Posted: May 02 2011 By: Greg Hunter Post Edited: May 2, 2011 at 1:03 pm
Filed under: USAWatchdog.com
By Greg Hunter’s USAWatchdog.com
Dear CIGAs,
The Federal Reserve held its first press conference in its 97 year history last week. In my mind, it did this because it recognizes the deep financial trouble the U.S. is in. It wants to put a positive spin on the mess it largely created and/or allowed to happen. After all, it was Tim Geithner who was the head of the New York Fed during the go-go years of the mid 2000’s. He was supposed to regulate the big Wall Street banks. You see how well that worked out—the entire system melted down and Geithner got a promotion to Treasury Secretary.
I’ll give my interpretation of a few of the important points the Fed was trying to get out to the public. Overall, the Fed wants people to keep their confidence in a system where money is loaned into existence. Yes, that’s right. Every time you swipe your credit card, you are not borrowing money but creating it. The banks love this because there is virtually no cost to them, and you have to pay back the money with interest just for the privilege of going into debt. Can you see why the Fed wants to keep this confidence game going?
My interpretation of a few specific points brought up in the Press conference hosted by Fed chief Ben Bernanke are: high oil prices are not the fault of the Fed; neither is the weak dollar, that is the Treasury Department’s problem even though U.S. dollars say “Federal Reserve Note” across the top of every single one of them; and finally (and this is my favorite), the second round of Quantitative Easing (QE2) will end by June 30th. (Click here for more on the Fed press conference from Reuters.)
The overt fed money printing of $75 billion a month is going to end, but the covert money printing will not. It can’t because who will step in and buy all that debt at discount rates? Jim Rickards, Senior Managing Director for Market Intelligence at Omnis, Inc., thinks the Fed will still be printing “$750 billion” a year. Rickards wrote a piece about 5 weeks ago spelling out why he thinks QE will be “perpetual.” Rickards is a big thinker, and he is the insider’s insider. He says, “The Fed is now like a 400-pound man who can eat 5,000 calories per day without gaining weight because his morbidly obese metabolism requires it to function. The discussion of QE, QE2 and QE3 has become irrelevant. What we have is permanent QE until such time as the Fed decides to tighten financial conditions. This is unlikely to happen until mid-2012 at the earliest, perhaps later in view of the housing double-dip and increasing oil prices. In any case, QE will be with us for an “extended period” no matter what the Fed announces.” (Click here to read the complete post from King World News.)
More…
In addition to all the already highlighted factors (margin hikes, Cramer buy recommendations, Chinese slowdown concerns, etc.) another possible reason why silver holders (at least of the recent variety, those who have been long since ~$10 could not care less) recently have had a difficult time with estabilishing positions in a suddenly very volatile silver market, is that according to a recently released 13-D by Sprott Asset Management, the head of the world's first silver physical ETF has taken profits on over 1.6 million shares of PSLV, across various funds, for total proceeds of just over $35 million, including up to $6.4 million for personal gain by Sprott.
Filed under: USAWatchdog.com
By Greg Hunter’s USAWatchdog.com
Dear CIGAs,
The Federal Reserve held its first press conference in its 97 year history last week. In my mind, it did this because it recognizes the deep financial trouble the U.S. is in. It wants to put a positive spin on the mess it largely created and/or allowed to happen. After all, it was Tim Geithner who was the head of the New York Fed during the go-go years of the mid 2000’s. He was supposed to regulate the big Wall Street banks. You see how well that worked out—the entire system melted down and Geithner got a promotion to Treasury Secretary.
I’ll give my interpretation of a few of the important points the Fed was trying to get out to the public. Overall, the Fed wants people to keep their confidence in a system where money is loaned into existence. Yes, that’s right. Every time you swipe your credit card, you are not borrowing money but creating it. The banks love this because there is virtually no cost to them, and you have to pay back the money with interest just for the privilege of going into debt. Can you see why the Fed wants to keep this confidence game going?
My interpretation of a few specific points brought up in the Press conference hosted by Fed chief Ben Bernanke are: high oil prices are not the fault of the Fed; neither is the weak dollar, that is the Treasury Department’s problem even though U.S. dollars say “Federal Reserve Note” across the top of every single one of them; and finally (and this is my favorite), the second round of Quantitative Easing (QE2) will end by June 30th. (Click here for more on the Fed press conference from Reuters.)
