Global Interest Rates Plunging

Further evidence that the reflation schemes of the Western Central Bank are apparently failing can be seen in the collapsing yield across the global bond markets.

News out of Europe this morning that March Auto Sales fell to a TWENTY YEAR LOW has shaken the confidence of investors in the demi-gods manning the turrets of the Central Bank towers. It seems as if even the mighty German economy, which has heretofore been the stalwart among the European economies is not immune from weakness.

Dow Jones is reporting that the Swedish Central Bank just cut that nation's growth outlook for 2014. The Bank of Canada lowered its forecast for this year. Remember, it was just yesterday that we received the projections from the IMF detailing their prognosis for global growth by revising it lower as well.

The result - a mass exodus out of stocks (for the time being) and back into the "safety" of sovereign debt. Investors figure that the Central Banks will be there to mop up any excess supply of bonds in effect watching their backs for them.

Need some evidence? Look at the chart below. The yield on the Ten Year Treasury note has hit a FOUR MONTH LOW in today's session. It was over 2% a little over a month ago and is now down below 1.7%.

This is what has Fed governor Bullard so concerned. These guys can read what is happening. It is also why copper and crude oil, two key economic barometers continue to plunge.

What will the Central Banks do if they current bond buying programs still cannot generate enough consumers/businesses to borrow and spend????

By the way,  I laid out the data in this format because this type of chart tends to cut through the "noise" and give a cleaner view of the larger trend.

Federal Reserve's Bullard: Worried that Inflation is too Low

That is the headline on one of the Dow Jones newswire this AM.

Bullard is head of the St. Louis Federal Reserve Bank (that is the one with all those nifty databases by the way on economic statistics).

He made a comment about the Personal Consumption Expenditures Price Index or PCE as it is commonly referred to and noted that he was concerned about it "running very low."

I have to give credit to Mr. Bullard when he noted that the Fed is limited in its ability to impact the labor market. He said that is best left to labor market policies themselves.

Bullard appears to be uncomfortable with the Fed's  focus on the unemployment number as a target for its bond buying programs.

I bring this up this AM because Copper is breaking down and entering Bear market territory while Crude Oil and gasoline prices are also weak. We will want to keep an eye on that.

Grains are also mixed this morning with the exception of new crop corn that is up over planting delays ... completely unwarranted in my view... associated with the cooler than normal weather in the Midwest, and some strength in wheat. Market participants are constantly underestimating the ability of the US farmer to get a crop in the ground. They will plant in the dark if they have to.

Gold is showing strength at this juncture however as it appears the growing number of reports detailing extraordinary demand for the metal, particularly overseas in Asia, are perhaps making some bears a bit less aggressive this morning. Truth be told, I do not like to see markets pop like this without retesting the recent lows. Spiking bottoms make risk/reward decisions very difficult. Better to see the market move lower and see whether it uncovers more selling or more buying on the way back down. That is a much better signal.

The problem for gold today remains what it has been seemingly forever now; the gold shares are continuing to sink lower stretching that HUI-Gold ratio to nearly cosmic proportions. Something is going to need to give here fairly soon. Either these gold stocks are going to bottom or the price of gold is going to have to move lower yet.

When you are knocking on levels seen at the very inception of a generational bull market ( it began in 2001 - the ratio is at the exact same level now as it was then), something is amiss. Keep in mind that the ratio at that time was at a low because gold was coming out of a TWENTY YEAR BEAR MARKET that began back in 1980 after it peaked out near $850. Here we are after a decade plus BULL MARKET and already the ratio is down at the same level it was at the end of a TWO DECADE BEAR MARKET. That makes no sense to me whatsoever in just thinking about it.

I am not sure what the market is saying about some of these mining shares but one has to wonder if we are going to soon see some very big changes in that industry.

Incidentally, the US DOLLAR is on the receiving end of safe haven flows today with the Euro, the Pound and Swissie all sharply lower. The commodity currencies are also weak with the Yen coming well off its overnight lows as it too continues to get those safe haven flows for some bizarre reason that I will never be able to understand.

Silver is holding up better than I expected given the sharp down day in the Copper market but it seems to be getting some support from the resilience in gold this morning.

Long term Gold Chart

In attempting to discern a stopping point for this decline in gold, the best we can do is to take a look at the longer term chart. The extent of the selloff has been so swift, so severe, and unprecedented in terms of my own experience based on the percentage decline, that one would expect the selling to have played itself out for the time being. This does not mean that we should expect one of those "V" bottoms and an immediate resumption of the uptrend. Rather, I think what we will see is an intermediate bottom followed by a trading range as gold trader/investors attempt to ascertain what we can expect next.

From all the reports that I have been reading last evening and today, gold coin and bullion demand is soaring. A report on Dow Jones last evening remarked about the surge in demand from some of the bullion dealers in Singapore. Further stories about gold coin demand continue to appear today. The break in price has attracted a significant number of purchases by those scooping up what appears to them to be bargains.

Also, some industry analysts have been tossing around the number of $1300 as a sort of breakeven cost for the general gold mining industry. The thinking is that if prices were to move down below that level, mines would be sold off, closed down, etc. which would eventually begin to impact supply moving forward. Of course that is a much longer term perspective for short term oriented traders but it does go to show that at some point, the best cure for low prices, is indeed, low prices.

What remains to be seen is whether or not this strong physical demand can offset money flows of hedge funds out of gold and gold related items such as mining shares which are managing only the most feeble of bounces in today's session. The result has been that the ratio of the HUI - Gold price is now down to levels that it has not seen since April 2001, almost at the very beginning of the decade + bull market in gold. That is simply stunning.

My contention - until these pathetically weak gold mining share stocks begin to show some signs of life, it is going to be difficult for bullion to mount any sustained rally here in the Western trading session hours. Too many people here look at these shares as a forward indicator of where gold prices are going and trade accordingly. If they see sustained weakness and only the most feeble of bounces in price in the mining sector, they are going to sell gold rallies with impunity since in their minds, they have absolutely nothing to fear.

 Take a look at the following long term monthly chart of gold to get a sense of where we currently are. I have drawn in two different sets of Fibonacci Retracement levels, the first of which takes the entire rally beginning back in 2001 to the peak up near $1900 into account; the second which uses as its starting point, the 2008 level made during the depths of the credit crisis.

Note that gold has moved down very near the 50% retracement point of that entire rally off the 2008 low that came in close to the $700 mark. The HALFWAY point on any rally, is a major chart technical level. On this chart it hits at $1310. Gold made an overnight low near $1320 which is close enough for dirt work.

It makes some technical sense that it held at that point. 
If you look closely, you can see that BELOW that level, there is the 38.2% Fibonacci retracement of the rally that began in 2001. That level is near $1280. If gold were to be unable to hold above $1310, odds would favor it dropping down to this level.

I have also drawn in an Andrew's pitchfork. I know some guys like to use them on an intraday or shorter term basis; I personally do not. However, they have some value in my view for the longer term, bigger picture charts, particularly if their various lines happen to coincide with the Fibonacci points or horizontal support and/or resistance levels.

If you look at that big ugly black bar sitting on the chart for this month, you can see that the median line crosses it very near the 38.2% retracement level of the 2008 low (the dotted line in purple). That level is $1454.

What I would need to see to indicate at least the chance of some sort of turning point in this market, is a combination of strength in the mining shares AND a push through at least the $1454 level. That is doable but only if we see something to spark inflation fears on the part of market participants. The notion du jour is that the Central Banks have killed inflation in spite of their money creation binge. That will need to change, and we need to see some data that suggests it is changing, namely VELOCITY OF MONEY, to dissuade the broader investor world that inflation is upon us.

I was looking at some data on the wage growth today that pretty much sums up what the problem is for gold right now.... REAL EARNINGS, that is, wages adjusted for inflation rose a paltry 0.3% in March from a year ago. While that is up a tad the data revealed that they are down from 2008! In other words, real wages have gone nowhere since the credit crisis nearly FIVE YEARS AGO.

Some further analysis by Dow Jones on this data reveals something even worse, the peak was way back in 1973! That is a GENERATION ago! 

This is the problem - consumers are not gaining any purchasing power in real terms. They are being forced to raid their savings or retirement accounts or use their credit cards and head deeper into debt to try to maintain their standard of living. Some were once using their houses as virtual ATM machines by refinancing at successively lower and lower rates and taking the cash saved and spending that on "stuff". How long can a generation continue to do that, Fed policy or no Fed policy?

This is why I think and will maintain, no matter how high this equity market eventually goes, that it is nothing but an enormous bubble pumped up by reflation efforts of the Central Bankers. It is not build on a solid foundation but on a shifting house of sand. Again, as a trader I have to go with the tape and play the cards dealt me, but as someone watching this lunacy unfold before my eyes, I have to speak out against it as monetary madness.

Wall Street currently cares nothing about any of this. All it knows is that $85 billion a month is being alchemized out of air and fed into equities. Nothing else matters - terrorist attacks, increasing poverty, falling real wages, soaring food stamp participation rate, mediocre job creation, increasing government indebtedness, IMF reports about predicted slower growth in 2013 for the Euro zone in general, slower than expected growth in China, etc. Nothing!

Pavlov's dogs were so well trained that they salivated every single time a bell rang, food or no food. The Fed has so well trained the hedge fund community that they salivate every single time they see any dip in price, whether it is large or it is small; in they come with the buy programs. And why not? They keep getting rewarded for their behavior so they will continue to do so until they stop getting rewarded. Case in point - the S&P 500 has now managed to take back 2/3 of the losses from yesterday... Meanwhile, the gold stocks keep moving lower and lower and lower....

Oh by the way, don't forget, that we will also need to see the action in the bond spread market along the curve to suggest inflation concerns are mounting. So far, nothing doing there either.

What I am saying is that while it is certainly nice to see at least one day in which the enormous selling has finally let up some, gold has some serious obstacles ahead of it to convince those who have been very badly burned by this metal, that it is okay to come back into the water and get wet once again. For now, it is a spurned lover with competition from the younger, hotter, woman - the US equity markets.

CME Raising Gold and Silver Margins

It was just a matter of time before this occurred but coming at this time,it tends to feed into the margin related selling as those specs who are still long from higher levels and have been holding out by refusing to sell while they wait for the market to bottom are now going to be under even more pressure, particularly if this market does not find a bottom very soon.

Here are the new margins, effective as of the close of trading tomorrow (Tuesday). These rates are for speculators.... bona fide hedgers have a new margin rate the same as the maintenance rate for the specs.


Gold:

Old Margin     Old Maintenance      New Margin    New Maintenance

$5,940            $5,400                    $7,040        $6,400

Silver:

$10,450           $9,500                    $12,375       $11,250

China, Boston - derail equities

News of a slower than expected growth rate in China, combined with a heart-wrenching tragedy in the city of Boston, served to pull the rug out from beneath the US equity markets today.

Before moving any further, let me state my great distress at seeing the pain and grief of my fellow citizens in the city of Boston at what has been a generally festive time for that city and its inhabitants.

Once again a sad reminder that evil exists in this world. Between what is happening there, what is happening in the global financial system, and what is happening on a moral and ethical nature in this land, it seems as if the wheels are coming off of the bus of this society.

"If the foundations be destroyed, what can the righteous do?" asked the Psalmist in Psalm 11:3.


His answer?
"God is our refuge and strength, a very present help in trouble. Therefore we will not fear, though the earth should change, and though the mountains slip into the heart of the sea; though its waters roar and foam, though the mountains quake at its swelling pride.

There is a river whose streams make glad the city of God, the holy dwelling places of the Most High. God is in the midst of her, she will not be moved; God will help her when morning dawns.

The nations made an uproar, the kingdoms tottered; He raised His voice, the earth melted. The Lord of hosts is with us; the God of Jacob is our stronghold.

Come behold the works of the Lord, Who has wrought desolations in the earth. He makes wars to cease to the end of the earth; He breaks the bow and cuts the spear in two; He burns the chariots with fire.

"Cease striving and know that I am God; I will be exalted among the nations, I will be exalted in the earth.'

The Lord of hosts is with us; the God of Jacob is our stronghold."  (Psalm 46: 1-11)

Moving to the actual performance of the equity markets here in the US, I want to again focus in on the Russell 2000, seeing that it is perhaps the best indicator of equity investors' willingness to assume risk. Here is the final chart for the session. Note that the close was beneath both the previous support level and the 50 day moving average.

Note also the significance of the Fibonacci retracement levels posted. The first retracement level of 25% comes in at the 906 level. The session low was 904.91 with the close being 907.18. It is coincides nicely with the horizontal support line near 910. This market will need to hold here, right now, or it is going down to 880. which would also take it below the 100 day moving average.

Honestly, this scenario that we witnessed today in both equities and in commodities, is eerily similar to what we witnessed in 2008 when the JAPANESE YEN CARRY TRADE began to be unwound. You might recall at that time, the entire world of hedge funds were short the yen by borrowing in yen terms at inordinately low interest rates, and then taking those proceeds and investing them abroad into nearly anything that was not nailed down. Not only that, but then this brainless lemmings leveraged themselves to the gills in their rapacious pursuit of even greater profits to the point that they were all on the same side of the same trade with massive positions all leaning the same direction.

When the news began to surface that Lehman and Sterns were in trouble, there was a mad rush to the exits by these funds and literally no one, and I mean NO ONE, to take the other side of the trade. We saw a virtual meltdown across the markets that collapsed not only the equity world, but the entirety of the commodity world as well. 

Let me explain what I think is now happening - Gold had stabilized near $1360 even as the equities were weaker but when the Boston news hit the wires, the stock market began a sharper selloff with volume picking up. As it dropped through downside support levels, gold began to move sharply lower falling another $25 in literally minutes. It fell as low as $1335 before it bounced some.

While this was occurring, simultaneously, the Japanese yen was experiencing its version of a mini MELT UP. Fundamentally, there is absolutely no reason to buy the Yen, not when it is the express intent of the political and monetary leaders there to deliberately weaken it. Most speculators who have been around for a while in trading the currencies, know that the Bank of Japan is not to be trifled with when it comes to their dearly beloved Yen. If they begin to express displeasure about the level that their currency is trading at, specs had better be careful because they will annihilate anyone who dares to go against their intentions. Nonetheless, the Yen was up nearly 2% against the Dollar alone with a greater increase coming exactly as the stock market fell apart.

In short, the Yen carry trade is being unwound today and just like it crushed the gold price in 2008, it is what it now working against the gold price. The margin related selling then gets amplified as more of these carry trades (one shorts or borrows yen and then buys gold with those proceeds) are reversed. Gold then gets sold, along with the rest of the commodity world, and now, today, the equity world, and the yen gets bought - and this is important - REGARDLESS OF FUNDAMENTALS. Those are meaningless when there are such vast sums of money involved in these one-way highly leveraged bets.

If you want to know why I despise these Central Banks so much and why I detest what they are doing, just look at the results of their handiwork when it all comes apart. These people are the ones that created this environment in which SPECULATORS GONE WILD is the new normal. They prod, cajole, tease and practically entice them into making enormously leveraged bets, particularly on stocks, to give visually proof of the "success" of their bond buying schemes. As long as those speculators oblige, all is well and these masters of the monetary universe go around patting themselves on the back for their keen insight and ability to cure what ails the economy. Meanwhile, when something occurs that then upsets this nicely arranged apple cart, all chaos is unleashed in the markets as these complacent speculators, all belatedly wake up to the fact, they are now on the wrong side of a losing trade with no one to take the other side.

At that point, it becomes a sort of footrace to the exit to see who can dump their entire positions before the next guy can. There is no finesse, no attempt at scaling out, no attempt at subtlety - it is all overboard at once.

I am not sure when this pressure will let up but I am completely confident that if it does not let up soon, the monetary authorities are going to be forced to intervene yet again to come up with some sort of soothing words, vis-à-vis, policy action that they stand ready to enact to grease the tracks of the global economic train tracks. Certainly the Japanese monetary authorities are not going to put up with this again, as they were on the receiving end of an unwind back in 2008 and they did not like it one bit. As a matter of fact, their recent comments have made it evident that they believe as a result of this unwinding that began back then, the Yen remains overvalued in their view and needs to move lower.

