs.

      But I guess it's all over now. The first bubble ever that the general public got right.

    2. tell that to my retirement M. yup, stupid old me bought a few dips (the "f" really doesn't stand for few). well, i have no one to blame for losing all my money but myself, right? even though i'm a stupid dum bass, and soon to be a worthless eater, it was fun while it lasted. maybe if i live to be 100 years old i'll get another chance at timing the next precious metals bubble right. one thing i won't do is buy those dips - wow was that ever piss poor advice Turd! look at those numbers above! first dip bought near 35 for me. another at 22!!! eat another hat Turd for 17, or even better,cram it up your backside. sad thing is that if i live to be 100, likely i'll still be working - if i even can find work. already at 50, this economy (and the wing-nuts) say i'm worthless. thanks though for keeping the hope alive M. i still have about 10 ounces of silver left, and my first ever onza oro. so if gold hits the stratosphere like Organ, Turd, Maguire, F. Santa, and the other piece of shit conmen say, by 12/31/14, maybe i won't be evicted in the dead of winter. so thank you so much "M" for keeping the hope alive. i really mean that.

      i'm just about pissed off enough to post this. oops.

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

    4. http://www.zerohedge.com/news/2014-07-12/silver-150oz-possible-coming-months-due-tiny-size-physical-market




      oh, how we laughed....

    5. The ones that sold got it right. You know, the evil ones, plus Jim Sinclair.

    6. the truly astonishing thing is the stamina which these Muppets display: I don't know if they have invented a form of emotional viagra or something, but there is apparently no stopping them, day and night, pounding away with this repetitive rythmic jive. At least it's not me that is getting forked, but the constant noise is quite troubling. Especially the moans.

    7. Peckerwood
      Sorry to hear about your loss. I somewhat older and was much more diversified so took a smaller hit. Still feel the pain though.

      I have a brother in law who has been a bug since forever. Did well in the run up and gave back half in the long gold bull market. He was one of those looking for $5,000 an ounce. Sorry he could not take profits.

    8. thanks Mike. too often people forget that investment mistakes are life changing. yes, many folks are going through crushing hardship having listened to the metal charlatans. since accepting my losses, and broadening my view, i have found that these type of con men have always existed, though the internet exponentially expands their reach. perhaps i can save someone else by my posts here.

      if you are reading this Turd, what happened to the latest HEH, Andrew Maguire news? guess that went over like a lead balloon, like all your other "just trust me folks". but the duration and impact of these fairy tales is waning. you are absolutely pathetic Turd, and may you get your justice.

    9. This comment has been removed by the author.

    10. Hang in there peckerwood! :-)

      HEH? That was patently ridiculous and it was at that point over there I knew he'd say or assert just about anything to keep stringing people along.
      My gut feeling on what I was witnessing was spot-on and the fact he admitted that most of what he asserted was to keep folks interest and hopes up (after the May 2011 silver massacre) was a glaring red flag that some chose to ignore.

      The only folks left over there that still believe that faith based BS ("just trust me folks") from Mr. Haney (of Green Acre's fame!) are the same folks who evidently overlooked the fact their message system was spied on....and the site made no apologies of that practice that went on for over two years that's still in place, no doubt.

      Some people have no problem overlooking that which they would normally have a major problem with....like the NSA uproar.
      Makes little sense.
      But then again...when an obvious paranoid headcase is allowed to rant obvious nonsense and then unapologetically and antagonistically spam any and all forums with half-crazy drivel it tells me the management style over there is still oblivious to how that site went off the rails of credibility.

      Try as they might...it's unFIXable and far too late.

  25. Just wondering why the donkeys out there caught long and wrong do not talk much anymore about how much we have gone up since '98 in the precious, precious metals. Oh, is that because we are now into the 4th year of a bear mkt, or something like that? Keep stackin' boys, because deep down inside you are really looking to lose.

