Get used to hearing and seeing the acronym "POMO" because it will become a substantial part of the financial lexicon over the coming years. In some circles it is already standard parlance.
POMO stands for Permanent Open Market Operations and is a tool used by the Federal Reserve to supply liquidity (cash) to markets. The Fed announces these POMOs in advance, so nobody is surprised by them, though the general public has little to no idea of their existence. On Wall Street, however, they are greeted like manna from heaven, because, in a way, that's what they are.
Technically, the Fed sells Treasuries to Primary Dealers (PDs), such as Goldman Sachs, morgan Stanley and all the rest of the Too Big to Fail (TBTF) crowd, then buys them back via the POMOs to replenish the brokerages with fresh infusions of cash. These primary dealers then do what every red-blooded crooked bankster does with free money - they invest it in stocks. It's all very tidy and well-organized and though there's no explicit instruction from the Fed that the PDs should or must buy stocks, it's pretty much an implied contract.
So, just in case you're wondering why stocks begin to nose-dive - like today, down more than 80 points on the Dow at 10:00 am - and then suddenly recover and turn positive, it's thanks to the Fed and the Primary Dealers and the POMO. It's all one big happy family down there in lower Manhattan, keeping the indices moving ever higher, no matter the real conditions in the economy.
On top of the Fed and the banksters keeping the world safe from true price discovery (rigging the markets), there's more going on out there in the wild world of high finance that most people don't know about nor understand at all, especially in the FOREX markets where dollars are exchanged for Yen, Euros for Francs and all manner of currency changes hands constantly.
The latest craze among Central Bankers - those devious minions of high muckety-mucks, like our own dear Federal Reserve - is called "race to the bottom," in which each nation tries to see who can devalue its own currency faster than the other guys. The reasoning is that a cheap currency will cause exports from that country to sell more quickly, thus boosting profits for the most-favored corporations.
If it all sounds very socialistic, maybe even fascist and totalitarian, that's because, as a policy, it is. Nothing causes countries to become extinct better than debasement of the currency, but, since the central bankers don't want to disturb the TBTF private banks with real accounting standards and true remedies to bad loans, bad trades, bad debts (the reason the global financial system nearly fell apart in 2008 and also why no banks went bankrupt), the race to the bottom strategy is most favored these days.
Over the past couple of weeks, the Japanese have tried their hand at it to little avail, but also Switzerland, South Korea, Brazil and even Peru have been out selling their own currencies and snatching up others in planned attempts to cheapen their own money. Strangely enough, this kind of monetary protectionism is the same kind of thing that exacerbated, broadened and lengthened the Great Depression, although back then it was mostly done by slapping tariffs on foreign goods. Today's method is so much cleaner, simpler and effective. At least that's what the brainiacs at the Fed and other central banks would like you to believe.
The problem with racing to the bottom is that when everybody does it, the net effect is bad for everyone, but mostly the working or middle class of the participating nations because the workers get paid in dollars or yen or yuan or euros that were worth more yesterday than today, and the process continues until somebody eventually defaults, bringing that nation to quicker ruin than the other players.
Rest assured, even though America likes to be first in everything, this is one game we're probably not going to win, though our Fed Chairman, Ben Bernanke, is trying as hard as he can, announcing that the Fed will just print up an additional $100 billion per month in order to assure that the US dollar will be wanted by nobody. So far, we're winning, but the Eurozone nations and the Japanese will probably beat us down the abyss of financial ruin and become the first to create some other exchange, like barter or shells or whatever they think people will readily use.
The entire concept of currency debasement is not new. It has been around for years. It's just that now, with economic stress manifold, it's become popular. These central bankers know that time is not on their side. They realize that the days of floating currencies are coming to an end and that eventually some kind of asset-backed currency will have to replace the fiat (paper) money, and that asset is likely to be gold, silver, oil or a combination of all of them.
