Janet Yellen begins her first FOMC Press Conference as Fed Chairwoman
  • *Update: During Press Conf, Yellen advises no rate hikes for “a couple” FOMC meetings, states “Almost all participants see 2015 rate hike
  • Fed to be “Patient” with interest rate hikes
  • After initial pop, gold & silver selling off on que as Yellen takes the podium…

If the past 6 post-FOMC Statement gold & silver smashes are any indication however, don’t be surprised to see the cartel attempt to smash silver towards a $14 handle and gold towards $1150 by Friday…

Full December FOMC Statement is below: 

gold crash

A few years ago Jim Rickards came out with his book “Currency Wars” which talked about countries engaging in a race to devalue their own currencies to try and pump up sagging domestic economies. As things have unfolded, the currency wars have indeed been intense.
We can kind of think of all these massive QE and stimulus programs like a stock car race to see who can devalue their currency the fastest.  Right now the US has pulled in for a pit stop, but Japan, China, and the EU are still fighting it out on the track. 

Here is the net result of central banks pursuing quantitative easing and zero-interest rates: a massive increase in global risks resulting from the carry trades the money expansion and cheap rates fueled.
The central banks’ “solution” has blown another global bubble of risk that now threatens to destabilize not just the carry trades but the economies and credit systems that have become intertwined with the carry trade.

In effect, the failure to address the structural problems revealed in the Global Financial Meltdown of 2008-2009 have been transferred to the larger foreign-exchange (FX) market, which is connected to virtually everything in the global economy.

Sovereign Man

Miguel de Cervantes’ novel Don Quixote is brilliantly entertaining.  But the modern-day monetary equivalent is not so much.
Central bankers today have an equally delusional view of the world.   Just three months ago, Mario Draghi (President of the European Central Bank) embarked on his own Quixotic folly by taking certain interest rates into NEGATIVE territory.
Draghi convinced himself that he was saving Europe from disaster. And like Don Quixote, everyone else has had to pay the price for his delusions.
On November 1st, the first European bank has passed along these negative interest rates to its retail customers.

QE

Mark October 29th on your calendars.  The Dow is at 16974, the S&P 500 is at 1982 and the NASDAQ is at 4549. 
From this day forward, we will be looking to see how the stock market performs without the monetary heroin that the Federal Reserve has been providing to it. 

QE taper

It is widely expected that the Federal Reserve is going to announce the end of quantitative easing this week. 
Will this represent a major turning point for the stock market? 
As you will see below, since 2008 stocks have risen dramatically throughout every stage of quantitative easing. 
But when the various phases of quantitative easing have ended, stocks have always responded by declining substantially. 
The only thing that caused stocks to eventually start rising again was a new round of quantitative easing. 
Most Americans don’t even understand what derivatives are, but when the next great financial crisis strikes we are going to be hearing a whole lot about them.
The big banks have transformed Wall Street into the biggest casino in the history of the planet, and there is no way that this is going to end well.
A great collapse is coming.  It is just a matter of time.

HarveyOrgan1

Gold & silver were whacked by the cartel in the access market today as Janet Yellen and the Fed announced QE will end at the end of the month. 
Expect gold and silver to be under the weather for the remainder of the week.
Let’s head immediately to see the major data points for today:

panic

Something nasty is going on behind the scenes in the financial system that is not yet apparent.
Treasury futures opened in the early evening and the 10-yr traded down to 2.25%
.
Something has the market incredibly spooked and I find it interesting that the U.S. Treasury Secretary and the UK’s equivalent will be running a big bank fail simulation test next week.
The movement in 10-yr Treasury yields AND the blatant smashing of the gold price since mid-July is exactly what occurred in 2008 before Lehman collapsed.

Is another TBTF mega bank on the brink of insolvency??

end badly

Thanks to the Fed’s monetary policies, which have encouraged an increase in demand for US Treasuries, the Federal government no longer has a problem funding its deficit. QE is therefore redundant, and has been since tapering was first mooted.  This does not mean that QE is going to be abandoned forever:  its re-introduction will depend on the relationship between the government’s borrowing needs and market demand for its debt.
This analysis is confirmed by Japan’s current situation. There, QE coincides with an economy that is deteriorating by the day. One cannot argue that QE has been good for the Japanese economy. The reality behind “abenomics” is that Japan’s government is funding a massive deficit at the same time as savers are drawing down capital to cover their day-to-day living requirements. In short, the funding gap is being covered by printing money.   And now the collapsing yen, which is the inevitable consequence of monetary inflation, threatens to expose this folly.

yellen
  • Yellen lays out Federal Reserve’s plans to “normalize” monetary policy
  • Fed to officially DC QE at next meeting if economic outlook holds
  • “Normalization” will not necessarily occur immediately 
  • Fed will use an overnight repo facility as needed during normalization process
  • Fed may raise interest rates as early as 2015
  • Committee is prepared to adjust its approach if necessary (translation- we’re going to try to pull the punchbowl, but we’ll eventually bring back MOAR QE )
  • Gold & silver smash commences on que as gold sent down a mineshaft below support at $1230

Full FOMC statement is below: 

Source: Banzai7

The QE program created substantial hedge fund interest in gold-related ETFs. Unfortunately, QE never created the inflation the funds had anticipated.
That’s because commercial banks held the QE money they received, “tight to the chest”, rather than loaning it to businesses and consumers.
In a nutshell, by enlarging the money supply while GDP was falling, the Fed created deflation.
So, if the Fed were to shrink the money supply now, or at least reduce its rate of growth, while GDP rises, and banks start making loans with their “QE booty” at the same time…. is that inflationary?
The answer is yes.

panic crash

The Federal Reserve’s third quantitative-easing campaign is on track to wind down in late October.  At that point the Fed will likely stop printing new money to buy bonds, a sea-change shift with ominous implications for the stock markets.  Their entire surreal levitation during QE3 mirrored the huge growth in the Fed’s balance sheet from QE3’s bond monetizations.  When they cease, another major selloff is likely.
Prudent investors and speculators today don’t have to guess about what the end of QE3 means for the lofty Fed-inflated US stock markets.  We have the precedent of the ends of QE1 and QE2.  This next chart looks at the flagship S&P 500 stock index superimposed over the Fed’s balance sheet.
And out of all the many thousands of charts I’ve created over the years, this probably tops the heap as the scariest.

June’s FMQ components have now been released by the St Louis Fed, and it stands at a record $13.132 trillion. As can be seen in the chart above, it is $5.48 trillion more than an extension of the pre-Lehman crisis exponential growth trend.
The chart confirms that tapering seems to be having little or no effect on money markets and therefore the growth rate of fiat currency.
Still believe the Fed is really tapering QE?

Play

The world’s leading silver expert David Morgan joins The Doc & Eric Dubin this week to discuss: 

  • The Fed tapers official QE another $10 billion- gold & silver whacked the day after the FOMC statement yet again
  • David breaks down gold and silver trading over the first half of 2014:  Gold & Silver still base building a Major Bottom
  • Is the next banking crisis beginning? Banco Espírito Santo’s share price halved on  Thursday
  • Be right and sit tight?  David explains why the PM markets will scare you out or wear you out
  • We ask David how he sees the end-game for the dollar playing out- will we see a deflationary crash, or a hyper-inflation monetary collapse,  and how will PMs protect wealth against both?
  • On the Brink?  Washington driving West towards direct conflict with Russia

The SD Weekly Metals & Markets With The Doc, Eric Dubin, and David Morgan is below: