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Backwoods Jack called me this morning.  He said he read that the economy was doing better and had turned the corner.  The Fed wants you to think so, so they can continue to cut back on QE.  But it’s all smoke and mirrors.  If you want to hear it like it is, listen to what John Williams has to say…

– Particularly Unreliable Economic Data

– 2013 Annual GDP Growth Slowed to 1.9% from 2.8% in 2012

– Growth Bloated by Continuing Excess-Inventory Build-Up

Shadowstats.com, January 30, 2014

According to Stephen Roach, a Yale University economist and former Morgan Stanley Asia chairman…

The good news is that GDP appeared to grow in the back half of 2013, the official jobless rate is down and the Federal Reserve feels confident enough to taper back on its mountain of monetary stimulus. 

“But my advice is to keep the champagne on ice,” he said in an opinion piece for Project Syndicate. “Two quarters of strengthening GDP hardly indicates a breakout from anemic recovery. The same thing has happened twice since the end of the Great Recession in mid-2009. . . . In both cases, the uptick proved to be short-lived.”

Money News.com, January 30, 2014

After consecutive $10 billion QE cuts by the Fed some of you must be wondering what ever happened to Jim Sinclair’s promise of “QE to Infinity?”  I don’t recall him ever saying that the Fed wouldn’t try and cut back; he simply said they can’t do it without tanking the economy and the bond market.  They will cut back until the markets and the global economy says “no mas.”

If you believe that the government and the Fed can hold back gold and silver and hold up the stock market, bucking reality, then sell your gold and silver and put the funds into the stock market.  That’s not my plan, but it’s a free world.

I hold to my view that gold and silver will hit new all-time highs in 2014 or early 2015 at the latest.  And the stock market – well, if the Fed continues to cut back $10 billion at a crack, by the fall the economy should be in the tank and interest rates should be on the upswing causing bonds to tumble and the Federal deficit to swell (due to higher interest payouts on a very large debt).

Recently, Dave Kranzler interviewed Paul Craig Roberts. I found it on both Roberts and Kranzler’s web site and it was also highlighted on LeMetropole Café and Ed Steer’s site as well.

The topic of the interview was The Hows and Whys of Gold Price Manipulation.  This interview is important enough to feature in my section today…

Paul Craig Roberts: Why the Fed is Tapering (paulcraigroberts.org)

January 30, 2014

As the supply of physical gold on hand diminished, increasingly recourse was taken to selling gold short in the paper futures market. We illustrated a recent episode in our article. Below we illustrate the uncovered short-selling that took the gold price down today (January 30, 2014).

When the Comex trading floor opened January 30 at 8:20AM NY time, the price of gold inexplicably plunged $17 over the next 30 minutes. The price plunge was triggered when sell orders flooded the Comex trading floor. Over the course of the previous 23 hours of trading, an average of 202 gold contracts per minute had traded. But starting at the 8:20AM Comex, there were four 1-minute windows of trading—and here’s what happened…

Over those four minutes of trading, an average of 3,424 contracts per minute traded, or 17 times the average per minute volume of the previous 23 hours, including yesterday’s Comex trading session.

Read more…

John Embry (Chief Investment Strategist at Sprott Asset Management LP) was interviewed by Henry Bonner.  The topic was Gold and Silver at “Historic Undervaluation.”  Here are some of the highlights of that interview (which, by the way, I agree with totally)….

Gold and Silver at ‘Historic Undervaluation’: John Embry (Sprott Global.com)

January 29, 2014

I believe that the fundamentals that should be driving the price couldn’t be better. At the same time, because the price of both gold and silver have been driven down relentlessly – going on two and a half years now for gold – the degree of undervaluation against any method that I look at is approaching historic records.

As a result of this counter-intuitive price action that we’ve seen in both metals, the sentiment in the market is horrible. I don’t think I have actually ever seen people so negative and disinterested in the subject, which I think represents one of the greatest buying opportunities in history.

I am buoyed in this is that all of the preconditions for a significant bottom are in place; none more so than the sentiment.  When you throw in what’s going on in the financial and economics world – what’s really going on, not what the mainstream is telling you – and you superimpose it on that historic undervaluation, I totally agree with Eric’s views on this thing.

We’re not talking small moves here. When this thing really gets going, we’re going to be talking multiples of the current prices. It will unfold over time but it could happen quickly too.

Continue reading on Sprott Global.com.