In the meantime, stocks will be moving at the whims of the primary dealers and not along the lines of fundamental valuations. It's almost a certainty that stock markets will rally and crash, making boom and bust the normal cycle rather than something to be avoided. In fact, we're already there. The 2008-2009 crash was just the first taste. There are many more crashes and mini-rallies to come. That's how the PDs make their money after all, trading, and being on the right side of more trades than the other guy.
Because of all this manipulation, my job just got easier. Now, all I have to do is announce the size of the POMO, when it's going to be completed and report how high stocks rose. Simple, easy and clean. Unfortunately, not a real market and nowhere for individual investors to play. Here's a hint: buy gold and silver from a dealer and take physical delivery. It's just about the only way to protect yourself from the currency manipulators who would steal all your wealth.
Dow 10,858.14, +46.10 (0.43%)
NASDAQ 2,379.59, +9.82 (0.41%)
S&P 500 1,147.70, +5.54 (0.49%)
NYSE Composite 7,310.32, +46.95 (0.65%)
NASDAQ Volume 2,140,495,250
NYSE Volume 4,189,045,750
Advancing issues pounded decliners, 3956-1766. New highs: 397; new lows: 35. Volume was in the toilet. Apparently the computers didn't find the POMO all that interesting.
November crude fell 34 cents, to $76.18. Gold made another new high, up $9.90, to $1,306.60. Silver reached another 30-year high, gaining 23 cents, to $21.69. Don't think the precious metals traders are going to take a break here. As long as the developed nations of the world insist on devaluing their currencies, gold and silver will price higher. They are, after all, not only the most-trusted store of value, they're going to be used as money again, real soon.
Tuesday, September 28, 2010
Monday, September 27, 2010
Preparing for 12% Unemployment and $45 Silver
Had a conversation with an otherwise intelligent fellow the other day who opined that "a little inflation is good."
Before leaping out of my skin amid thoughts of years of savings being wiped away and 14% mortgages as were the norm in the late 70s, I calmly asked how much "a little inflation" was.
There was no answer in absolute numerical terms, only the assertion that enough to keep people working and businesses growing would be "enough."
So, I pondered the relative absurdity of a targeted 2-3 per cent inflation rate, as the Fed has suggested and the greater stupidity of quantitative easing as a way to inflate out of recessions, depressions or other worse scenario.
A little inflation, which we have had, courtesy of the Federal Reserve Bank, has caused the value of the dollar to decline by over 90% since 1913, the year the Fed was formed, and that takes into account the decade-plus of the Great Depression when prices for many consumer goods declined in order to meet the diminished demand of the day. A little deflation turned out to be not such a good thing either, it appears.
One would not be so concerned with inflation if it were a uniform, mathematical construct which took wages higher along with the cost of food, clothing, housing and other mundane necessities, but, alas, that is not the case. The generally abusive inflation of which people most usually speak affects prices of goods only, while wages remain stagnant, as they have over the course of much of the last thirty-five years.
Of course, even in the utopian condition of wage and price inflation, savings would still be eroded. That thousand dollars you put away in 1985 would only be worth about $500 in today's goods. And since the purpose of money saved is to eventually pay for something, without investing at a decent rate of return (and holding it there steadily for 25 years or more - a near-impossibility) the process of saving anything at all seems a fool's game.
And so it was during the boom of the past few decades. Nobody saved much at all, as inflation turned a country of savers into spenders and a net positive trade balance turned negative. So, since inflation makes saving more an exercise in financial self-flagellation than anything prudent and wise, it does emboss the value of investing in cold money, that being gold and silver coins and bars.
Silver has quadrupled in ten short years, as has gold. The current trend, should it continue at its present pace, would bring the price of an ounce of silver to $45 in just three years, possibly sooner, as the precious metals are "heating up" amid widespread acceptance of a number of inescapable monetary facts, those being that the level of government debt being piled upon the already reeking, stinking heap will double before the end of the next decade and will never be repaid, the debt will be well over 100% of current (or future) GDP, as it already is, and the Fed's plan to revive the economy consists of running the printing presses at full bore and adding on a few units to produce more and more federal Reserve Notes.
