Marc Faber Expects Market Sell Off On QE2 Announcement

 

The Fed Wants to Unleash a BIG QE 2 Program… But CAN It?


Project Weimar: Why QE2 Could be More Inflationary Than You Think

 

China Retaliates Again, Accuses US Of "Out Of Control" Dollar Printing

In The News Today

Posted: Oct 26 2010     By: Jim Sinclair      Post Edited: October 26, 2010 at 4:26 pm
Filed under: In The News


Jim Sinclair’s Commentary
This certainly sounds good. Let see if it is for real as the only people with rights over the past many years have been the Banksters.
An honest man in an amoral world?

CFTC’s Chilton raises alarm about silver market WASHINGTON | Tue Oct 26, 2010 9:30am EDT
WASHINGTON Oct 26 (Reuters) – There have been repeated attempts to influence prices in silver markets, Bart Chilton, a commissioner at the U.S. futures regulator, said on Tuesday.
"There have been fraudulent efforts to persuade and deviously control that price," Chilton said in prepared remarks before a Commodity Futures Trading Commission meeting.
Chilton said he could not pre-judge the outcome of the CFTC’s ongoing investigation of the silver markets, but said public deserves some answers to their concerns.
More…



CFTC Takes Aim at "Runaway Robotic Trades": Chilton By Christopher Doering
October 25, 2010
WASHINGTON (Reuters) – Computer-generated algorithmic trades have run amok in markets more than once this year, and U.S. regulators should look for ways to hold traders accountable, a top official on the Commodity Futures Trading Commission said on Monday.
Bart Chilton, a commissioner with the futures regulator, said "mini-flash crashes occur all too often" following a surge in high-frequency trading.
Securities and futures regulators have been trying to determine ways to prevent another event like the May 6 "flash crash" when markets temporarily plunged. The CFTC on Tuesday will unveil new draft rules to clamp down on disruptive trading practices.
"They don’t cause as much of a disruption as that of May 6, but more than once this year, runaway algos have disrupted markets. By that I mean, cost people money," Chilton said in prepared remarks for an energy conference in Las Vegas.
"We should explore ways to hold those who set off runaway robotic trades accountable," he said.
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Jim Sinclair’s Commentary
Be sure to check out this video on the truth about unemployment...
http://www.cbsnews.com/video/watch/?id=6987699n


Jim Sinclair’s Commentary
A bet on inflation, or on the government statistics of inflation?

TIPS dip into negative territory. For the first time ever, inflation-protected Treasury bonds sold with a negative yield. Investors bought $10B of five-year TIPS yesterday with a yield of negative 0.55%, in a bet that the Fed will be successful in stimulating the economy, boosting inflation and making the TIPS more valuable. If the investors turn out to be wrong and inflation doesn’t appear as they expect, they could end up paying to lend money to the government.



Jim Sinclair’s Commentary
This says it well concerning the Forex market.

WORLD FOREX: Dollar Rises; GDP Boosts Sterling By Nicholas Hastings
Of DOW JONES NEWSWIRES
Fresh warnings from Japanese officials about the strength of the yen helped to push the dollar higher in European trade. However, the U.S. currency’s gains continued to be limited by the debate over just how much more quantitative easing the Federal Reserve will need to introduce early next month
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Jim’s Mailbox

Posted: Oct 26 2010     By: Jim Sinclair      Post Edited: October 26, 2010 at 4:14 pm
Filed under: Jim's Mailbox
Jim and Dan,
Here’s today’s update:

