Eric Sprott recently joined Matterhorn Asset Management’s Lars Schall to discuss the metals, QE, and how the great Keynesian fiat experiment is likely to end for Western governments.
Sprott claims that the West will one day soon regret all of its financial policies including QE, ZIRP, and gold suppression, and that the major governments carrying out these policies are now insolvent!
When asked by Lars what would be the signal to exit the gold and silver markets and what he views as the top in gold Sprott replied: For me to see a top in gold you would need to see 1 of 3 things: A maniacal blow-off. 2. The Central Planners become financially responsible (not likely). 3. If they finally capitulated and made their currencies gold-backed (which I don’t suspect we will see). I think we have a long way to go before we see any of those elements manifest themselves.
Rudolph von Havenstein was head of the German Central Bank during the infamous Weimar hyperinflation/currency collapse period (1921 – 1923). As most of you know, every German who had their wealth denominated in German marks on the night of November 13, 1923 woke up the next day to discover that their paper wealth was worthless. Gold, for all intents and purposes, went to infinity as measured in the German mark (gold began the Weimar Republic period at 170 marks and peaked at 87 trillion marks).
I mention this as background because, despite the Fed’s lip service to the contrary about reducing QE (the “taper”), the Fed has no choice to not only continue printing money, but will soon be forced to increase its rate of printing. Make no mistake, this is going to get crazy and they will probably eventually start buying assets other than Treasuries and mortgages, such as municipal bonds, pension liabilities and equities. [Read more...]
The Fed, through ZIRP and QE, has created $Trillions of benefits for the financial industry and much of that benefit has been created at the expense of government pension plans and individuals who depend upon interest earnings. This has a direct and negative consequence to many retirement plans, especially city and state public pensions.
It is especially destructive to those individuals who depend upon interest earnings to fund their cost of living.
Thanks to QE Your savings (fiat ones anyways) are unlikely to last as long as you hoped. [Read more...]
It’s probably time for the Western gold community to focus more on the huge quantitative easing program in Japan, and less on American QE tapering.
Gold and silver prices can rise in 2014, even if the Fed tapers “all the way to zero”.
While most gold investors think 2014 will be a terrible year, I think they could be in for a very pleasant surprise.
I expect silver could outperform gold in 2014 by a significant margin. [Read more...]
One of the frustrating elements for traders since the 2008 credit crisis slashed value is the way markets have traded and reacted to fundamental news. There were no trends, just a constant risk-on/risk-off world where opportunity gave way to fear and fear to opportunity, not so much based on the analysis of market fundamentals but on how the Federal Reserve and other central banks would manage the so-called “new normal.” [Read more...]
Already beleaguered, gold suffered another sharp drop this week. When the minutes from the Federal Reserve’s latest policy meeting implied it might slow its QE3 bond-buying campaign “in coming months”, futures speculators responded with heavy selling. But their extreme gold bearishness is highly irrational, they are missing the forest for the trees. Taper or not, quantitative easing remains super-bullish for gold. [Read more...]
Carl Icahn is right to call “a lot of” corporate earnings a “mirage” because by reducing borrowing costs via ongoing QE, The Fed has artificially elevated earnings.
Thus Corporate Earnings are yet another Dangerous Fed-created Asset Bubble.
With Janet Yellen’s appointment as Fed Chairman, we can expect Easy Money Policies including Bond Buying via QE to continue indefinitely.
This will likely keep rates on the 10 year below 3% for a little while more but cannot keep them from rising indefinitely. There is simply too much Fed-created Hot Money in the System. Hot Money Bubbles are inflating because Fed QE suppresses interest rates, which lowers borrowing costs, which artificially elevates corporate Earnings. These earnings are thus Hot, i.e., artificially created, money. Remove or lessen the QE and the Bubble Bursts. [Read more...]
Gold and silver have just been absolutely hammered on the Fed minutes release in which Fed MOPE claimed a taper is likely in the coming months.
Gold has plunged through $1250 to $1240, and silver has just broken support at $20 and now has a $19 handle plunging to $19.73! [Read more...]
Two days before the Janet Yellen confirmation hearings, Andrew Huszar, an ex-Fed official, publicly apologized to the American people for his role in QE. Mr. Huszar called QE “the greatest backdoor Wall Street bailout of all time.”
As recently as five years ago, it would have been unheard of for a Wall Street insider and former Fed official to speak so bluntly about how the Fed acts as a reverse Robin Hood. But a quick glance at the latest unemployment numbers shows that QE is not benefiting the average American. It is increasingly obvious that the Fed’s post-2008 policies of bailouts, money printing, and bond buying benefited the big banks and the politically-connected investment firms. QE is such a blatant example of crony capitalism that it makes Solyndra look like a shining example of a pure free market! [Read more...]
QE3 is running at $85bn, and directly increases FMQ by double that amount, or $170bn, indicating that other factors contributed $57bn to the FMQ total. This suggests that the current rate of QE was insufficient to provide the liquidity required in money markets consistent with current interest rates, at least for the month of September. [Read more...]
Zerohedge recently drew attention to the growing level of foreign bank cash deposits, tucked away at the bottom of the Fed’s H.8 statement.
Foreign banks’ cash balances have increased by $518.7bn since September 2012, accounting for almost all of the increase in these banks’ total assets in the H.8 table. The implication is that these cash balances are held as reserves on the Fed’s balance sheet, the counterpart of quantitative easing.
This naturally raises the reasonable question posed by Zerohedge as to why the Fed appears to be benefiting foreign banks with QE.
The answer is either these deposits have been transferred to them from US banks in the normal course of business or the Fed is prepared to provide liquidity to foreign banks: after all the US dollar is the reserve currency. And this liquidity is most needed by the weakest banks in the international banking system, many of which are in the euro-zone. [Read more...]
The Federal Reserve is creating hundreds of billions of dollars out of thin air and using that money to buy U.S. government debt and mortgage-backed securities and take them out of circulation. Since the middle of 2008, these purchases have caused the Fed’s balance sheet to balloon from under a trillion dollars to nearly four trillion dollars. This represents the greatest central bank intervention in the history of the planet, and Janet Yellen says that she does not anticipate that it will end any time soon because “the recovery is still fragile”. Of course, as I showed the other day, the truth is that quantitative easing has done essentially nothing for the average person on the street. But what QE has done is that it has sent stocks soaring to record highs. Unfortunately, this stock market bubble is completely and totally divorced from economic reality, and when the easy money is taken away the bubble will collapse. Just look at what happened a few months ago when Ben Bernanke suggested that the Fed may begin to “taper” the amount of quantitative easing that it was doing. The mere suggestion that the flow of easy money would start to slow down a little bit was enough to send the market into deep convulsions. This is why the Federal Reserve cannot stop monetizing debt. The moment the Fed stops, it could throw our financial markets into a crisis even worse than what we saw back in 2008. [Read more...]
In this excellent interview, Jim Rogers explains just how badly Quantitative Easing and ongoing currency wars are damaging the U.S. economy, why it’s so important for any person to protect their savings with physical gold and silver, and what will happen the moment the Fed attempts to taper quantitative easing:
“Eventually they will try to cut QE, it will finally cause the collapse, at that point we will have a big change, because they will throw them out, whether it’s the politicians or the central bankers or whoever.“
Jim Rogers’ MUST READ interview on precious metals & how QE ends is below: [Read more...]