The Fed's aim is to debase the economy without end, keeping interest rates at ZERO for eternity or longer and completely destroy any remnants of the once proud United States of America and the rule of law. When the Fed finally accomplishes their dastardly deed, we wonder two things: 1> will George Bush be around to announce, "Mission Accomplished", and what currency will replace the tired, worn FRNs?
The simple answers are Yes, and silver, and to some degree, gold. Since the complete destruction of the world's reserve currency should be complete within fifteen years at the outside, George Bush should still be alive and kicking enough to make proclamations. And as a replacement for currency, most people will only accept something that has value. Gold is already too high-priced to be considered currency, except for very expensive items. In 2020, a couple ounces of gold may be enough to buy a new car, so there could not be any coin small enough for everyday purchases.
Enter silver, specifically, silver quarters minted prior to 1965, which contain 90% silver and currently command a value of nearly $4.00. With silver at $21 and change, those same silver quarters will be worth upwards of $8, small enough for reasonable purchase of food, lodging, movie tickets and the such. Often called "poor man's gold", silver will likely take on the moniker of "middle class gold," for obvious reasons.
Larger sums of silver, at $45 and up, may be beneficial as collateral, no matter what fiat or paper currency is currently in vogue, thus making it not only money and a store of value, but also possessive of status as a fractional reserve.
It should be lovely living in a future with plenty of silver on hand.
Morgan Stanley today announced a hiring freeze due to low participation levels in the market. Trading volumes have been at historic lows for months and a continuation of that trend will result in weakened earnings from the major brokerages. Stanley assures us that should the condition persist or worsen, that "hiring freeze" will magically morph into layoffs, heralding in the second leg of the depression, wherein government-measured unemployment increases from the current 9.6% to somewhere North of 12%, in the coming year.
Of course, government measurements are inherently inaccurate, as current "real" unemployment stands today at 16-18%. By the end of next year that number should grow to 20-22%.
Today's markets could not carry though on Friday's rally, culminating in a dizzying dive in the final hour of trading.
Dow 10,812.04, -48.22 (0.44%)
NASDAQ 2,369.77, -11.45 (0.48%)
S&P 500 1,142.16, -6.51 (0.57%)
NYSE Composite 7,263.37. -37.67 (0.52%)
Declining issues overwhelmed advancers, 3400-2330. New highs retained their edge over new lows, 389-26, on dismal volume. More of the same.
NASDAQ Volume 1,888,585,625
NYSE Volume 3,759,252,750
Oil gained three cents, to $76.52. Gold was up 70 cents, to $1,296.70. Silver gained 7 cents per ounce, to $21.46.
There's still plenty of room to run for both gold and silver, as neither have been shown to be in any kind of speculative bubble.
Before leaping out of my skin amid thoughts of years of savings being wiped away and 14% mortgages as were the norm in the late 70s, I calmly asked how much "a little inflation" was.
There was no answer in absolute numerical terms, only the assertion that enough to keep people working and businesses growing would be "enough."
So, I pondered the relative absurdity of a targeted 2-3 per cent inflation rate, as the Fed has suggested and the greater stupidity of quantitative easing as a way to inflate out of recessions, depressions or other worse scenario.
A little inflation, which we have had, courtesy of the Federal Reserve Bank, has caused the value of the dollar to decline by over 90% since 1913, the year the Fed was formed, and that takes into account the decade-plus of the Great Depression when prices for many consumer goods declined in order to meet the diminished demand of the day. A little deflation turned out to be not such a good thing either, it appears.
One would not be so concerned with inflation if it were a uniform, mathematical construct which took wages higher along with the cost of food, clothing, housing and other mundane necessities, but, alas, that is not the case. The generally abusive inflation of which people most usually speak affects prices of goods only, while wages remain stagnant, as they have over the course of much of the last thirty-five years.
