Today's overgrown gains on the US stock indices stand as an object lesson of how Fed monetization of US debt trumps everything.
While oil took a brief respite, thanks, without doubt to pressure on traders to "cool it", the Fed flipped back to the Primary Dealers some $7.657 billion, more than half of it in the form of repurchasing notes just auctioned off two weeks ago.
That money went straight into stocks, which, by the way, were already overpriced.
Dow 12,214.38, +124.35 (1.03%)
NASDAQ 2,765.77, +20.14 (0.73%)
S&P 500 1,321.82, +11.69 (0.89%)
NYSE Composite 8,394.04, +57.02 (0.68%)
Advancers took the high road over declining issues, 4225-1491. There were 95 new highs and 34 new lows on the NASDAQ, while on the NYSE, 149 new highs to a mere 10 new lows. Volume, as expected, was very light. The move was not liquid.
NASDAQ Volume 1,869,438,750
NYSE Volume 4,451,904,000
NYMEX crude oil front-month futures eased 52 cents, to $105.02. Gold shed $7.30, to $1,427.20. Silver lost 21 cents, to close in NY at $35.66. The small downside in the precious metals and oil should be examined more closely, as they are just profit-taking and natural rotation on a "risk on" day for the casino gamblers.
The trend remains in place for commodities over the short, medium and long term along with significant downside risk for equities short term and longer. The major indices are treading water carelessly on seas of free money. With QE2 due to expire by the end of June, expect a pullback in equities unless the Fed announces further quantitative easing and the indices remain below their February 18 highs.
In the meantime, it's a good moment to snatch up precious metals.
Tuesday, March 8, 2011
Monday, March 7, 2011
Slip Sliding Away
With all due apologies to Paul Simon, the stock markets the past 10 days have been playing the tune that says, in part, "the nearer your destination, the more you're slip sliding away."
With stocks making a new peak on February 18 and attempting a run at all-time highs via the Fed's easy money policy (Here's a couple billion. Don't blow it all at once.), the bump in the road has been met and it seems to have come in the familiar form of high oil and gasoline prices.
Everybody knows that when you spend more on gas to get where you're going, you have less money to spend on what you went there for, despite your original intentions. Gas has run up so high, so fast, some people (like me) are considering not driving at all.
Consider the things you can't do while driving: drinking, talking on a cell phone (in most states), texting, and I've heard that most police officers frown on any sexual activity while behind the wheel. So, since they've taken all the fun out of driving and it's really expensive, why not just give it up altogether?
One may note that eating is still allowed while driving, and that's obviously due to the huge sums of money the fast food giants give to political campaigns. Seriously, eating a Mac-Double and fries while at the wheel is at least as dangerous as talking on a cell phone, and not quite as healthy. But, it's still allowed. We wouldn't want to close down all those drive-thru windows, now would we?
Getting back to stocks, with today's close, the major indices have been down six of the last ten sessions, and the Dow is off by 300 points, or about 2 1/2%. Apparently, all the money pumped into the markets by the Fed's QE2 program has caused some unintended outcomes, those being, primarily, massive increases in everything people need to live: food and fuel, among other things.
Making matters worse, Fed Chairman Bernanke seems to believe a little inflation is not a bad thing and also doesn't think the Fed is responsible for commodity price increases, food prices spiking and now oil going through the roof.
Well, Mr. Bernanke is either profoundly stupid or a very, very bad liar, and neither of those conditions are very good. It's quite obvious, and economics 101 teaches us that increasing the supply of money will lead to higher prices for the same goods, or, inflation. The Fed has pumped about $400 billion of their promised $600 billion into the markets and this is the result so far. I, for one, can't wait to see what the next $250 billion of free cash for the bankers will do. How bout gas at $4.25 and a permanent 10% increase in your weekly grocery bill.
It's not completely Bernanke's fault for being a stubborn fool, since he was appointed by a president freely elected by the stupid masses (me and you) and the Fed's been doing this kind of thing since 1913. Amazingly, this is only the second Great Depression they've caused, but hopefully, it will be their last.
Movements are afoot in at least 11 states to make gold and silver (it's what the constitution of the United States of America calls money) legal tender, in direct competition to Federal Reserve Notes, which, in reality, are nothing more than debt instruments. Given time, we'll return to a gold standard, though we'll have to lay waste to the Federal Reserve and all of their too big to fail banks like Bank of America, Wells-Fargo, Citigroup, JP Morgan Chase and maybe even Goldman Sachs. It is with hope that the banks and the Fed go quietly, because we really don't want to go through another tumultuous period like the Civil War.
So, all is not lost, and we sincerely hope the Fed keeps making the US dollar worth less and less. Maybe gas prices over $6 or $7 a gallon will rile up enough people to start looking at the Federal Reserve as the real enemy, not the great benefactor of OUR money they like us to believe they are.