Fortunately, this new yen carry trade has not been taking place for the same length of time as the former one did but nonetheless, we can still see what happens when Central Banks succeed at herding hedge funds all into the same spot at the same time.

 

Watching the HUI for Signs of a Respite to the Selling

The gold shares have been remarkably prescient when it has come to predicting the slide in the price of gold. We have mentioned that the ratio of the HUI/Gold was so skewed that something had to give, either the price of gold was going to have to drop further and at a faster clip than the HUI was falling or the HUI was going to have to start to rise to bring this ratio back into balance.

Seeing that the shares have led the price of gold lower, I think it just makes sense to look for a sign of a selling exhaustion in there first before the metal itself will bottom.

In looking at the following long term chart of the HUI, the technical damage is all too painfully evident if you are a holder of the mining shares. I think it was last week that I put up a chart of this and noted that since the bottom tine of the pitchfork had been violated, that the next technical level of support would not emerge until down near the 275 level. We are there now. Notice that using two different sets of points from which to sketch out the Fibonacci retracement levels, we have a confluence near the 75% retracement level of both sets of numbers. I have circled that with an ellipse on the chart.

As you can see, that is between 273 - 272. That is very near the low made so far in the session which is 272.60. Here is what to think of this. If this level does not hold the decline, and I think it will have held if the HUI can close today's session above 290, (The session is not over as I type these comments) then based on Fibonacci retracement theory, we are going down even further. There is another band of support down near 250 should we fail here.

I also want to make a point very clear here. Just because a market may bottom, does not mean that the bull market is now ready to resume. It is not. The chart damage and more importantly, the psychological and financial carnage inflected on gold bulls has been so severe, that it is going to take a massive sea change in sentiment towards this metal before the gold bull market will resume. In short, their confidence towards the metal has been dealt a massive injury and that is going to take time to heal.

Right now, the sentiment will be to sell rallies until the chart technical aspects improve. What will it take to do that? Answer - loss of confidence in the respective currencies of these various nations that have embarked on their large scale quantitative easing/ bond buying programs. Remember, this is still to all practical reasons, a zero interest rate environment. Yield is still the key. Since gold throws off no yield, and since investors have as of yet to lose confidence in these fiat currencies, there is not much incentive to own the metal. Something has to transpire to shake the complacency.

What will cause investors to lose confidence in their currencies, is the onset of inflationary pressures. With the entire commodity complex currently falling apart, it is difficult to see where that is going to come from in the very near future.

I would want to see wages rising, which as of yet there are no signs of, before getting to a different mind set towards inflation. Heck, the US jobs machine is broken with the number of jobs being created no where near what is necessary to spark a solid recovery. Right now, we are back in the deflationary mindset with the only thing preventing a larger share of investors to coming around to that view being the soaring stock markets around the planet. We may have finally now seen the first real chink in the equity bulls' armor however. Finally, the S&P 500 is responding in kind to the severe sell off in tangibles and to the various warning signals that have been popping up in the Russell 2000 and the Dow Transports. STill, even with all this carnage in the commodity sector, there remains an incredibly obtuse attitude towards these warning signals on the part of the "buy every dip in the stock market" crowd.

There is a real tendency among traders, (among human beings in general I might add) to not recognize a change in the dynamics of a situation. In other words, we tend to rely on what has always worked in the past and assume that will be the permanent order of things. Anything that deviates from that which we are familiar with then is looked at as if it is an aberration, something that is momentary and will pass before the familiar status quo reasserts itself. This is why inflection points in markets can be so difficult to ascertain. We ask ourselves, is this a change in the trend, or is this just another ongoing reaction in a bull market. The equity guys, for the most part, have not bothered to even ask themselves this question. They almost robotically and mindlessly I might add, continue to buy the dips in price expecting ever higher and higher prices in stocks while all that is transpiring around them should urge any of them with a bit of sense to exercise some caution and not be so damned dogmatic.

As I stated in a previous post, there is not a single human being on the planet who has ever lived through anything remotely resembling what is currently occurring in the financial realm right now. We are all sailing without a compass in that sense. How in the world can we know with any certainty where in the heck things are going to go right now? We are just making guesses, informed guesses based on experience and history, but they are guesses nonetheless.

In that regards, the behavior of the overall speculative crowd is what will help us navigate these waters. Herd instinct or herd behavior is difficult to predict but once it manifests itself, it is not too difficult to read. When the attitude of the herd towards equities changes, when they are reluctant to chase prices higher, when they begin to grow nervous over holding stocks, when the formerly confident dip buyers begin to second guess themselves, then we can note that when it occurs.

Keep in mind this one word - CONFIDENCE. When that goes, so too will everything else. That is the number one task now of these monetary elites and Central Banks - do nothing, say nothing, infer nothing that might rattle confidence.

Take a look at this chart of the Russell 2000. These small cap stocks have been a much better indicator of investor willingness to take on risk. One would have thought that with Qe3 and QE4, now combined with the near equivalent of the Bank of Japan's version of QE, that small cap stocks would be on a tear higher. They are not and that should pique the attention of investors. Here is a market that has now had THREE KNOCKS on a solid resistance level and has failed to better it. Not only that, it is back below the 50 day moving average. If the support level on this chart gives way, and I do not know if it will, then I would expect to see some more rattling of the confidence cage of these equity perma bulls.

Some General Thoughts

Rather than trying to answer various comments individually due to time constraints, let me just jot down some thoughts here.

Andrew: I agree with your assessment completely. I believe I have been saying the same thing for some time now. The problem that we are seeing in regards to gold is the Velocity of Money. We have the gargantuan sums conjured into existence by the alchemists of the Western Central Banks but that money is not turning over fast enough in the general economy. It is going one way and one way only and that is into equities. It is NOT going through the broader economy nor is it changing hands frequently.

The continued weakness in the copper market, along with the other base metals I might add, and the general theme of weakness across many of the various commodity markets, (look at sugar and coffee as an example and now the grains), falling unleaded gasoline prices along with crude oil, etc. is telling us that there is a general deflationary theme at work. One cannot have a growing robust economy in which the price of resources (commodities) is moving continuously lower. The fact that the CCI, Continuous Commodity Index is not moving higher alongside of the equity markets tells me that there is NO REAL GROWTH in the US economy, or some of the other Western economies I might add.

What we are seeing is a freak of nature (created by men) in which growth hormones are pumped into the stock markets FORCING them higher without any true economic growth occurring at the same time. It is like a man shot full of HGH to make him 10 feet tall but who lacks the skeletal foundation to enable him to function normally. Everything about him is unbalanced and unstable. Pull back the HGH and leave him to himself, and  he will topple.

Back when things used to make sense (before the Central Banks got involved and destroyed our free markets) a stock market in a strong, robust uptrend signified solid, genuine economic growth, particularly in the manufacturing sector where raw materials are needed. That is no longer the case. We have this freak of nature that goes one way to the point of absurdity driven SOLELY by a speculative frenzy desperate for YIELD in a ZERO INTEREST RATE ENVIRONMENT created by these self-serving Central Bankers, who should damn well know better than this by now.

All we need to do is to use our common sense to consider that if manufacturing is robust, there is a real demand for the raw materials, commodities, natural resources, etc., used to create those goods or products. When I see Dr. COPPER going one way, DOWN, and I see the equity markets going the other, UP, I know something is terribly, terribly wrong.

Just consider what we witnessed when the Fed began its first QE program back in late 2008 after the credit crisis unleashed a wave of deflationary pressures. It seemed as if everything on the planet starting moving higher. It didn't matter what it was. Copper, Crude, Gold, Silver, Grains, etc. all moved up as the stock market moved up. Things seemed to be in sync. Why was that? Because investors began to anticipate an inflationary impulse due to the sheer size of the liquidity being supplied by the Fed. We all assumed that prices would rise because the underlying currency would weaken as its supply was increased. This would feed into an inflationary psyche and create an environment in which consumers would come back and begin borrowing once again, banks would lend, jobs would be created and growth would ensue. Guess what? It worked somewhat in the sense that it kept things from deteriorating further but as far as dealing with what got us to this point in the first place, it did nothing.