Of course, even in the utopian condition of wage and price inflation, savings would still be eroded. That thousand dollars you put away in 1985 would only be worth about $500 in today's goods. And since the purpose of money saved is to eventually pay for something, without investing at a decent rate of return (and holding it there steadily for 25 years or more - a near-impossibility) the process of saving anything at all seems a fool's game.
And so it was during the boom of the past few decades. Nobody saved much at all, as inflation turned a country of savers into spenders and a net positive trade balance turned negative. So, since inflation makes saving more an exercise in financial self-flagellation than anything prudent and wise, it does emboss the value of investing in cold money, that being gold and silver coins and bars.
Silver has quadrupled in ten short years, as has gold. The current trend, should it continue at its present pace, would bring the price of an ounce of silver to $45 in just three years, possibly sooner, as the precious metals are "heating up" amid widespread acceptance of a number of inescapable monetary facts, those being that the level of government debt being piled upon the already reeking, stinking heap will double before the end of the next decade and will never be repaid, the debt will be well over 100% of current (or future) GDP, as it already is, and the Fed's plan to revive the economy consists of running the printing presses at full bore and adding on a few units to produce more and more federal Reserve Notes.
The Fed's aim is to debase the economy without end, keeping interest rates at ZERO for eternity or longer and completely destroy any remnants of the once proud United States of America and the rule of law. When the Fed finally accomplishes their dastardly deed, we wonder two things: 1> will George Bush be around to announce, "Mission Accomplished", and what currency will replace the tired, worn FRNs?
The simple answers are Yes, and silver, and to some degree, gold. Since the complete destruction of the world's reserve currency should be complete within fifteen years at the outside, George Bush should still be alive and kicking enough to make proclamations. And as a replacement for currency, most people will only accept something that has value. Gold is already too high-priced to be considered currency, except for very expensive items. In 2020, a couple ounces of gold may be enough to buy a new car, so there could not be any coin small enough for everyday purchases.
Enter silver, specifically, silver quarters minted prior to 1965, which contain 90% silver and currently command a value of nearly $4.00. With silver at $21 and change, those same silver quarters will be worth upwards of $8, small enough for reasonable purchase of food, lodging, movie tickets and the such. Often called "poor man's gold", silver will likely take on the moniker of "middle class gold," for obvious reasons.
Larger sums of silver, at $45 and up, may be beneficial as collateral, no matter what fiat or paper currency is currently in vogue, thus making it not only money and a store of value, but also possessive of status as a fractional reserve.
It should be lovely living in a future with plenty of silver on hand.
Morgan Stanley today announced a hiring freeze due to low participation levels in the market. Trading volumes have been at historic lows for months and a continuation of that trend will result in weakened earnings from the major brokerages. Stanley assures us that should the condition persist or worsen, that "hiring freeze" will magically morph into layoffs, heralding in the second leg of the depression, wherein government-measured unemployment increases from the current 9.6% to somewhere North of 12%, in the coming year.
Of course, government measurements are inherently inaccurate, as current "real" unemployment stands today at 16-18%. By the end of next year that number should grow to 20-22%.
Today's markets could not carry though on Friday's rally, culminating in a dizzying dive in the final hour of trading.
Dow 10,812.04, -48.22 (0.44%)
NASDAQ 2,369.77, -11.45 (0.48%)
S&P 500 1,142.16, -6.51 (0.57%)
NYSE Composite 7,263.37. -37.67 (0.52%)
Declining issues overwhelmed advancers, 3400-2330. New highs retained their edge over new lows, 389-26, on dismal volume. More of the same.
NASDAQ Volume 1,888,585,625
NYSE Volume 3,759,252,750
Oil gained three cents, to $76.52. Gold was up 70 cents, to $1,296.70. Silver gained 7 cents per ounce, to $21.46.
There's still plenty of room to run for both gold and silver, as neither have been shown to be in any kind of speculative bubble.
Friday, September 24, 2010
Stocks Surge on No News, High Hopes
Sure enough, no sooner do I call a near-term top and tell the world to shun stocks and buy gold and silver, than the market participants decide to push the indices close to 2010 highs.
Notice I said close, not at 2010 highs. The major indices are anywhere from 4 to 8 per cent below the levels reached in late April, with the Dow being the closest of the three. What is propelling stocks higher is nothing in particular, but gobs of free money, courtesy of the Fed, in aggregate.
This is actually the way it's going to play out, with stocks advancing on nothing but momentum or speculation, while gold and silver may take a bit of a breather, only to resume rising as money evaporates along with all investments measured in it, except, or course, the precious metals, an asset class unto themselves, doubling as a safety-net, de facto currency.
Dow 10,860.26, +197.84 (1.86%)
NASDAQ 2,381.22, +54.14 (2.33%)
S&P 500 1,148.67, +23.84 (2.12%)
NYSE Composite 7,301.04, +159.53 (2.23%)
Advancing issues were back in their groove, dancing all over decliners, 4645-1065. New highs totaled 420, to just 29 fresh lows. Volume was subdued, once again.
NASDAQ Volume 2,014,145,250
NYSE Volume 4,326,041,500
Gold finished nearly unchanged at $1297.70 per ounce; silver was shining, at $21.42. Crude oil finished $1.31 ahead, at $76.49.
Notice I said close, not at 2010 highs. The major indices are anywhere from 4 to 8 per cent below the levels reached in late April, with the Dow being the closest of the three. What is propelling stocks higher is nothing in particular, but gobs of free money, courtesy of the Fed, in aggregate.
This is actually the way it's going to play out, with stocks advancing on nothing but momentum or speculation, while gold and silver may take a bit of a breather, only to resume rising as money evaporates along with all investments measured in it, except, or course, the precious metals, an asset class unto themselves, doubling as a safety-net, de facto currency.
Dow 10,860.26, +197.84 (1.86%)
NASDAQ 2,381.22, +54.14 (2.33%)
S&P 500 1,148.67, +23.84 (2.12%)
NYSE Composite 7,301.04, +159.53 (2.23%)
Advancing issues were back in their groove, dancing all over decliners, 4645-1065. New highs totaled 420, to just 29 fresh lows. Volume was subdued, once again.
NASDAQ Volume 2,014,145,250
NYSE Volume 4,326,041,500
Gold finished nearly unchanged at $1297.70 per ounce; silver was shining, at $21.42. Crude oil finished $1.31 ahead, at $76.49.
Thursday, September 23, 2010
Beginning of the End for Stocks; Gold and Silver Set to Soar
It's all so simple. Once one can take a deep breath, review all that's come before and all the promises made and not kept - like the current Republican phony Pledge to America - one can truly see that the future of life in America is going to be difficult for many over the ensuing twenty to thirty years.
If you are one of the millions who expect to be alive and living in the good, old, USA from 2010 to 2030 and maybe beyond, you've got to see through all the phoniness of politicians, the corruption and collusion of the banks and major corporations, the concentration of wealth at the very, very top (not just the top 5%, but especially the top 1%) and on the other side the welfare state of outright welfare recipients, people on disability, veteran's benefits, social security and other similar entitlements and begin to believe that it's all going to end badly and the end is getting closer and closer every day.
The politicians and the fed and the completely corrupt, elite banksters will probably be able to keep the status quo for another six months or a year or maybe even two, but conditions are likely to deteriorate further. All attempts to sell "recovery" to the populace has failed. There's still some hope left in the people, but it's growing tired, especially since the "change" part of the equation promised by Mr. Obama and his Democratic party friends has failed to materialize in any meaningful way.
Upcoming are the mid-term elections, with Republicans blaring on about how the Democrats have failed and the Democrats attempting to vie for more time or alternatively scaring the voting public about what a Republican Tea Party takeover of congress will do to the country, not for the country. The worst part of it all is that the Republicans are likely to pick up some seats in the House and a few in Congress, but not enough to enable a majority large enough to overcome a presidential veto, while the Democrats will face the same kind of obstructionism that's been prevalent for the past four years.
