Here is an excellent article from Uncommon Wisdom below. It makes one wonder why the hedge funds would sell gold when Bernanke states that the Fed will continue with QE or another form of adding liquidity into the system for a long time. This should be gold friendly, but as we’ve seen lately, no matter what the news, it has no positive affect on the price of gold.
Let’s just face it; for now, the funds want to be in the stock market and they are either ignoring or shorting commodities, gold and silver. It makes no sense, but as long as the paper market is setting the price and there is enough gold to deliver to China and the other buyers in the Far East, not much will change.
Investors are being steered into the stock market because the interest paid on deposits and bonds is negligible and precious metals are out of favor – there is no place else to go. Buyers think they can ride the stock market up and get out before it suffers a major pullback and they believe they can wait to buy precious metals and jump in before their price goes too high. Timing is always difficult, but for better or worse, that’s what is happening and fundamentals are damned.
Nothing looks good right now, but the charts favor the stock market and are not friendly to gold and silver. I still believe that this will reverse itself shortly after Bernanke leaves office.
Being in “the eye of the hurricane” does have its advantages. We still have some time to move funds out of harms way out of the country and we still have time to add to our precious metals portfolio at prices that simply are too low, if you use common sense. As long as spending is out of control, deficits are enormous, the Fed is creating the money to keep the game going, I vote for gold and silver. The final chapter hasn’t been written yet.
The Newest Round of Fed Stimulus: Words and More Words
Brad Hoppmann | November 20, 2013
The Federal Reserve is stimulating the media with massive word injections.
The last 24 hours brought a speech that may turn out to be Ben Bernanke’s farewell address … minutes from the October Fed policy meeting … and news of a secret Fed meeting they conveniently didn’t mention to the rest of us when it took place.
Earlier today, we learned the U.S. Consumer Price index fell 0.1% in October. CPI rose a total of only 1.0% over the last year. Excluding the financial crisis period, this was the lowest yearly annual inflation in almost 50 years.
Low inflation ought to be good for the markets, but the Fed stories were probably more important today. Let’s review what we know.
Financial markets spent the last seven months endlessly debating the Fed’s “tapering” plans. Collectively, professional and individual investors must have devoted millions of hours to this question.
Last night, Ben Bernanke told the National Economists Club it was all a big misunderstanding. The Fed plans to keep stimulating the economy, one way or the other, however long it takes. They never meant to suggest otherwise.
I’m not kidding. Bernanke really did say this. You can read the full transcript of his speech at the Federal Reserve website.
Regarding the June FOMC statement and his comments afterward that set off a market firestorm, Bernanke now says:
[M]arket participants may have taken the communication in June as indicating a general lessening of the Committee’s commitment to maintain a highly accommodative stance of policy in pursuit of its objectives.
In particular, it appeared that the FOMC’s forward guidance for the Federal Funds rate had become less effective after June, with market participants pulling forward the time at which they expected the Committee to start raising rates, in a manner inconsistent with the guidance.
To the extent that this third factor—a perceived reduction in the Fed’s commitment to meeting its objectives—contributed to the increase in yields, it was neither welcome nor warranted, in the judgment of the FOMC.
This change in expectations did not correspond to any actual lessening in the FOMC’s commitment or intention to provide the high degree of monetary accommodation needed to meet its objectives, as Committee participants emphasized in subsequent communications.
I think Ed Steer summed up Wednesday’s action pretty well below – good enough to feature it here at the front of today’s daily…
Furious Gold Slam Down Leads to Yet Another 20 Second Gold Market Halt
November 21, 2013
I see little serious debate about position limits and exemptions for hedging and market making discussed anywhere else in the general media, or in the gold and silver blogosphere – just on these pages and, according to news reports, at the highest levels of government and commerce. Instead, I see endless debate about the level of Comex gold warehouse inventories and deliveries, and the latest GOFO rates (still goofy), and whether all the statistics from the Comex are invalid because of a disclaimer. This baffles me. What baffles me the most is that most Internet commentators fully accept that COMEX gold and silver prices are manipulated; it’s just that they all seem to want to come up with their own version for why gold and silver prices are manipulated, and what the signs will be for when it ends.
There is only one possible cause for a market manipulation – a market dominance brought about by a concentrated position or market share. Add in total trading control brought about by predatory computer trading and willing victims (the tech funds) and the manipulation picture is complete. JPMorgan has held a market corner on the short side of Comex silver for going on six years and has managed to flip a short market corner in Comex gold to a long market corner. The enforcement of legitimate position limits uncompromised by phony hedging or market making exemptions would make a market corner impossible. That’s the promise behind the proposals for position limits and the Volker Rule. – Silver analyst Ted Butler: 20 November 2013
Well, JPMorgan Chase et al took another big slice out of the gold and silver salamis again on Wednesday. All four precious metals are now at new lows for this move down. I said in The Wrap in yesterday’s column that: “I don’t expect much price action, except to the downside, between now and next Thursday.” I was right, but must admit that I wasn’t expecting “da boyz” to hit their respective prices so hard. You have to wonder how many long positions in silver and gold the technical funds and small trader have left to sell, and how many more short positions they’re prepared to put on. But based on the price activity and volume, they did it with abandon yesterday.
More reasons to consider moving assets out of the US banking and brokerage system while you still have time to do it. Check out the following New King World News Blog titled John Hathaway: “Warning – NSA to Oversee Individual Bank Accounts and Wealth.”
Neil Keenan, Karen Hudes and others (who for security, prefer to protect their identity) appear to have evidence of Global Collateral Accounts which contain up to 2.4 million tons of gold. This puts the stock to flow ratio at 1,000 years. This should not surprise anyone since mankind has been storing gold for at least 6,000 years, while destructive consumption is negligible. Much of this gold appears to be under the control of the bullion banks who are using it to suppress the paper price. This is enough gold to maintain a suppressed price at or (if they choose even) below the cost of production for 1,000 years at current delivery rates.
I am not aware of any such large stock of silver which could be used to suppress the price of silver in this same way. Also, silver is consumed for a variety of products for which substitution is difficult. The price of silver can not be suppressed for as long as that of gold.
I don’t agree David!
It makes perfect sense to me when you are trying to purchase the metals at the most reduced price possible.
At this point, the Fed and major hedge funds have to realize what’s coming down the road and are most likely competing with India, China, the bullion Banks, etc. in removing as much “cheap” metal from the market as possible.