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.

Zeal091313BThe Federal Reserve’s upcoming decision on whether to slow its third quantitative-easing campaign’s debt monetizations has to be this year’s most-highly-anticipated market event.  Traders have been trying to game the odds of QE3 tapering literally all year long, driving some sharp market moves.  So the Federal Open Market Committee’s decision due out next Wednesday is likely to be a major market-moving event.
The focus on this imminent FOMC meeting is so hyper-intense that its impact should be considerable no matter what the Fed decides.  The QE3 taper (or lack thereof), its size, and what the FOMC implies for future tapering will almost certainly spark sharp price reactions in the bond markets, currency markets, stock markets, and precious metals.  All have moved violently this year on mere QE3-taper anticipation.

Zeal071213AGold’s biggest psychological overhang this year has been the fate of the Fed’s third quantitative-easing campaign. Gold futures traders hang on every word of Fed officials, extrapolating them into a timeline for ending QE3. This consuming obsession fueled unprecedented selling that spawned a stunning gold anomaly. But as QE3’s nature becomes more apparent, gold is due for a massive mean reversion higher.

In the wake of the European melt-down in progress thanks to the botched Russian bank heist in Cyprus, the Fed will likely not to be able to afford the luxury of spewing any more MOPE propaganda about QE Fexit in today’s FOMC release (almost an afterthought with the events of the week thus far), but as is tradition here at SD, ahead of Bernanke’s public appearance-
PUNT THE BERNANK!

Source: Banzai7

Source: Banzai7

The next time you hear propaganda from Fed officials or the financial MSM that the Fed will end QE by the end of 2013, please recall this startling statistic:  thus far in 2013, the Fed has increased its Treasury bond holdings by $51.1 billion, while the official US debt has increased by only $47.2 billion over the same period. 
This confirms with startling clarity that the Federal Reserve is the ONLY remaining purchaser of US debt in size, and that the Fed must not only take up all of the newly issued US debt, but it must also absorb the maturing treasury bonds coming due.

QE is going to INFINITY…AND BEYOND… and will continue until one of three events occur:
1. Gold revaluation (the final deflation-fighting tool in Bernanke’s toolbox)
2. Dollar devaluation (essentially #1 just announced in dollar terms) such as Venezuela announced Friday
3. Hyperinflation of the dollar & complete systemic collapse.

Got PHYZZ??

bubblesJim Sinclair has sent an email alert to subscribers tonight regarding the Treasury bond bubble.  While many in the precious metals community believe that the T bond bubble will spectacularly bust and collapse in the near future due to the US’ unsustainable debt, Sinclair states that the Treasury bond market cannot collapse as long as the Fed continues purchasing US debt via QE to infinity

Sinclair states that quantitative easing will continue to increase in size by the Fed to meet the size of US bond offerings, and that US interest rates will not rise substantially unless the Fed ceases its QE program.

Essentially Sinclair is stating that interest rates will continue to manipulated at an artificially low level by uneconomic buying of T-bonds by the Federal reserve governor typing on a keyboard, and that the pace of QE will keep pace with the pace of the US budget defecit/ funding gap, until which point the US dollar faces a collapse in the confidence of the currency itself.

Sinclair’s full alert is below:

Submitted by Deepcaster:

Money printing creates illusory wealth and buys time, but if it was truly the answer to a deleveraging cycle, Zimbabwe would be a member of the G10.

The recent Equities Rally and Glimmers of Economic Recovery are Artificial because they have been bolstered up on a Tide of Central Bank created liquidity (via QE etc.).
They have not been generated in the healthy sustainable way by savings and Investment.   Therefore, it is highly likely they are Transitory.

Given the Daunting Challenges facing the U.S., Eurozone, China, Japan, and other economies, and the understandable Investor uncertainty about how these challenges will be met, it is essential to review Key Baseline realities Critical to Profitable Investing.
As repeated Doses of QE become less effective, the Central Banks, specifically The Fed and BOJ, resort to a related Baseline Reality: Money-Printing-to-a-greater Degree than other Central Banks, i.e., to Currency Devaluation.

BernankeSubmitted by Stewart Thomson:

Quantitative easing and “rates to zero” policy is spreading to every major economy around the world.  Horrifically, despite these enormous “fire hoses of liquidity”, gold stocks continue their unending slide.   By this point in the gold “super bull” market, most gold stock investors believed they would be wearing a crown of solid gold.
The market never ceases being a fight, and in a super-crisis, the fight becomes a “clash of the titans”.  Gold stock investors have never faced a greater challenge than they face right now, but neither have the bears.

The biggest weapon held by gold stock bulls, is the central bank of the United States, and over the next two days, the bank’s open market committee engages in key policy discussions.  The meeting culminates with the release of a statement to the public, at 2:15PM, New York time, on Wednesday.  For all practical intents and purposes, the primary driver of the gold price is the balance sheet of the central bank of the United States.