In other words, the congress will be balkanized, stalemated and incapable of agreement on anything. It will be even worse in makeup than it is today, inept, powerless, clueless and incompetent, a recipe for economic disaster as sure as the sun rising in the East.
Today's action in stocks is significant, since the Democrats are making statements to the effect that they will not consider any kind of legislation concerning either the expiration or extension of the Bush-era tax cuts before the election, which was literally a sell signal to Wall Street, because getting a deal done after the election and before the tax cuts expire (December 31, 2010), will be next-to-impossible.
That's the main reason stocks ended today as they did, down for a second day in a row and this day's decline larger than yesterday's. Also, unlike recent days of gains, these last two declines were orderly, with each of the indices in somewhat of a lock-step with the others.
Stocks made a major near-term top on Tuesday, directly after the Fed announcement, and are aligned to head lower into the upcoming elections, just six weeks away. Prior to the elections, third quarter earnings report for most major publicly-traded firms are due out, which could provide some short term relief, but the direction is overall to the downside from here. After election day, who knows? With the Fed hell-bent on keeping the status quo, effectively debasing the currency with QE2, prospects for the remainder of 2010 are dicey at best.
Meanwhile, gold and silver have never looked better. Upon the release of the FOMC statement, both precious metals priced higher and have held or exceeded their new tops. Silver is at a 30-year high. Gold close to an all-time high, the record being set just yesterday.
Gold and silver will survive and prosper. They have been the best investments of the past 10 years and may have only begun an historic bull market. Precious metals prices could double, triple or go well beyond those levels within the next three to five years. Their charts show steady appreciation and interest in them is growing daily. All of this leads to the unmistakable conclusion that they are the only true store of value worth investing in today.
Advancing issues took a back seat to decliners on the day, 3897-1812. New highs continued to erode, but stayed well ahead of new lows, 249-57. Volume was not even worth mentioning, it was so shabby.
Latest gold bid: $1292.30; silver: $21.14 per ounce. Crude for November delivery rose 47 cents, to $75.18.
For more, read the latest musings of the Golden Jackass.
If you are one of the millions who expect to be alive and living in the good, old, USA from 2010 to 2030 and maybe beyond, you've got to see through all the phoniness of politicians, the corruption and collusion of the banks and major corporations, the concentration of wealth at the very, very top (not just the top 5%, but especially the top 1%) and on the other side the welfare state of outright welfare recipients, people on disability, veteran's benefits, social security and other similar entitlements and begin to believe that it's all going to end badly and the end is getting closer and closer every day.
The politicians and the fed and the completely corrupt, elite banksters will probably be able to keep the status quo for another six months or a year or maybe even two, but conditions are likely to deteriorate further. All attempts to sell "recovery" to the populace has failed. There's still some hope left in the people, but it's growing tired, especially since the "change" part of the equation promised by Mr. Obama and his Democratic party friends has failed to materialize in any meaningful way.
Upcoming are the mid-term elections, with Republicans blaring on about how the Democrats have failed and the Democrats attempting to vie for more time or alternatively scaring the voting public about what a Republican Tea Party takeover of congress will do to the country, not for the country. The worst part of it all is that the Republicans are likely to pick up some seats in the House and a few in Congress, but not enough to enable a majority large enough to overcome a presidential veto, while the Democrats will face the same kind of obstructionism that's been prevalent for the past four years.
In other words, the congress will be balkanized, stalemated and incapable of agreement on anything. It will be even worse in makeup than it is today, inept, powerless, clueless and incompetent, a recipe for economic disaster as sure as the sun rising in the East.
Today's action in stocks is significant, since the Democrats are making statements to the effect that they will not consider any kind of legislation concerning either the expiration or extension of the Bush-era tax cuts before the election, which was literally a sell signal to Wall Street, because getting a deal done after the election and before the tax cuts expire (December 31, 2010), will be next-to-impossible.
That's the main reason stocks ended today as they did, down for a second day in a row and this day's decline larger than yesterday's. Also, unlike recent days of gains, these last two declines were orderly, with each of the indices in somewhat of a lock-step with the others.
Stocks made a major near-term top on Tuesday, directly after the Fed announcement, and are aligned to head lower into the upcoming elections, just six weeks away. Prior to the elections, third quarter earnings report for most major publicly-traded firms are due out, which could provide some short term relief, but the direction is overall to the downside from here. After election day, who knows? With the Fed hell-bent on keeping the status quo, effectively debasing the currency with QE2, prospects for the remainder of 2010 are dicey at best.
Meanwhile, gold and silver have never looked better. Upon the release of the FOMC statement, both precious metals priced higher and have held or exceeded their new tops. Silver is at a 30-year high. Gold close to an all-time high, the record being set just yesterday.
Gold and silver will survive and prosper. They have been the best investments of the past 10 years and may have only begun an historic bull market. Precious metals prices could double, triple or go well beyond those levels within the next three to five years. Their charts show steady appreciation and interest in them is growing daily. All of this leads to the unmistakable conclusion that they are the only true store of value worth investing in today.
Advancing issues took a back seat to decliners on the day, 3897-1812. New highs continued to erode, but stayed well ahead of new lows, 249-57. Volume was not even worth mentioning, it was so shabby.
Latest gold bid: $1292.30; silver: $21.14 per ounce. Crude for November delivery rose 47 cents, to $75.18.
For more, read the latest musings of the Golden Jackass.
| Dow | 10,662.42 |  76.89 (0.72%) |
| NASDAQ | 2,327.08 | 7.47 (0.32%) |
| S&P 500 | 1,124.83 | 9.45 (0.83%) |
| NYSE Compos | 7,141.51 | 69.34 (0.96%) |
| NASDAQ Volume | 1,951,539,875.00 | |
| NYSE Volume | 3,999,012,250.00 | |
Wednesday, September 22, 2010
Markets Are in a Seriously Confused State
First, a bit of a correction, or, an explanation, at least.
When I posted the losses in gold and silver in yesterday's post, I was taking the quotes from CNN/Money, where I usually get the information. Looking at a chart from Kitco.com, I see that the price level I quoted was just about the low of the day, quoted just at 2:15 pm, right as the Fed made their announcement. Ditto for silver.
Immediately, gold and silver shot through the roof, and the NY Globex close was 1286.80. Being that Kitco gives the close at 5:30 in the afternoon, and I usually write this about 4:00-4:45 pm, I cannot guarantee the accuracy of the gold and silver quotes, though I will endeavor to do so from here on out.
Now, on to today's events...
After a positive open, stocks were down most of the remainder of the day as the true ramifications of the fed's overt hinting at QE2 and fresh numbers on housing reached the Street about 10:00 am. The FHFA House Price Index [PDF], a gauge of residential housing prices in America, came in with a 0.5% decline for July, off a revised 1.2% drop in June. That's a 1.7% drop in residential housing in just two months, or a full year run-rate of 10.2%. The news was not received very well.
The Index is a government gauge, meaning it is subject to tweaks and revisions and is probably a more conservative approach than most would use. The Index tracks conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. It also excludes, multi-family units and condos, among others, so it is likely to be a more conservative estimate than say, NAR data. To get an idea of just how conservative the measure is, consider that the index is only 13.7% below the April, 2007 peak.
Dow 10,739.31, -21.72 (0.20%)
NASDAQ 2,334.55, -14.80 (0.63%)
S&P 500 1,134.28, -5.50 (0.48%)
NYSE Composite 7,210.85, -35.10 (0.48%)
Once again, the markets took on small losses, but decliners submerged advancing issues in a big way, 3712-2027. New highs continued to dominate new lows, 313-52. Volume was at about the same levels as yesterday, still well off traditional readings.
