Welcome to Capital Account. It’s Federal Reserve Interest Rate Decision day! As expected, the Fed announced it will expand its bond-buying program with 45 billion dollars a month in longer-term treasury securities, after the conclusion of Operation Twist at the end of this year. In a different sort of twist, the Fed also announced it is now tying interest rate guidance to economic guide posts. At the press conference Bernanke announced that the FOMC members would take into consideration a variety of metrics for determining inflation, but how will the Fed use this data to make its long term inflation predictions? We ask Jim Rickards of Tangent Capital Partners if this gives the FOMC more subjective leeway to ignore potential high short term price inflation. He explains that this gives the Fed the room to tell the public “inflation is what we say it is, and that the Fed is attempting to INCREASE THE VELOCITY of the money supply in order to shock the public into spending due to higher than expected inflation!
By SD Contributor SRSrocco:
Well, it didn’t take long for market prices and reality to set in on Cheseapeake’s earnings.
In the chart below, you will notice that Chesapeake’s revenues have declined substantially since the last quarter and they took that nice $3 billion impairment charge due to.a WRITE DOWN IN RESERVES…. thanks to the USGS.
GoldMoney Chairman James Turk outlines the reasons why “everyone should have a precious metals portfolio.” James outlines the stark fiscal facts about government debt problems across the developed world, and why central banks’ determination to devalue the currencies they issue is causing a bull market in precious metals. He demonstrates why gold remains undervalued, despite the great gains seen in its price over the last 11 years, and a means of assessing whether or not the yellow metal is fairly valued or not.
James argues that we are living in “fiat currency bubble”, similar though many magnitudes greater than the recent housing bubbles seen in America, Ireland, Spain and other countries, or the “Tech bubble” in NASDAQ stocks in the late 1990s. The USA is racing towards hyperinflation, courtesy of the Federal Reserve’s monetisation of US government deficits.
Full interview below:
QE∞ is now QE∞er, and QE4 is official as the Fed announces $45 billion in NEW unsterilized monthly treasury bond purchases, exactly as expected by the market.
- FED INCREASES QE WITH $45 BILLION IN NEW MONTHLY TREASURY PURCHASES
- FED TO CONTINUE MORTGAGE BONDS PURCHASES AT $40 BILLION PER MONTH
- OPERATION TWIST EXPANDED INTO UNSTERILIZED BOND MONETIZATION
- MONTHLY PURCHASES TO TOTAL $85 BILLION
- FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
- Gold and silver popping
Full FOMC statement below: and Click here to watch Bernanke’s Press Conference on QE4 LIVE at 2:15pm EST:
Watch Ben Bernanke’s Press Conference below LIVE AT SD at 2:15pm EST!!
SD reader and commodities trader JB Slear has sent us silver’s 30 year chart which demonstrates one of the strongest and largest cup and handle patterns in history. JB states that the cartel’s manipulation of the silver market will backfire in a massive way, and that the target on the cup and handle chart will shock even silver bugs.
JB Slear’s 30 year silver chart below:
As expected, the pre FOMC silver raid has commenced. In a sign of extreme physical demand, silver found support at the day’s open, and failed to take out support at $33 upon the first waterfall. Gold holding support at $1710.
“We have a six-month [gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014,” says the 2013 outlook from Bank of America Merrill Lynch metals strategists this morning, in contrast with the Goldman Sachs gold forecast for 2014 made last week.
“These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012.”
“Quite clearly the US wants a lower Dollar and its monetary policy is certainly geared to deliver it,” says currency strategist Steve Barrow at Standard Bank in a note this morning.
Our favorite member of the European Parliament, Nigel Farage delivered another epic rant this morning, railing on the Eurozone being awarded the Nobel Peace Prize, and states the good Europeans would break up the eurozone, but that there are no leaders in those southern European countries who frankly have got the courage to stand up to the might of Brussels and to challenge the Eurozone project.
Farage’s full rant below:
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Gold and silver are both strong this morning ahead of the December FOMC statement release at 12:30pm EST.
Silver is up .40 to $33.50, and gold nearly $10 to $1720. If the Fed does indeed announce an expansion of QE to infinity at 12:30, look for a sudden raid in gold and silver just prior to the release, much like the flash crash in the metals 5 minutes prior to the announcement of QE∞ in September.
Turkey’s trade balance may turn on whether President Barack Obama vetoes more stringent sanctions against Iran after the U.S. Senate passed a measure targeting loopholes in gold exports to the Islamic Republic. Turkey’s gold trade with neighbouring Iran has helped shrink its trade deficit over the past year according to Bloomberg. Incredibly, precious metals accounted for about half of the almost $21 billion decline. That’s calmed investor concern over its current-account gap, and helped persuade Fitch Ratings to give Turkey its first investment-grade rating since 1994. The U.S. Senate voted 94-0 on Nov. 30 to approve new sanctions against Iran, closing gaps from previous measures, including trade in precious metals. Obama, who opposes the move on the grounds it may undercut existing efforts to rein in the nation’s nuclear ambitions, signed an executive order in July restricting gold payments to Iranian state institutions. Turkey exported $11.9 billion of gold in the first 10 months of the year, according to the Ankara-based statistics agency’s website. A very large 85% of the shipments went to Iran and the United Arab Emirates. Iran is buying the gold with payments Turkey makes for natural gas it purchases in liras, Turkish Deputy Prime Minister Ali Babacan told a parliamentary committee in Ankara on Nov. 23.
Submitted by Stewart Thomson:
The FOMC meeting this week could be the fundamental catalyst that drives gold above $1800, and turns it into a “here to stay” floor. Currently, about half of the bonds bought by the Fed are financed by other bonds it holds. That process is referred to as “sterilized QE”, but the Fed is quickly running out of short term bonds. Ben Bernanke also appears to be well aware that the real unemployment rate is quite a bit higher than 7.7%. As a result, the door is open for him to announce “unsterilized QE”. He could do it on Wednesday, December 12. I would expect it to be called “expanded QE3”. If he’s feeling particularly aggressive, he may give it the label of “QE4”.
Unsterilized QE4, and a gold price over $1800, could cause these huge movers of liquidity to believe that $1800, rather than $1500, is the new “here to stay floor” for gold.
By SD Contributor SRSrocco:
A recent article by Paul Van Eeden claimed the fair price of gold to be $800-$900 an ounce. If we look at the table I put together below, we can see that when we factor in ALL COSTS, in reality, the break-even price of mining gold is now above $1,300:
Financial analyst Gregory Mannarino says, “The Federal Reserve is going to print into oblivion. Why? Because cash is going out of style.” It was recently reported the Fed is buying 90% of U.S. Treasuries. Mannarino contends, “The Federal Reserve has to go out and buy Treasury bonds. It they don’t do this, it’s over . . . the system collapses. The Fed is now the lender of last resort.” Mannarino predicts not only America, but the world, is headed for a collapse. “Nothing they do now can change the trajectory we are on, which is the mother of all collapses of the financial system–on a global level,” says Mannarino. When that happens, what is going to happen to all the asset classes? Mannarino says, “You got to be nuts to buy 10-Year Treasury bonds . . . . At some point, it will be the free market that will decide fair value with regard to everything across the board, including debt.” Mannarino thinks interest rates will spike and “commodities are going to go to the moon . . . gold and silver are going up over the long term.” Join Greg Hunter as he goes One-on-One with Gregory Mannarino.