Bernanke DimonWHOLESALE Gold Bullion prices climbed back above $1660 an ounce Tuesday morning, broadly in line with where they ended last week, as stocks and commodities fell slightly and the Dollar ticked higher against the Euro ahead of tomorrow’s interest rate decision from the US Federal Reserve.
“We are seeing a technical rebound following a few days of price decline,” one trader in Shanghai told newswire Reuters this morning.  “In the short run, gold is still going to drift without much conviction, though over the longer term it is still facing very heavy pressure on the upside.”  Like gold, silver regained some ground this morning after losses in recent days, climbing back above $31 an ounce.

In the US, the Federal Open Market Committee begins its two-day meeting today ahead of the Fed’s latest policy decision tomorrow.  “This week’s FOMC meeting and US non-farm payrolls [on Friday] will be key in setting gold’s price trajectory,” says a note from Barclays Capital.

imagesLegendary gold trader Jim Sinclair sent another email alert to subscribers over the weekend, continuing his in-depth series on the monetary crisis in progress, and the fundamental reasons the dollar will hyperinflate and result in $3,500 + gold.

Sinclair stated that the dollar is re-entering a decade long major bear market, and that this is the foundation set in steel that will launch the next major bull phase in the gold price very soon.
While Sinclair has long urged readers to take physical gold positions without margin, with gold mining shares near historic lows compared to gold bullion, Sinclair states that condemning gold shares is total nonsense utilized by PM scoundrels.

Sinclair concludes by stating that Every problem we have from national to private is a balance sheet problem. As QE is the only tool to feign solvency, Gold is the only tool to accomplish solvency.

Sinclair’s full email alert is below:

imagesIn his latest update, Greg Mannarino addresses the Fed’s minutes released last week, in which several Federal Reserve members supposedly stated QE will end by the end of 2013.   Mannarino states that the Fed ending QE at the end of the year is impossible, and that the Federal Reserve has absolutely no intention of stopping or even slowing quantitative easing.
As we stated upon the release of the Fed minutes, Mannarino states that the Fed’s threat to stop QE is pure propaganda designed to stall the rally in gold and silver that was getting underway last week.
He states that if the Federal Reserve were to stop printing money, everything would end, and the collapse would be so incredible that people would literally eat each other in the street!

Mannarino’s full update below:

binford xlMoney manager Peter Schiff warns that Japan will likely stop buying U.S. government debt. He contends, “If the Central Bank of Japan has a choice between monetizing Japanese debt or U.S. debt, they’ll go for their own debt . . . that means the Fed has to print even more money.” Closer to home, the new debt deal also means more money printing because of even bigger deficits. According to Schiff, “The majority of the tax increases were cancelled. The spending cuts were cancelled . . . the Fed is going to have to keep buying bonds to keep interest rates from surging.” Schiff thinks talk from the Fed about stopping the $85 billion a month money printing (QE) is preposterous. Schiff says, “They can’t do it. . . . The minute they try to take the cheap money away, the phony economy is going to crumble.What’s not going to crumble is the gold and silver market. Even though precious metals have been down recently, Schiff says, “So what, buy more. Look at the sell off as an opportunity to unload more of your fiat currency and get some real money.” Join Greg Hunter as he goes One-on-One with Peter Schiff.

The legendary Jim Sinclair has sent another email alert to subscribers regarding the take-down in the gold and silver markets Thursday on the release of the December Fed minutes.
Sinclair states that contrary to the Fed’s MOPE attempting to convince the market that QE will be phased out in 2013 as the economy recovers, There is no practical way that QE can cease here or in Euroland without a total and final collapse of the financial system.

Sinclair points out that the entire derivatives market hinges on the Fed’s unceasing QE, as the moment QE ceases, the US bond market collapses and the Fed must debt monetize all required debt, which means if QE stops, it starts up again immediately and in a crisis mode.

Sinclair states that QE cannot stop or the world as we know it instantly ends, and that the implications to what the Fed has done cannot be talked or manipulated away.  The consequences are coming.

Full alert below:

Jim Sinclair, the man who predicted gold would reach $1650/oz over a decade ago sent an email alert to subscribers tonight, stating that the Euro-zone, Russia, and China will determine the future of gold, as the financial power has shifted from the US and UK to the East. 

Sinclair also states that the purpose of QE was and is to transfer worthless assets on the books of the TBTF banks onto the Central banks themselves, and thus forestall the inevitable complete collapse of the western financial system. 

Sinclair states that the Federal Reserve has no means of ever unwinding the worthless and toxic junk assets it has taken onto its balance sheet, and that the mathematics of the price of gold’s response to what has already occurred are now well in excess of $4,000.

Sinclair’s full alert below:

The Doc sat down with Harvey Organ Wednesday for the first of several interviews regarding the recent massive cartel intervention in the gold and silver markets post the QE4 announcement, the fiscal cliff, the CFTC’s silver probe, and the unprecedented 20 million oz of silver still standing for December delivery.

Harvey stated that the end game is being played out, and that an Asian group has decided to take on the cartel and drain the physical silver from the COMEX.   He states that the bullion banking cartel’s suppression of the gold and silver markets is the ultimate treason against Americans, as  350 years of US wealth is being drained East due to the price suppression of gold and silver.

MUST READ!