So here we are now, FOUR QE's later and a massive version of the Bank of Japan's own version of QE, along with bond buying programs of the ECB and the BOE and yet we still have minimal job creation and only modest to barely perceptible growth. What the Fed is trying to do, along with the Bank of Japan and the ECB and the BOE, I might add, is to drive interest rates to the point of nothing in order to stimulate demand for money or credit. Entice consumers to borrow and go deeper into debt is their recipe for growth. The problem is that requires consumers feel secure about their jobs AND that they have enough disposable income that they are comfortable taking on additional debt. That is not happening. What they have instead created is a nirvana for giant speculators and hedge funds to place huge leveraged ONE WAY bets on rising stock prices.
By the way, as an example of what I am saying here, as I am typing these thoughts, the Dow Jones newswire is flashing comments from some of these monetary masters. Get a load of this if you want to see a perfect example of either an ignorant fool of a Central Banker or one who believe his own BS.

Fed's Evans (Chicago FEd):
"Fed Actions have been helpful to the economy"
"Fed making progress  of improving the job market"
"Actual inflation is low"
"Worries of rising inflation overblown"
"Monetary policy should be more accommodative"
 and here is the kicker -are you ready....

"Doesn't see ANYTHING that Suggests FED Causing Imbalances"

Yep - SEE NO EVIL, HEAR NO EVIL, SPEAK NO EVIL".

Here is a perfect example of the blind leading the blind. A stock market soaring to new heights almost day after day while the poverty rate in the nation is back to where it was in the 1960's, 43-44 million people on food stamps, 14 million on some form of government disability, a shrinking labor participation rate which is the only thing driving down the farcical unemployment number and a job creation rate that is not even keeping up with the rate of the growth of the population in general... Nope - no imbalance here. Everything is just peachy keen! Idiot....

Think that is not enough? here is another one:

Kocherlakota (Minneapolis Fed):
"Doesn't see signs FED fueling Asset Bubbles"

Here is yet one more (and all of this is taking place on one day, A Saturday at that).

BOE's Miles:
"Asset buying not creating asset bubbles in UK".


Do you see a pattern here? Let me tell you what this means. It means the EXACT OPPOSITE of what these talking heads are out there parroting! Anytime you see a public official denying something, rest assured it is true. The fact that they feel so compelled to go out and talk about this denying these bubbles that they are blowing is because this is what the thinking is becoming. They are using the oldest line in the book of manipulating public opinion:

"Who are you going to believe, us or your own lying eyes?"

Who do these alchemists think that they are fooling at this point? They are doing the only thing that they know how to do and that is to turn paper (lots of it) into money. These demi gods of finance consider themselves to be infallible assessors of their own handiwork much like the one true God who when He had created, rested on the seventh day, surveyed His handiwork and called it good. In His case, it was true. In their case, it is an opiate that solves nothing but merely continues to foster the speculative mania that results from basically free money and NO RISK when it comes to buying stocks.

If and when this massive amount of liquidity ever manages to somehow get into the broader economy and people begin to DOUBT the very integrity of their own currencies, then we will see the VELOCITY of MONEY soar and with it the inflationary nightmare that many fear. That is why these people must continue to obfuscate, deny, dissemble, spin, etc. They cannot let the public lose confidence because confidence, fleeting, effervescent, transitory confidence, is the only thing preventing a run on the currencies of these nations whose Central Banks are engaging in this reckless scheme. I might add here that this is also the reason I believe there is a concerted effort by these same monetary elites to discredit gold. A soaring gold price is a vote of NO CONFIDENCE in the Central Banks.

I want to repeat it here again - this game will stop when the public loses confidence in the currency of its nation. As long as the public is either ignorant of, apathetic towards or oblivious as to the scale of money creation that is being employed by these Central Bankers, they can play their game of demi-gods and spout the kind of idiocy that I quoted above. Look at how fleeting however confidence can be. Cyprus, Greece, Italy, Spain, Portugal, etc... It can happen here and it can also happen in Japan. It can evaporate overnight and when once lost, it is not easily regained.

Trader Dan Interviewed at King World News Markets and Metals Wrap

Please click on the following link to listen in to my regular weekly radio interview with Eric King at the KWN Weekly Markets and Metals Wrap.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/4/13_KWN_Weekly_Metals_Wrap.html