Dow 12,090.03, -79.85 (0.66%)
NASDAQ 2,745.63, -39.04 (1.40%)
S&P 500 1,310.13, -11.02 (0.83%)
NYSE Composite 8,337.02, -76.03 (0.90%)
Declining issues outpaced advancers, 4980-1583. On the NASDAQ, there were 107 new highs and 38 new lows. On the NYSE, 159 new highs and 22 new lows. These numbers continue to converge and there's probably less than two weeks left before the new lows begin to overtake new highs on a daily basis. There may be a time of sideways trading, but, as traders always like to look ahead, if the Fed is really going to cease it's QE activities at the end of June, it might be better to get out of the way before the carnage in stocks begins, because once they pull away the artificial stimulus, the economy will head right back into the tank, just as it did briefly last summer.
Mr. Bernanke and his friends at the Fed have painted themselves into a dark and ever-shrinking corner and they have found no way out. Their dual mandate of stable prices and full employment is nothing but a very bad joke. The sooner the American people wake up to the fact that the Fed, with congress and the administration as their willing accomplices, are ruining the country, the sooner we the people can stand up and start fixing it.
NASDAQ Volume 2,203,664,500.00
NYSE Volume 4,595,122,500
It was another thrilling day for commodities. Crude was up another $1.05 at the close, at $105.44, though it traded well over $106 early in the day. Gold tacked on a gain of $5.90, to $1,434.50 at the close, though it too traded much higher, the top being $1445.90. So too silver, which was as high as $36.79, but finished up a mere 54 cents, at $35.86.
As for the mighty US dollar, the daily chart of the Dollar Index shows the dip to 76.12 prior to US markets opening and the day-long ramp up. Buying the dollar (another Fed plaything?) caused oil, gold and silver to lose their early momentum, but it's a losing battle for fiat money and it's coming to a head, soon.
With stocks making a new peak on February 18 and attempting a run at all-time highs via the Fed's easy money policy (Here's a couple billion. Don't blow it all at once.), the bump in the road has been met and it seems to have come in the familiar form of high oil and gasoline prices.
Everybody knows that when you spend more on gas to get where you're going, you have less money to spend on what you went there for, despite your original intentions. Gas has run up so high, so fast, some people (like me) are considering not driving at all.
Consider the things you can't do while driving: drinking, talking on a cell phone (in most states), texting, and I've heard that most police officers frown on any sexual activity while behind the wheel. So, since they've taken all the fun out of driving and it's really expensive, why not just give it up altogether?
One may note that eating is still allowed while driving, and that's obviously due to the huge sums of money the fast food giants give to political campaigns. Seriously, eating a Mac-Double and fries while at the wheel is at least as dangerous as talking on a cell phone, and not quite as healthy. But, it's still allowed. We wouldn't want to close down all those drive-thru windows, now would we?
Getting back to stocks, with today's close, the major indices have been down six of the last ten sessions, and the Dow is off by 300 points, or about 2 1/2%. Apparently, all the money pumped into the markets by the Fed's QE2 program has caused some unintended outcomes, those being, primarily, massive increases in everything people need to live: food and fuel, among other things.
Making matters worse, Fed Chairman Bernanke seems to believe a little inflation is not a bad thing and also doesn't think the Fed is responsible for commodity price increases, food prices spiking and now oil going through the roof.
Well, Mr. Bernanke is either profoundly stupid or a very, very bad liar, and neither of those conditions are very good. It's quite obvious, and economics 101 teaches us that increasing the supply of money will lead to higher prices for the same goods, or, inflation. The Fed has pumped about $400 billion of their promised $600 billion into the markets and this is the result so far. I, for one, can't wait to see what the next $250 billion of free cash for the bankers will do. How bout gas at $4.25 and a permanent 10% increase in your weekly grocery bill.
It's not completely Bernanke's fault for being a stubborn fool, since he was appointed by a president freely elected by the stupid masses (me and you) and the Fed's been doing this kind of thing since 1913. Amazingly, this is only the second Great Depression they've caused, but hopefully, it will be their last.
Movements are afoot in at least 11 states to make gold and silver (it's what the constitution of the United States of America calls money) legal tender, in direct competition to Federal Reserve Notes, which, in reality, are nothing more than debt instruments. Given time, we'll return to a gold standard, though we'll have to lay waste to the Federal Reserve and all of their too big to fail banks like Bank of America, Wells-Fargo, Citigroup, JP Morgan Chase and maybe even Goldman Sachs. It is with hope that the banks and the Fed go quietly, because we really don't want to go through another tumultuous period like the Civil War.
So, all is not lost, and we sincerely hope the Fed keeps making the US dollar worth less and less. Maybe gas prices over $6 or $7 a gallon will rile up enough people to start looking at the Federal Reserve as the real enemy, not the great benefactor of OUR money they like us to believe they are.
Dow 12,090.03, -79.85 (0.66%)
NASDAQ 2,745.63, -39.04 (1.40%)
S&P 500 1,310.13, -11.02 (0.83%)
NYSE Composite 8,337.02, -76.03 (0.90%)
Declining issues outpaced advancers, 4980-1583. On the NASDAQ, there were 107 new highs and 38 new lows. On the NYSE, 159 new highs and 22 new lows. These numbers continue to converge and there's probably less than two weeks left before the new lows begin to overtake new highs on a daily basis. There may be a time of sideways trading, but, as traders always like to look ahead, if the Fed is really going to cease it's QE activities at the end of June, it might be better to get out of the way before the carnage in stocks begins, because once they pull away the artificial stimulus, the economy will head right back into the tank, just as it did briefly last summer.
Mr. Bernanke and his friends at the Fed have painted themselves into a dark and ever-shrinking corner and they have found no way out. Their dual mandate of stable prices and full employment is nothing but a very bad joke. The sooner the American people wake up to the fact that the Fed, with congress and the administration as their willing accomplices, are ruining the country, the sooner we the people can stand up and start fixing it.
NASDAQ Volume 2,203,664,500.00
NYSE Volume 4,595,122,500
It was another thrilling day for commodities. Crude was up another $1.05 at the close, at $105.44, though it traded well over $106 early in the day. Gold tacked on a gain of $5.90, to $1,434.50 at the close, though it too traded much higher, the top being $1445.90. So too silver, which was as high as $36.79, but finished up a mere 54 cents, at $35.86.
As for the mighty US dollar, the daily chart of the Dollar Index shows the dip to 76.12 prior to US markets opening and the day-long ramp up. Buying the dollar (another Fed plaything?) caused oil, gold and silver to lose their early momentum, but it's a losing battle for fiat money and it's coming to a head, soon.
Saturday, March 5, 2011
Price Discovery is Difficult, but Silver is Grossly Undervalued
Very simple. Buy gold and silver.
In 1950, money in circulation (M3) was $135 Billion. In 2012, M3 will be approximately (the government stopped publishing the figure because they don't like pornography) $15 trillion.
That's a ratio of 111.11~ to 1.
In 1950, a dime was a dime, worth roughly what the 90% silver content was worth, 10 cents.
Using our 111.11-1 ratio, we find pre-1965 coins, including dimes, to be grossly undervalued. They are, according to conflation.com, worth $2.58, nearly 26x their face value.
This is with silver at $35.67 per ounce.
Using our 111.11-1 ratio again, and 2012 M3 at $15 trillion, in 2012, a pre-1965 dime should be worth $11.11, and an ounce of silver should be $153.60.
I don't know that much about gold, but the silver calculations are pure.
Of course, nothing's perfect, but I've been trying to find a reasonable way to calculate the true value of silver, though in this current ponzified regime of constant money printing, manipulation of markets and obfuscation of monetary reality, this is the best formula I've yet to devise.
Silver is grossly undervalued, and most of the people who have been accumulating it are doing so because they know it will almost certainly rise in value in the face of our current debt/finance structure and that the end of the fiat money regime is also near.
Buy silver, as much as you can reasonably afford, quietly, without attracting the attention of too many, and in future years, you'll be happy you read this comment.
In 1950, money in circulation (M3) was $135 Billion. In 2012, M3 will be approximately (the government stopped publishing the figure because they don't like pornography) $15 trillion.
That's a ratio of 111.11~ to 1.
In 1950, a dime was a dime, worth roughly what the 90% silver content was worth, 10 cents.
Using our 111.11-1 ratio, we find pre-1965 coins, including dimes, to be grossly undervalued. They are, according to conflation.com, worth $2.58, nearly 26x their face value.
This is with silver at $35.67 per ounce.
Using our 111.11-1 ratio again, and 2012 M3 at $15 trillion, in 2012, a pre-1965 dime should be worth $11.11, and an ounce of silver should be $153.60.
I don't know that much about gold, but the silver calculations are pure.
Of course, nothing's perfect, but I've been trying to find a reasonable way to calculate the true value of silver, though in this current ponzified regime of constant money printing, manipulation of markets and obfuscation of monetary reality, this is the best formula I've yet to devise.
Silver is grossly undervalued, and most of the people who have been accumulating it are doing so because they know it will almost certainly rise in value in the face of our current debt/finance structure and that the end of the fiat money regime is also near.
Buy silver, as much as you can reasonably afford, quietly, without attracting the attention of too many, and in future years, you'll be happy you read this comment.
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