I've pulled all the levers I can.....it just won't "fly"
Most of you are quite familiar with my constant reference to Nature's Law, which applies to all aspects of our lives. You may think these laws can be broken but they cannot. The speed of light, gravity, water's boiling point, to mention a few........and math. You know, that little word, math. Nature's law....2 plus 2 equals 4. It is a constant that is not variable just water and oil. You don't mix the two.......its nature's law. Violating these laws have consequences. Last week an almost laughable FOMC discussion supposedly contemplating stopping QE this year was attributed to gold and silver tanking. Fortunately for the Fed most Americans either cannot do simple math or just are not interested in doing a little checking into the debt debacle their country faces. Keeping it simple the average interest rates over multiple decades for the 10YTB should be just over 5%. Over the next few years we will add TRILLIONS more to our debt total, but lets assume the Fed was suddenly able to return the CURRENT 18 Trillion debt to "normal" interest rates of a little over 5%. At only the CURRENT debt the INTEREST ALONE we would pay yearly on that debt would be HALF of our ENTIRE Yearly Budget. That is ONLY if it occurred NOW. Imagine what happens to the economy and GDP if we start paying Mortgages at 7% and car loans are at 10% etc. You have GDP in this weak economy collapsing......you have instant Depression. So in effect the supporters of Bernanke's strategy do have a point. What no one wants to admit however is the effect that a rise in interests on the long bond would have on the 1.5 Quadrillion derivatives market? What about the carrying costs of local and state debt???? INSTANT bankruptcy. So you see, this is all a cruel ruse that is designed to delude the investing community there is an exit strategy from Quantitative Easing....QE to infinity...... There is no exit. At least there is no exit without major default and risks to the very banking system itself. Either way will involve tremendous pain. The intent of the FOMC release was also to temper the rise of commodities and PMs. PMs are a barometer of the health of the currency and they want the CONfidence in the dollar to hold for as long as possible. The dollar is under attack as are many developed nations currencies from currency swap arrangements from developing nations. Our money printing policy will begin to have a strangling effect on the middle class as the rise in prices of essentials begins to stifle the family budgets to the point that NO discretionary spending is possible......just survival spending. These attempts to stifle PMs will continue but their desired effects are lessening. At some point the market forces (nature) will prevail. I do not share Jim Willies profoundly bearish outlook on PM mining stocks but I do give him the respect of noting they could certainly underperform for longer than many of us can tolerate. I have no other "favorite" places to park paper and I am not levered..... so I'll stay invested. If you DON'T have physical metal then again GOOD LUCK!!....Willie, Red and I all agree on that one.... gl
I use as many metrics as I can find...This market is the BEAR of all bears perhaps worse than the 1929-1933 crash.It was the result of a thirty year credit bubble that could have been stopped. Many of us trading and trying to survive this will be destroyed....Many families will be destroyed, conversely many families will become closer as they unite to survive. I will attempt to provide useful current daily news that will assist you in your market and personal decisions. Always do your own due diligence...my commentary is just that....commentary. We are now entering the K Winter final phase down. This is heralded by a complete loss of CONfidence. Many of you that have read this blog know this is EVERYTHING for markets. We are lost and our moral compass is lost...that is a disastrous combination. The rule of law is now in the rear view mirror for this nation. Prepare for coming events beyond your imagination. readers