    1. This comment has been removed by the author.

    2. oh, they're talking alright - you just need to know where to listen: the Usual Suspects are the ones who need people to keep purchasing come rain or shine, because no traffic = no margin: try these for size:







      and the best til last: http://www.silverdoctors.com/harvey-organs-update-gold-silver-whacked/

      "we had a huge questionable withdrawal of gold from the J.P.Morgan vaults "

      .... and Oldie but Goodie, as Karen Carpenter might have observed

    3. When I was wrong I'd listen to Turd Ferguson
      Betting on TPTB
      When JP Morgan sold 'em short
      I'd winge and moan

      Those were such crappy times
      When not so long ago
      Andy Maguire would string us along
      And now he's back again
      Just like those cheap con men
      Trying hard to sell and sell

      Ev'ry sha-la-la-la / Ev'ry woah-woah still shines.......
      Ev'ry trash Silver thing
      That their claiming will win


  26. It is not about their belief on gold but the persons they worship. In Dollar Vigilante Facebook group, someone bashing me when I criticized Eric Sprott. Is he billionaire so no one dare to comment about him ? Or the symptom "Dear Leader" imported from East to West whereas gold from West to East ? World mad, isnt it ?

    1. eric sprott is another made up billionaire by eric clown king, just like all the world renowned 55 year consultants to the world donkeys

    2. meant to say 55 year veterans of the mkts; sorry Richard Russell, I know you are a 60 YEAR vet and frustrated history teacher

    3. i like your perspective Linh. you have it right. it is the worship of money in our culture. somehow capitalism has been bastardized to the point that all that matters is how much you got, no consideration how you got it, or who you ruined on the way to the top. just look at Donald Trump or the Kochs. btw - i bought Jaguar Mining because of Eric Sprott. good grief. worst investment of my life - really. just freaking unbelievable. i'm broke and he still has his billion.

  27. This is exactly what I've been talking about as far as how all the massive QE asset purchases the last several years will have an almost dividend-like reinvestment legacy that will continue to support the market structure for years without any additional QE needed in the near future.
    I highly recommend reading this in it's entirety.
    Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE

    By Jeff Kearns
    October 24, 2014 12:00 AM EDT

    Quantitative easing may turn out to be a gift that keeps on giving for the U.S. economy.

    As the Federal Reserve prepares to end its third round of bond buying next week, the central bank plans to hang on to the record $4.48 trillion balance sheet it has accumulated since announcing the first round of purchases in November 2008.

    That will continue to keep a lid on borrowing costs, helping the Fed lift inflation closer to its target and providing support to a five-year expansion facing headwinds abroad, from war in the Mideast to slowing growth in Europe and China.

    Holding bonds on the Fed’s balance sheet limits the supply of securities trading on the public markets, which helps keep prices up and yields lower than they otherwise would be. That provides stimulus to the economy just as a cut in the Fed’s benchmark interest rate would, according to Michael Gapen, a senior U.S. economist for Barclays Plc in New York and former Fed Board section chief in charge of monetary and financial markets analysis.

    “Preserving it will continue to support the economy,” Gapen said. “The Fed message is we think we’ve done enough to generate momentum and keep the economy on the right track. Now we’re going to wait and see how things go.”

    The Federal Open Market Committee plans to end its purchases of Treasuries and mortgage bonds at the next meeting Oct. 28-29, according to minutes of the last gathering.

    Maintaining Holdings

    Chair Janet Yellen opened the door to keeping a multi-trillion-dollar portfolio for years, saying a decision on when to stop reinvesting maturing bonds depends on financial conditions and the economic outlook. Shrinking the balance sheet to normal historical levels “could take to the end of the decade,” Yellen said at her press conference last month.

    Fed quantitative easing has provided the Treasury market with a steady and consistent buyer, helping to keep yields lower than they otherwise would be. The central bank is now the largest holder of U.S. government securities.

    If the Fed continues to hold the securities, it “will continue to put some downward pressure on rates relative to what they would have been had the Fed not had this balance sheet,”...(cont)

  28. yup, the economy is improving because the FED says it is. suppose that's about all the firepower they got left.

    the article above makes no sense. rolling over the bonds does not add additional stimulus. also consider that the government will continue to run deficits as far as the eye can see. is that not supply of new paper so supply and demand says that bond prices will fall, on their own, which i believe is what the FED really wants, but doesn't dare say. anyway a neutral stance at this point would require the FED to at least monetize the new issuance. i think that article deploys circular logic, and smoke and mirrors. not shooting the messenger though DPH :-) just call me a great big FED skeptic.

    1. I hear 'ya on that peckerwood.
      The only thing I can add is that in a perood of historic and unconventional monetary policy that there's no shortsge of things that make no sense to many of us.
      But if you consider how Fannie Mae and Freddie Mac were able to generate BILLIONS of dollars back into the system (via interest income) after they were bailed out then just think how much residual juice is left over from the huge injections of asset purchases that took place the last several years.

      Bottomline to me, even if it doesn't make perfectly clear sense to myself, is that because they (Treasury/Fed) can move huge amounts of bonds and liquidity around and apply it anywhere they want in their forward looking ledgers even if those entries are misguided.

      Unconventional monetary policy allows for unconventional bookkeeping. Those that make the financial rules can fo anything they want.

    2. it is insane. but things have gone on like this for long enough that people are forgetting what normal is. case and point - 75 cents interest per year per one hundred bucks in a savings account. guaranteed loss of (real) principle. but all i hear from the financial press is how great the future will be, and soon. read some of my posts at that other place. where i live people are killing themselves. yes, the economy sucks and people are losing hope. faced with the potential of homelessness, after doing things right my whole life, i completely get it. and lying to the public for years on end, saying things are getting better, when they aren't causes people to internalize the pain. they think their situation is all their own fault. this is evil plain and simple. when this all ends, and it will, i hope at least some bankers, and their paid off pol shills are dangling from lamp posts.

      rant off.

    3. "it is insane. but things have gone on like this for long enough that people are forgetting what normal is."

      Several years ago I kept mentioning..."We're in the moment."
      What I was alluding to was how some of the previous "norms" (monetary policy & FINRA bookkeeping) would never be the same.
      That's the new normal. They'll make it work.
      And like I've stated previously, they have time on their side not to mention the ability (and necessity) to change whatever rules they previously adhered to and create new financial/bookkeeping guidelines.
      Business as usual. It's always been that way and it'll always be that way.
      It's in no one's best interest (except for the doomers out there) to let "the system" crash when all they need to do is make adjustments (of all types) to fit whatever it is that might potentially stymie the CB's.

      They'll make it up as they go along and changing or adjusting how they account for this stuff (massive unconventional monetary policy) by implementing massive unconventional financial regulations to make it work.
      Those who write, pass and enforce the laws can do whatever they want.
      We're all witness to that at this point.

      They'll make it work because collapse and failure is unacceptable.

    4. Agree with you completely, Peckerwood. Everything is upside down including moral values, and sense of decency. If you are too big to fail you get a pass on criminal responsibility, and can commit the same crimes again and again with impunity - but woe to the small time crook, who goes down for sentences viewed in most other countries as appalling. We have a two or three tier Justice system; like a two or three tier medical system, depending on who you are and how much money you have. In our crazy world savers and the retired are punished, but banksters gambling on a huge scale with OPM are rewarded on a grand scale, but if wrong get another go, and another, until they get it right. In our Orwellian world debt is good, and saving bad; just spend, spend, spend. Our 'leaders' and politicians are all on the make, and will never take a stand, so nothing will change, until one day it all collapses.

    5. DPH, making it up as they go along, is exactly right, but all the time pretending they know what they are doing. Being in the Fed is all about acting, manipulating the psychology of the people, and playing games with 'dissenting' members mouthing off and the like, to keep us in a perpetual state of confusion, but always with a bias to the positive. All orchestrated and prearranged of course, and we wait with bated breath for the FOMC meeting, or laughable Fed Minutes, and are amazed that they are utterly predictable, except for perhaps a word or two. This is how they 'run' the economy, until one day they are no longer believed, their credibility smashed, and rejected even by the dumbest of the dumb, then watch out below!

    6. PD...yep, that's how I see it.
      So many things are based on perception and the projection of knowledge and confidence in whomever SEEMS like they SHOULD know exactly what they're doing.
      When an obvious moment ocurrs where a crisis of confidence happens is when things get dicey and they no longer seem trustworthy.
      The..."Uh oh, brace for impact!" moment.
      They'll do everything in their lawmaking (lawbreaking?) ability to shape the playing field as necessary. Business as usual.
      But the longer they string things out, by whatever means possible, the more likely they are to survive it and move on.
      We're watching it happen day by day, year by year, and before you know it a decade went by...then two etc.

  29. Peckerwood

    The same thing happened in 1929. Just have to wait. The laws of gravity are still in place.

  30. "...can't handle the mauling of the bear..."

    Have no idea what that means. I think most of us simply don't respect or care for the cock-sure shills out there who either have a cyclops view and can't stand being wrong OR are purposely misleading while probably playing the paper short while cheerleading the long side of that trade.
    Let's admit it...if Sprott or Sinclair etc weren't shorting the markets at certain times they would've been fools or simply blinded by their obvious gold/silver fever.

    If they're fools, albeit rich/shrewd fools, then why would folks take them seriously because at this point it's patently obvious they were completely wrong and gave horrible guidance for over three years even up to now.
    Why would anyone continue listening or take them seriously?

    If they're not fools, which is likely, they've been purposely misleading people.
    It can't be both.

    Just because a person has made a lot of money doesn't give them some sort of free pass that excuses them from ever being unscrupulous or a fool.
    People get blinded by the wealthy sometimes and assume they're usually trustworthy.

    Sinclair, Sprott, Willie and all the other cheerleaders out there are either fools blinded by a gold/silver fever or they're shrewd manipulative types who seek excessive attention with their wild relentless claims disguised as guidance.

    Wolves in sheeps (shearing) clothing....and the sheep were the hardcore bugs who can't even fathom that their basically a herd their dear leaders realize they can herd.

    I'm kind of surprised some smart people haven't realized or accepted that to a certain extent that they've been used for someone else's personal gain and that most of those Dear Leaders will say ANYTHING to keep people onboard because they're afraid it will effect their bottomline.

    That's manipulative and disingenuous and that type of behavior has negatively effected many other people's bottomlines.

    And they could care less.

  31. From the day one, I believe your FED will be successful to boost the economy based on QE. I feeling the West governments learn and apply some technique from the East to manage theirs society and economies accordingly. That called social and economic experiments. You don't need to ask other permission to do a big thing. Your guy Obama born in Hawaii, grown up in Indonesia so I see he does things without bothering to ask you or referring to Congress. Just does what ever he likes. Gun, health care, drone attack, eavesdropping. Blame game is also Asian culture advantage. I see him so much identified with Asian culture where never appreciated nomadic way of life. Unfortunately, the first time I red "Asia Gold" by the author Marc Faber and I instantly believed blindly to so called experts in the West in terms of prediction such as 4000$ for gold or 500 SP. Poor me at that time. Now I free from their ideology. They talk non sense, never stopping just like communist propaganda about a socialism heaven on earth but it never come.This world be like hell when the West importing so bad things from the East (yoga actually is a form of worshiping many gods , the good effect of releasing stress just a minor feature ) and in turn, the East learning and copying so many worst things from the West. That is globalization ! I want to learn the best things form the West (individualism+ Christianity+ humanity+ freedom and liberty+ Entrepreneurship+ nomadic culture) but the more I learn the vague I get. Instead I see so many things actually based on the East and embed and repeated to the West now. That kind of funny. I really shock when some western thinkers call to apply some social and economic experiments done by Mao and Stalin to Western societies. Is that QE kind of economic experiment ? It will do continuingly for 10 years ? Crazy.

  32. Nice comments Linh...I'm glad you're hanging around here. :-)
    Nice to get an alternative viewpoint.

    As far as American culture goes....in my opinion, large portions have been distorted beyond recognition and in some respects it's become a version of "life imitating art".
    The mainstream media/entertainment industry to be exact.
    The distorted and perverted/violent aspects of that industry has polluted and shredded any remaining thread of decency or respect that once existed in seemingly simpler times.
    Nothing is sacred any longer and the various types of messaging in the various media has had a profound effect on what people focus on and are distracted by while dynamic societal changes aren't interestng enough or possibly to bleak in some way that it's preferable to just look the other way.

    Imho...Hollywood/MSM has had a toxic and divisive and destractive effect on our culture.

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