The overt fed money printing of $75 billion a month is going to end, but the covert money printing will not. It can’t because who will step in and buy all that debt at discount rates? Jim Rickards, Senior Managing Director for Market Intelligence at Omnis, Inc., thinks the Fed will still be printing “$750 billion” a year. Rickards wrote a piece about 5 weeks ago spelling out why he thinks QE will be “perpetual.” Rickards is a big thinker, and he is the insider’s insider. He says, “The Fed is now like a 400-pound man who can eat 5,000 calories per day without gaining weight because his morbidly obese metabolism requires it to function. The discussion of QE, QE2 and QE3 has become irrelevant. What we have is permanent QE until such time as the Fed decides to tighten financial conditions. This is unlikely to happen until mid-2012 at the earliest, perhaps later in view of the housing double-dip and increasing oil prices. In any case, QE will be with us for an “extended period” no matter what the Fed announces.” (Click here to read the complete post from King World News.)
More…
A "Confuzzled" Einhorn Compares Melt Up Market To Charlie Sheen, Gives Up On Hedging: Goes Long, Keeps Gold new
Submitted by Tyler Durden on 05/02/2011 14:23 -0400From the just released Greenlight Capital letter: "Much like Charlie Sheen, who seems to believe that all publicity is good publicity, recent market behavior suggests that we are in the part of the cycle where “all news is good news.” This was true for the broad market, which shrugged off the continued escalation of commodity prices, unrest in the Middle East, a catastrophe in Japan, tightening monetary policy outside the United States and a deceleration of domestic economic growth....this quarter we were repeatedly confuzzled when we read company news announcements that we expected to cause falling stock prices, only to see them rise instead – and sometimes sharply at that. Nonetheless, we believe that this environment is cyclical, and that it will continue this way... until it doesn’t. Since we don’t expect to be able to call the turn, we believe our best course is to concentrate on generating better alpha." In other words, shorting is for wimps. It appears everyone has now given up on hedging. Last time this happened was in the summer of 2008 when nothing could dent the market.
Sprott Sells $35 Million Worth Of PSLV Across Different Funds In Week Between April 18 And April 25
Submitted by Tyler Durden on 05/02/2011 13:54 -0400In addition to all the already highlighted factors (margin hikes, Cramer buy recommendations, Chinese slowdown concerns, etc.) another possible reason why silver holders (at least of the recent variety, those who have been long since ~$10 could not care less) recently have had a difficult time with estabilishing positions in a suddenly very volatile silver market, is that according to a recently released 13-D by Sprott Asset Management, the head of the world's first silver physical ETF has taken profits on over 1.6 million shares of PSLV, across various funds, for total proceeds of just over $35 million, including up to $6.4 million for personal gain by Sprott.
Guest Post: China’s Economy: #1 or #126?
Submitted by Kurt Brouwer of Fundmastery
China’s economy: #1 or #126?
There have been plenty of reports that China’s economy is overtaking the U.S. economy and that it may soon outstrip the U.S.. As an example, in a recent piece, my MarketWatch.com colleague Brett Arends, reported on a study by the International Monetary Fund on the size of China’s economy. The IMF study suggested that by one economic measure China’s economy would look almost as big as the U.S. economy in a few years. Of course, that set off my innate skepticism so I did a little digging. In this post, my goal is to cover two questions:
China’s economy: #1 or #126?
There have been plenty of reports that China’s economy is overtaking the U.S. economy and that it may soon outstrip the U.S.. As an example, in a recent piece, my MarketWatch.com colleague Brett Arends, reported on a study by the International Monetary Fund on the size of China’s economy. The IMF study suggested that by one economic measure China’s economy would look almost as big as the U.S. economy in a few years. Of course, that set off my innate skepticism so I did a little digging. In this post, my goal is to cover two questions:
- How big is China’s economy compared to ours?
- And, is it really going to surpass our economy in size any time soon
April ISM Falls, Prices Paid At Highest Since July 2008, "No Commodities Down In Price"
Submitted by Tyler Durden on 05/02/2011 10:23 -0400
The April ISM is out, and while it confirms last week's declining Chicago PMI data and the fact that the Japanese contraction has not even remotely impacted US businesses yet (and it will), the recent weakness predicted by various Fed diffusion indices is being confirmed. The ISM came at 60.4, a decline from 61.2 in March, primarily a a result of a fall in Production (-5.2), New Orders (-1.6) Supplier Deliveries (2.9) and Imports (-1.0). All of these metrics will drop far more once the Japanese contraction is truly appreciated. On the other hand, inventory restocking is still working its artificial growth miracles, rising by 6.2 to 53.6. Yet the most important metric as always remains the Price Paid, which after rising once again from 85.0 to 85.5, above expectations, is at the highest since July 2008. Then again, by now our thesis of (more than) transitory inflation can be appreciate by everyone.
By: Bob Chapman, The International Forecaster
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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