Friday could be the turning point for gold this year. Gold was up a monster 4.05% with a $63 move. Gold is usually capped at 1% and a 2% day is rare, so 4.50% is really BIG – one of the biggest one day gains in history.
What happened? The situation in Europe is frightening and getting worse by the day. The employment numbers were so dreadful that there was no way to give them a positive spin. But until Friday, these types of negative stories had no positive affect on the price of gold. In fact, the MSM was routinely reporting that gold had lost its “safe haven” status. But then, in one day, it suddenly turned around and gold became the “safe haven” place to move money. Ya can’t have it both ways – either it is a “safe haven” or it isn’t. Well, what do you expect from the lame brains in the MSM?!
Ted Butler has an answer. He says it’s all about manipulation on the COMEX. Just as the Cartel (JPM) can orchestrate the price DOWN, they can also orchestrate it UP. Manipulation is not just “down,” it occurs when one or two entities move the market in the direction that they desire. It wasn’t hard to do – prices had been pushed so low that they were ready to bust out. And co-incidentally, Jim Sinclair predicted that gold would break out in June, and so it is.
Maybe Larry Edelson is finally ready to admit the bottom is in. On Sunday he wrote:
But this recent announcement takes the cake: Beijing just gave the country’s commercial banks the green light to dump U.S. dollars — for the first time ever!
Is it any surprise that the U.S. dollar is hovering near record lows against the Chinese yuan, ready to plunge further? I think not!
Is it any surprise that the U.S. dollar can’t even rally against Europe’s currency — a currency that everyone knows is doomed?
I think not!
My view: If you don’t take the action you need to take now to PROTECT your money and turn this looming, disastrous dollar devaluation to your advantage…
You’re about to commit financial suicide!
In addition to this very gold-friendly news out of China, John Brimelow reports:
In what could well be very important news for gold, the Istanbul Gold Exchange reported that Turkish gold imports for May were 19.47 tonnes, 150% above May’s and the heaviest since September 2008 (May 2011’s imports were only 0.029 tonnes). 2012 imports so far at 79.7 tonnes are 87.6% above last year.
JBGJ tracks Turkish gold premiums daily. Generally they have been negative during May (the lira has been soft). So this does not look like retail buying. Two possibilities present themselves
· Buying of a wholesale nature by Turkish Banks which are increasingly allowed to use gold for reserve requirements
· Wholesale shipments to Iran.
Both have bullish implications.
As you have probably figured out by now, if I move an article up into my lead-in section, it is very important and the following release by Jim Sinclair is very important!
June 1, 2012, at 7:04 pm
by Jim Sinclair
QE to infinity is for certain. About that there is no question whatsoever. It cannot be avoided.
Operation twist is damn joke stimulation wise. At this point in time it is a dark joke.
The Fed is playing with something worse than fire. That fire is posted in a video today on www.jsmineset.com. This video references a worldwide financial crisis that if it starts cannot be stopped by any power on the planet.
They are already easing up on the rhetoric. The Fed will downright panic as the world’s economies go from slow to dropping out of sight. That is what is on the plate tonight, this night, right here and now.
Safety only exists in gold bullion and in the outrageously depressed good gold shares now shorted out of sight.
Fed Will Likely Weigh Rosengren’s Call for Stimulus
By Joshua Zumbrun and Jeff Kearns – Jun 1, 2012 3:50 PM ET
Federal Reserve policy makers this month will consider joining Boston Fed President Eric Rosengren’s call for renewed stimulus after a report today showed unemployment rose to 8.2 percent in May, economists said.
Rosengren said the Fed should further its full-employment mandate and extend beyond June a program known as Operation Twist, which lengthens the average duration of bonds on its balance sheet. He spoke before the Labor Department today said the U.S. added 69,000 jobs in May, the fewest in a year, pushing the yield on 10-year Treasury notes to a record low.
“The May report does significantly raise the odds of further easing from the Fed,” said Dean Maki, chief U.S. economist at Barclays Plc in New York and a former Fed economist. “There will be a case made at the June meeting for easing.”
