Anyone who believes the Fed can (or will) cut back on QE hasn’t seen this chart.
Cut back on QE and the economy tanks, the stock market collapses, interest rates explode and the bond market implodes. Do you really think that Bernanke will allow that to happen on his watch?
The next chart compares the monthly percentage growth of the Federal Reserve balance sheet (U.S. Treasuries and Agency MBS) against gold price.
Posted June 2nd, 2013 at 1:49 PM (CST) by Jim Sinclair
Dear Mr. Sinclair,
The continuous raid on gold prices since last top at 1800 already depleted them from 1/3 of their eligible reserves.
Click here to view the chart…
…and 50% of the registered ones.
Click here to view the chart…
…and if we saw a small bounce on the eligible reserves, the registered ones keep going to the abyss.
So we are already halfway towards a complete default on the Comex if they don’t change the rules. This, within 6 months.
That might give an idea to CIGAs about how many months are left before margins get raised to 100% as you mentioned, especially if they try to drive prices even further down.”
Thank God for Free Markets!!!
Fed Balance Sheet vs. Gold Price
This chart compares the monthly percentage growth of the Federal Reserve balance sheet (U.S. Treasuries and Agency MBS) against gold price ….
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The next time you see a headline that says “gold up dollar down,” or “gold down, dollar up,” ask yourself – what does one day’s move in the dollar have to do with the price of gold? It quickly becomes obvious, “absolutely nothing.” Except for the fact that the hedge funds trade on this type of data every hour, every day. And then the move up or down becomes a (short-term) pre-ordained reality. In this case; reality FOLLOWS expectations.
Ya gotta take it on faith!
In a sense, Gold Bugs approach gold in much the same way that religious people approach God. Now I don’t mean to be “blasphemous” with this comparison – I am making this comparison in a general way only, but it is a valid viewpoint.
“How do you know that God exists?”
“I know because I just know it!”
“Have you ever seen God?”
“No, but God is in my heart.”
“In other words, your belief in God is based on faith!”
“Yes, that’s right, on faith! There is no doubt in my mind that God exists! I have total faith in my belief!”
“How about the views that our dollar will lose much of its value and that the bull market in gold is still with us?”
“I am certain of it!”
“What proof do you have?”
“Proof – look around you. The proof is everywhere.”
“But the price of gold has been falling for over a year.”
“So what! I still believe that the price of gold will soar!”
“How can you be so sure?”
“You just have to take it on faith!”
I know the price has been falling lately, but “do you believe me or your lying eyes?”
These articles can drive you nutz! Yesterday, Rick Ackerman wrote the following:
Our forecast for the Dow Industrials calls for a blowoff top at 16810, about 1,700 points above Friday’s settlement price. Using proprietary technical tools, we have identified this “Hidden Pivot” target as one to keep firmly in mind — not only as a major rally target, but as a place to lay out shorts aggressively ahead of a possible avalanche. As noted here earlier, however, despite the bullish prediction, we’re keeping one foot on the fire escape, since the risk of a historical collapse at any time seems inordinate. If and when it comes, conceivably from a level that has fallen shy of our target, it is almost certain to occur with such devastating speed that even those who believe they are ready for it will have no time to escape. More likely is that the financial collapse that ushers in the Second Great Depression will begin in Asia and Europe, and that it will be a fait accompli by the time New York traders arrive at their desks.
–Rickackerman.com, June 4, 2013
And Larry Edelson wrote the following:
Now, don’t get me wrong. I am not turning outright bearish on the stock market. Any pullback you see now will simply be a well overdue correction. That’s it.
The new long-term bull in the stock market is alive and well. Almost no one thought we’d ever get to 15,000 and change in the Dow. But just as I said it would, we got there.
And just as I’ve also been forecasting, once this correction is out of the way, the Dow will start to head north again, and eventually, probably within three years’ time, we will see the Dow north of 21,000 — at a minimum …
And far more likely, pressing 30,000 or even higher.
–MoneyandMarkets.com, June 3, 2013
So which view is right here? A second Great Depression or Dow 30,000? I am not presenting these two viewpoints to proclaim one right and the other wrong, but obviously one will be right and the other will be wrong. The actions we take, or don’t take will have powerful financial consequences. We do not want to be wrong about this.
The one view both of these guys share is both of them expect gold to top $10,000. I just thought I’d throw that in. As for the rest – you will just have to make up your own mind. Good luck!
The truth is, as with our belief in God, we have to take a stand even though all the information, facts, charts, and events will not give us a 100% for certain answer. Ultimately, we will act on our faith. Our faith that we got it right.
King Tut hedged his bets in both arenas. He took an estimated three-quarters of a billion dollars (today’s dollars) worth of gold with him for the journey to the next life. Old Tut was certain that there is a God and an after-life and that gold is the best form of true wealth in either life. He just knew it. As for me, I think I’ll spend my gold in this life. The one thing I am certain of is “you can’t take it with you.” And I think I’ll add, gold is going above $5,000, maybe even $10,000. I just know it. I have no doubt! I have complete faith in my view! Like the George Michael song says, You Gotta Have Faith.