…..calling me objective is going to tarnish my street cred as a TROLL. Objective is a bad word to the religionist zealots of conspiracies, man you if don’t follow lockstep with this crowd, they want to burn you at the stake.
Here's a link for the video of Jim and Maria....but it was in April
But no problems here, anyone that’s has ever traded has been humbled by the market. When you commented on what I said here, please allow me to clarify:…….. Although your saying that if this were anything but gold I would short it shows you're not completely objective.
I stated that to make sure people understood the different characteristics of gold as money and as a raw material and also the difference when selecting stocks to short. A stock can go to zero……gold could but highly unlikely…..the currency you are hedging could and the dollar probably will one day.
As far as point number three…..I look at it this way……QE2 ( I think it was 2) the Fed started purchasing 45 billion a month is MBS from the banks……I would image that was the toxic waste from the Housing Bubble. Well you know….in a pool where only 5% or less went bad, that left 95% that didn’t and there has to be some value there, if they marked to model (which I wrote a post on here back on June 16 on bond valuation) you can come up the present value of discounted cash flow that will allow you to put a fair value on the remaining bonds in the pool (not to mention the call option of refinancing)..…..so I think that portion of the Fed balance sheet might be healthy…..it’s the treasuries (QE3 45 billion) a month that are in trouble. A move from 1.70% to 3.0% represents a 10 to 11 percent decline in the price of this asset class. The Fed purchases have not really changed banks’ exposure regarding the treasuries on their balance sheet……the Prime Dealers have been selling the new issue treasuries to the Fed…….think about it……..why would the banks sell their “off the run” treasuries when interest rates were going down …..those bond were going up in price…….the banks have just shuffled all the low yielding new issue from crap to the Fed…..for the banks and their holdings of older higher yielding treasuries.....those assetsprices have peaked and are starting down and will start to show losses from the previous quarterly banks balance sheet statements which will prompt the banks to try and offset these losses with higher yielding assets….ie loans.
So that brings me to my analysis of velocity. The banks will start to forgo the 25basis points the Fed is paying on excess deposit reserves and make more loans (this will move those excess deposit reserves to capital reserves)….the loans will kick in the fractional reserve inflation everyone has been looking for….this is why I said real assets will go up (or the purchasing power of all those new credit dollars going down). You really have to think about the magnitude of this high powered money creation…..the fed balance sheet has gone from pre-crisis 800 billion to 4 trillion……that is huge….at a 10% reserve ratio that’s 32 trillion in credit creation that could take place….i don’t think it will be that much but just a small portion of that could be devastating, but deflation will not be the problem except in financial assets.
You can see what I am saying in the M3 money supply figures on shadow stats.
Remember when they create all this money they DO NOT know where it is going to go…..India and Indonesia are already seeing the reversal of hot money flows. They are SELLING DOLLARS to defend their currencies and this could unleash an unintended consequence for the dollar eventually because of the net 15 trillion dollar currency reserve position of the world. So with all that said……I am more bullish on gold then bearish……but I never buy or sell ANYTHING without knowing what the charts say……I am a contrary investor, but I will trade a trend and the trend right now according to the chart you created is lower for gold……but 1200 looks like support.
So Dog I'm with ya on the short term……long term I am with the kooks…..they hate when I call them that…….but anyone that thinks that we are the only generation of government corruption and “they’ve” discovered the “truth” is a kook. They lament all of us that don’t go “bat shit crazy” every time they discover the latest offense and call people nasty names because “they think” we buy the “official story”…..but they are the ones that live in the fairy-tale of the “official historical story”…….don’t ya base1ass
Bond valuation link
Bloomberg deleted the bond calculation tool so here in a different one
solve for price, you’ll figure it out
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