NASDAQ Volume 2,193,723,500
NYSE Volume 4,082,509,750
Crude oil for october delivery fell 26 cents, to $74.71. The latest reading on gold was $1291.50, officially a new record. The spot silver bid was $21.15.
As there are numerous schools of thought now that the Fed has made it abundantly clear that they will proceed with dollar debasement in hopes of reviving inflation (a soundly stupid idea), there are many more questions than answers about where this is all leading. The best guesses - and they're all just guesses at this point - are for sustained inflation in food and energy prices, courtesy our friendly, evil central banking cartel, which seems hell-bent on salvaging the defunct credit structures of the past 40 years and keeping the insolvent mega-banks open for business, regardless of whether or not they have to starve half the global population to do so.
If the current economic scenario seems like some dysfunctional Orwellian nightmare, it's probably because it is. Keynesianism has burst upon the system in all its glory and is slowly eroding the value of all fiat currencies, one by one and often in unison. Eventually, it will end badly for those in power: the Fed, the president, congress, princes and kings of Euroland and probably the Chinese and Indians as well.
Welcome to the financial world of the future, where you don't know the value of anything.
When I posted the losses in gold and silver in yesterday's post, I was taking the quotes from CNN/Money, where I usually get the information. Looking at a chart from Kitco.com, I see that the price level I quoted was just about the low of the day, quoted just at 2:15 pm, right as the Fed made their announcement. Ditto for silver.
Immediately, gold and silver shot through the roof, and the NY Globex close was 1286.80. Being that Kitco gives the close at 5:30 in the afternoon, and I usually write this about 4:00-4:45 pm, I cannot guarantee the accuracy of the gold and silver quotes, though I will endeavor to do so from here on out.
Now, on to today's events...
After a positive open, stocks were down most of the remainder of the day as the true ramifications of the fed's overt hinting at QE2 and fresh numbers on housing reached the Street about 10:00 am. The FHFA House Price Index [PDF], a gauge of residential housing prices in America, came in with a 0.5% decline for July, off a revised 1.2% drop in June. That's a 1.7% drop in residential housing in just two months, or a full year run-rate of 10.2%. The news was not received very well.
The Index is a government gauge, meaning it is subject to tweaks and revisions and is probably a more conservative approach than most would use. The Index tracks conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. It also excludes, multi-family units and condos, among others, so it is likely to be a more conservative estimate than say, NAR data. To get an idea of just how conservative the measure is, consider that the index is only 13.7% below the April, 2007 peak.
Dow 10,739.31, -21.72 (0.20%)
NASDAQ 2,334.55, -14.80 (0.63%)
S&P 500 1,134.28, -5.50 (0.48%)
NYSE Composite 7,210.85, -35.10 (0.48%)
Once again, the markets took on small losses, but decliners submerged advancing issues in a big way, 3712-2027. New highs continued to dominate new lows, 313-52. Volume was at about the same levels as yesterday, still well off traditional readings.
NASDAQ Volume 2,193,723,500
NYSE Volume 4,082,509,750
Crude oil for october delivery fell 26 cents, to $74.71. The latest reading on gold was $1291.50, officially a new record. The spot silver bid was $21.15.
As there are numerous schools of thought now that the Fed has made it abundantly clear that they will proceed with dollar debasement in hopes of reviving inflation (a soundly stupid idea), there are many more questions than answers about where this is all leading. The best guesses - and they're all just guesses at this point - are for sustained inflation in food and energy prices, courtesy our friendly, evil central banking cartel, which seems hell-bent on salvaging the defunct credit structures of the past 40 years and keeping the insolvent mega-banks open for business, regardless of whether or not they have to starve half the global population to do so.
If the current economic scenario seems like some dysfunctional Orwellian nightmare, it's probably because it is. Keynesianism has burst upon the system in all its glory and is slowly eroding the value of all fiat currencies, one by one and often in unison. Eventually, it will end badly for those in power: the Fed, the president, congress, princes and kings of Euroland and probably the Chinese and Indians as well.
Welcome to the financial world of the future, where you don't know the value of anything.
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