By calling for new stimulus, Rosengren aligned with the view of Chicago Fed President Charles Evans. Any setback in the job market is also a chief concern of Chairman Ben S. Bernanke, who said in April the Fed may provide more accommodation should unemployment fail to make “sufficient progress towards its longer-run normal level.” Fed policy makers plan to meet June 19-20.
Today’s employment report “does change the game, certainly in terms of Operation Twist,” said John Silvia, chief economist at Wells Fargo & Co. in Charlotte, North Carolina. “Because the slowdown in the economy has been fairly rapid compared to what they expected, they’ll go ahead and extend Operation Twist.”
June 1, 2012, at 10:59 am
by Jim Sinclair
QE to infinity is more certain than death and taxes. See the video we posted here on jsmineset.com today that gives you the worst-case economic and social scenario for 2012, unless we go to full QE before the end of June 2012.
Problems are reaching terminal velocity right now, here, today.
QE to infinity might hold things together, in a sense, for 24 more months with gold above $3000. Those popular gold writers calling for much lower gold prices are simply out of their mind sand disconnected from reality.
Pimco’s El-Erian Sees Synchronized Global Slowdown
In the following comments, my friend Trader David R takes a different view of the inevitability of QE:
I actually have to disagree (with Sinclair) here. What more can they do with the 10-yr bond at 1.50%? I really believe that the Fed saw that QE increased commodity pricing and food price inflation, which has really hit the middle and lower class. It did not have the desired effect of stimulating growth, due to the policies of this Administration. I think the FED knows they need more stimulus, but it’s an election year, so they wanted to see how the economy would hold up without QE3 and in return, let asset prices fall and give the relief to the middle and lower class ahead of the elections with lower fuel and food costs. They are in a very tight spot now and I think the world is waking up to the fact that there are no safe currencies, as we have been suggesting for years, “currencies are the biggest bubbles” and people may now look to gold as the “Ultimate” currency to own. This bond market is getting to insane levels too, as desperate insurance and pension companies scramble for any type of yield. The world is becoming a very scary place right now and I think it’s going to remain volatile ahead of the elections and if the FED bails out Europe I will be joining the Wall Street Protesters.
Let me re-cap this information in my own words and then give you my view, which is a very different one on QE… On the one hand, you have the brilliant and insightful Jim Sinclair’s view that the Fed WILL announce QE3 later this month. His stance is that the Fed has no other choice. Trader David R. believes that since QE1 and QE2 were a total failure, the Fed will be reluctant to continue with QE3.
Now here’s the rub… The Fed’s policies are usually “political,” especially in an election year. Logic would dictate that the Fed WILL announce QE3 later this month, or at least announce their intention to continue with Operation Twist. But what IF the Fed is sick and tired of our President’s unilateral power grab and his increasing hostile attitude toward the “too-big-to-fail banks?” What IF the Fed is scared to death that the Administration’s disastrous foreign policy is pushing our friends and trading partners away from using the US dollar (China, India, Russia, etc.) as a means of settlement and the threat of the dollar losing its Reserve Currency status is becoming more likely by the day? What if the Fed pulls the rug out from beneath our President and his bumbling Administration and hold back on QE3… not because, as David R says that so far QE has been ineffective and hurt the middle class… but because they want Obama OUT of the White House by the end of the year? Without immediate monetary stimulus, the economy will continue to implode and in that environment, an incumbent President (and his party) will not find favor with the voters and Romney and the Republicans will waltz into control in 2013. Remember, Romney is pro-big business and by definition a friend of the banks. Remember, the big banks own the Fed. The Fed does have it within their power to make or break this election for Obama and the Democrats. Break, for sure.
IF the Fed does NOT announce QE3 or something similar by the end of June, then my take on this will prove to be correct. If the Fed follows Jim Sinclair’s premise and announces more QE, then the dollar can kiss its rear end good-bye and my business will go ballistic! And so will YOUR gold portfolio!
I do agree with Jim Sinclair that sooner or later the Fed must continue Quantitative Easing, but the real question is whether it will be now, when it can make a difference in the election, or much later in the fall or after the first of the year, which will result in Obama being a one-term President? This is just another one of my “out-of-left-field” thoughts and the good thing is we won’t have to wait very long to find out if it has any traction.