CIGA Stefaan

Home prices fell in August, near lows: S&P CIGA Eric
Sluggish to falling home prices are not keeping pace with the rate of currency devaluation. This underperformance is illustrated by a declining median home price to gold ratio. The chart reveals that the bounce within the steps is not only weakening but also shortening as the price of gold accelerates.
U.S. Median Home Price (MHP) to Gold:
Falling constant currency or “real” home prices means homebuilders struggle to remain profitable.
S&P Homebuilders (HB) to Gold Ratio:
Prices of single-family homes fell in August, hovering around recent lows after the expiration of popular homebuyer tax credits, according a Standard & Poor’s/Case-Shiller home price report on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3 percent in August from July on a seasonally adjusted basis, as expected in a Reuters poll. The dip followed a 0.6 percent July gain.
Source: finance.yahoo.com
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TIPS Yield Goes Negative for First Time CIGA Eric
The threat has never been deflation. Yet, that’s what they’ll continue to spin, thus, many will believe. Those that suggest that 2000-present represents a comparison to 1929-1954 ignore the key difference in the U.S. dollar between the two periods. Roosevelt, desiring inflation through currency devaluation, had to confiscate gold as it was directly tied to the dollar. Once gold was confiscated (at $20/oz), it was promptly revalued at $35/oz by executive order.
Check you pockets once. Do you find any $20 gold pieces? Any Federal Reserve notes convertible to gold?
The U.S. dollar has no anchor and can be devalued at will. On going default through inflation is the real threat.
The up turn in the TIPS to nominal long bonds reflects another reacceleration of inflation. It’s not the magnitude of the ratio but rather than direction and acceleration that matters to capital.
TIPS to Nominal Bond Ratio:
In its bid to fight deflation, the Federal Reserve seems to be gaining some traction.
On Monday, investors snapped up government securities designed to protect against inflation, generating so much demand that the Treasury was able to sell them with a negative yield, the first time that has happened.
Source: online.wsj.com
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The Fiscal Disaster Set to Explode in December CIGA Eric
Expect the moratorium on interest payments to be extended beyond December. The budgetary strains of the States have been and continue to be transferred to the Federal level. This transfer is increasingly supported by currency devaluation – better known as quantitative easing.
US Federal Budget (Surplus or Deficit As A % of GDP, 12 Month Moving Average) and Gold London P.M. Fixed:
As businesses lay off workers, fewer payroll tax dollars go into each state’s unemployment insurance
Since March of 2009, 31 states have borrowed billions from the federal government to continue paying out unemployment benefits while keeping their UI trust funds from insolvency. The federal stimulus provided for a moratorium on interest payments until December, 2010. And, as you likely know, that’s a month from now.
Source: minyanville.com
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Hourly Action In Gold From Trader Dan

Posted: Oct 26 2010     By: Dan Norcini      Post Edited: October 26, 2010 at 2:05 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
The silver market was abuzz with news today about CFTC Commissioner, Bart Chilton, concerns over price manipulation. The fact that he has come out so publicly took many, outside the camp of GATA and others, by surprise and lit a fire under that market which took it up into a resistance area near $24 on the charts. Strength in silver then worked to pull up gold which had been under pressure from the falling Euro and the subsequent bounce towards 78 in the Dollar.
You have to wonder about the many who have insulted GATA and its fine work over the years and ridiculed them in such a derogatory fashion whether they will now have the common decency to apologize for their shameless and contemptuous treatment of my friends Bill Murphy and Chris Powell and all the other dedicated members of the GATA board. The fact that Commissioner Chilton has come out so forcefully and chosen to use the words, “fraudulent” and “devious” in regards to the silver market is remarkable for its clarity and frankness. He was careful not to come to a conclusion about actual manipulation but as he pointed out, attempted manipulation is an entirely different matter. Based on his own words, it is evident that he strongly believes that attempted manipulation has been occurring regularly.
From here on, those who refer to GATA and its supporters as “the tin foil hat” crowd are only making fools out of themselves and revealing themselves to be mere hacks of the bullion bank crowd. GATA can no longer be dismissed as some sort of rogue band of disgruntled “gold bugs” but as the fine group of people that they are; people who share a genuine concern for the integrity of our financial markets and whose tireless research and efforts on the part of the precious metals markets deserves to be given the respect that is due to any organization which has produced work of the nature and quality that GATA has. I am not holding my breath however; very few are able to conquer their own pride and remain slaves to it all their lives. It takes a man of real character to admit he was wrong. Generally speaking, the most vocal opponents of GATA seem lacking in this department.
Hats off also to Commissioner Chilton for having the integrity to follow through on this even in the face of what no doubt must have been some very strong opposition. It is refreshing to see a man who actually takes what he does seriously and is working in the interests of the general public and not just a few favored special interests. If you have not done so, please take the time to send him an email encouraging him and thanking him for his efforts. So often men in his position only get emails or letters haranguing them.
Back to gold – it has reinforced its range trade after failing to take out $1,350 on the topside and moving lower back within its box that is defined by $1320 on the bottom and $1350 on the top. I still think it will work this range ahead of the next FOMC meeting in early November barring any drastic moves in the Dollar. Silver, even though it responded nicely to the Chilton news, has yet to break above $24 on the topside, which is the level it needs to best to give it a shot at $25 once again.
The HUI is up but below the strong chart level of 520 that needs to be vanquished before it can mount another assault on its recent peak. As long as it holds 490 on the downside it should be okay and continue consolidating.
The Dollar is also working in a range between 78 on the top and 77 on the bottom. The longer these markets range trade ahead of the FOMC, the more significance that meeting and what comes out of it is going to be.
There is some pressure in the bond market over the amount of supply coming. Until bond traders see the extent of any QE announcement, they are going to be bit worried whether demand will be sufficient to absorb it all.
We are all basically reduced to sitting around waiting for the Fed to act. A week is going to seem like an eternity.
Oh by the way, I have enjoyed the comments on my comments about the cotton market. For those of you are might be interested, they increased the limit to 600 points for today’s trading. It is up over 500 as I write this. The madness will continue until it just stops and then that will be that. That market is looking like a huge disaster just waiting to happen.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini