Submitted by Adam Hamilton:

Silver has been selling off relentlessly since the Federal Reserve expanded its third quantitative-easing campaign last week.  As that decision was highly inflationary, silver’s subsequent weakness has really vexed traders.  But its counter-intuitive selloff had nothing to do with fundamentalsAs the Fed’s past QE campaigns demonstrated abundantly, QE3 will eventually prove to be very bullish for silver’s fortunes.

Economist John Williams thinks the economy is in worse shape than most people think. In 2013, Williams predicts, “As this goes forward, you’re going to see we’re going to be in a new recession.” The Federal Reserve announced last week it is now printing a total of $85 billion every month to reduce unemployment and stimulate the economy. Williams says, “That’s nonsense. . . . There’s nothing they can do to stimulate the economy.Williams has long contended the Fed is really just using the weak economy to continue to prop up the banking system. Williams says, “If the Fed wasn’t doing what it’s doing . . . I’d presume you’d be on the road to a banking system collapse. The banking system is still in trouble.” Williams warns the “open-ended” printing of $85 billion a month “. . . will be part of what will eventually become hyperinflation.” And if there is no deal on the so-called “fiscal cliff,” then Williams expects “heavy selling pressure on the U.S. dollar.” Join Greg Hunter as he goes One-on-One with John Williams.

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:

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.

All-but-one of 49 economists polled by news agency Bloomberg predict the Fed will buy US Treasury bonds in addition to the $40 billion per month of mortgage-backed securities purchases announced in September.  “It’s going to be massive and open-ended in size,” says Deutsche Bank’s chief US economist Joseph LaVorgna.
[Fed policymakers] view this stimulus as what’s needed to sustain the economy,” agrees John Silvia, chief economist at Wells Fargo.
If the Fed comes out with $45 billion of bond purchases [as some analysts have suggested], it could be the spark we need for another gold rally,” says Matthew Turner, precious metals strategist at Mitsubishi.
“Previous episodes of quantitative easing have seen a gold rally. The policy should increase inflationary expectations, and gold acts as a hedge against inflation.”
People have realized that what the Fed has been doing is damaging to price stability,” adds Dominic Schnider at UBS Wealth Management, citing strong gold coin sales from the US Mint last month.

According to JPMorgan (who would know since as a primary dealer, they flip treasury take-downs to the Fed roughly 30 minutes after issuance for a handsome profit), the Federal Reserve is currently absorbing approximately 90% of new dollar-denominated fixed-income assets. 
Go back and re-read that last sentence.  That’s right, even the financial MSM is now admitting that the Fed is now nearly entirely monetizing the US deficit outright.
This is why QE4 will be announced next Wednesday (which has already been fully priced in thanks to multiple leaks from the Chicago Fed’s Evans as well as Bernanke last week) and why the Fed will ramp up outright purchases to $85 billion a month ($1.02 Trillion/yr) when operation Twist ends- there are simply no remaining buyers of US debt. 

Those who fail to see where this is headed may wish to acquire a copy of When Money Dies to grasp how the situation played out in Weimar Germany.

Submitted by Morris Hubbartt:

Many market pundits seem to have forgotten how strongly QE can affect the price of gold. This gold chart highlights those effects, with a broad green “chart brush”.   Note the thick green bars.  They highlight the gold price action during QE1 & QE2.  I believe QE3 (and possibly QE4) will produce very similar results.  When the Fed purchases bonds in the open market with printed money, gold tends to rally for a significant period of time.
Quantitative easing is positive for gold, and the effects on silver are even more powerful.  This chart highlights the enormous gains that silver achieved during both QE1 and QE2.   My focus is physical silver, because of concerns about the banking system and growing volatility.
My short term target is $44, which should be acquired at about the time that gold reaches $1850.  To put that in perspective, I expect silver to gain about 29%, while gold gains 7%.  That’s an outperformance ratio of about 4 to 1!

There is speculation in the markets that the US Federal Reserve will purchase more debt to help the US economy which is boosting gold bullion.
While speaking at Pace University in Manhattan , Federal Reserve Bank of New York President William C. Dudley said, “I will be assessing the employment and inflation outlook in order to determine whether we should continue Treasury purchases into 2013.” Dudley also stated, “The Fed will promote maximum employment and price stability to the greatest extent our tools permit, and we will stay the course.”

Fed officials are considering whether to step up record accommodation to counteract the scheduled expiration next month of Operation Twist, a program swapping short-term Treasuries with longer-term debt. A “number” of Fed officials said at the last policy meeting that they may need to expand its monthly purchases of bonds, according to the minutes of the FOMC ’s Oct. 23-24 meeting.
Gold has returned 10% this year and silver has returned 23% year to date, driven by quantitative easing.

By Stewart Thomson:

Fundamentally, I believe here are 4 major reasons that the long term silver chart looks “ultra-bullish.
First, the market is probably anticipating a substantial recovery in the Chinese economy, and perhaps additional government stimulus.
Second, the US fiscal cliff is likely to be resolved in a manner that encourages “risk on” institutional investors to take action on the buy-side.
Third, I expect the European Central Bank will announce measures that calm worries about not just Greece, but Spain and Italy, too.
Fourth, while the fiscal cliff will likely be resolved, I think the US Federal Reserve will expand the current level of stimulus being provided by QE3, probably in January, and this action could cause a near-vertical spike in all risk-on markets.

Silver is likely to be the greatest beneficiary of these 4 key events, even if they play out only partially.  If they play out as I’m predicting, I would expect silver to blast through the highs at $50, by early in the new year.  Silver at $80 is realistic, if these “fab four” events play out well.

The Pension Benefit Guaranty Corp (Federal agency that guarantees bankrupt pension funds) reported Friday that it ended it’s fiscal year with a $34 billion deficit, a 31% increase from the $26 billion deficit reported for the prior year.

QE to Infinity…AND BEYOND!!! will continue to grow exponentially as Social Security, Medicare, Medicaid, the Postal Service, FDIC, PBGC, and innumerable Federal spending programs are all bankrupt, and must either default or have their debts counterfeited away.
Which choice do you supposed Congress, the Treasury, and the Fed will choose?

In his latest update, Greg Mannarino discusses his outlook on crude oil, and why it is black gold.

Mannarino examines the terminal phase of the US dollar’s decline, which means that not only gold and silver, but oil will soon go super-nova priced in US dollars. 

Mannarino states that the middle class will not be able to cope with the rising cost of food and energy as the Fed’s QE policies continue throughout Bronco’s 2nd term, and the remainer of the middle class’ wealth is distributed to Wall Street.

The Bank of England Thursday prematurely halted it’s Quantitative Easing program at £375 billion, ending it’s QE3 early.  Governor King stated he has no plans for further bond purchases, and that the BOE will shift their focus to stimulating bank lending.

Apparently all of Europe including the UK will now allow Uncle Benny and the inkjets to perform their dastardly counterfeiting for them.

Does it really matter which bankster puppet is elected today?  In his latest update, Greg Mannarino discusses 4 major things the next US President cannot fix.
The first is the economy, which will continue to deteriorate regardless of today’s outcome.   The 2nd is US debt which will continue to accelerate to the upside as The Fed increases QE to oblivion.   The third is unemployment, which continues to deteriorate.  The 4th is the continued decline in salaries in real terms.