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Dec
11, 2010
1. QE. Quantitative
Easing. There are some
monkey wrenches starting to appear. Markets move on
liquidity flows.
2. All
Markets, not just bonds. We all want to "have
our cake and eat it too." The temptation is to
tell ourselves that lead US manager for the banksters, Ben "Dr.
Pinocchio" Bernanke, is going to print money and buy the
T-bond to keep rates low.
3. The
gold community doesn't believe that will help the economy, but
there's a growing consensus that it will put pressure on the
dollar and keep the system running.
4. Not
necessarily. You
have already seen the bond sell off immediately following the
announcement of QE2, whereas QE1 saw the bond soar.
5. My
view is that QE is already TOAST as a tool, which means Ben's
next tool, gold revaluation, is at hand...or
already in play. There
is clear institutional concern about QE2, with the top money
managers already setting upper and lower markers as to how much
QE is good, how much is neutral, and how much is harmul.
6. The
key point is they are placing upper limits on how much QE is
bad, not just lower limits, as they did in QE1.
7. Here's
my key point. By definition, yes, Ben can keep the
bond price high, simply by bidding higher than all sellers
since the central banks can print money.
8. Let's
leave aside the fact that the banksters are sitting on a pot of
trillions of dollars, and could employ that capital to attack
the bond on the short side, perhaps even at a level beyond what
Ben could buy on the long side, via OTC derivative contracts.
9. My
key point concerns the other markets. Institutions could
start to sell down the stock market and the US dollar and even
other interest rate markets besides the T-bond, if they
believed that QE was excessive or ineffective.
10. I
think we're very close to that point of action now. I
think most are vastly overestimating the effectiveness of QE.
11. I
think we're at a point where Dr. Pinocchio says, "we need
more QE", and institutions say, "no, it's not
working, what we need is something else. QE has
slowed the rate of meltdown, but it's not reversing it. Show
us something new."
12. "...if
yields are rising because people think America's fiscal
situation is unsustainable, then its armaggedon,"
- David Bloom, head of currencies for HSBC, world's 3rd largest
bank.
13. Even
well known personalities within the gold community are being
lulled into a sense of acceptance that QE will work.
14. OK,
business owners, time to make a DECISION. As a
business owner you are a decision maker. Let's see,
your POSSIBLE upside reward on QE is what, exactly? Oh,
yes, a continued quagmire and years and years of attempts to
revitalize the economy.
15. What
is your downside risk, as defined by David Bloom, chief of
currencies for a bank that just moved all its GOLD out of
America?
16. ARMAGEDDON.
17. YOU
can join the QE possible reward dance team if you like. Not
me. I don't see any point in focusing on that
reward, until I've TOTALLY managed the downside risk. The
real and clearly defined by HSBC bank risk of... ARMAGEDDON.
18. Which
is EXACTLY why I'm here in the Caribbean, with Cayman being
only the first stop on my risk management tour.
19. Fudd
just appointed himself a QE expert. He knows QE will
continue for "a long time" and so gold is therefore
"here to stay". Personally, I'm known to
lack confidence in Elmer Fudd Public Investor's various "here
to stay" price plops of his safe money in markets. I
believe they are irrational PRICE CHASES, and fuelled by huge
tidal waves of greed and terror, not economic analysis.
20. Remember
2008? Remember when the gold community thought gold
was going to the moon, and instead the banksters tanked
Lehman? I don't see a repeat of that, but what do
see is a similar possible error
with regards to QE. I'm
probably pretty much alone amongst the gold community writers
with my view that buying the bond (QE) is basically at an END,
not a beginning, in terms of EFFECTIVENESS as Ben's primary
TOOL. It is not at an end in terms of time of use;
it will continue on. But in terms of maximum point
of effectiveness, I think it QE is at:
21. THE
END.
22. Lowering
rates towards zero failed. QE failed. The next tool is
gold revaluation.
23. I
posted Ambrose Pritchard's latest piece on the website. I'd
urge you all to read that extremely carefully, and see how many
top managers are starting to ask themselves the question as to
whether QE is now starting to cause more problems than it is
solving.
24. Interestingly,
Mr. Macro, the top bond market expert in the gold community,
sees June 2011 as a possible "lights out" time frame
for the bond market. I've warned you that a major sell-off
in the bond could, initially, cause a huge gold market
sell-off, on the scale of around $500 an ounce. That
rout would be designed to take Fudd's "here to stay"
gold asset from him and put it in the hands of the banksters,
just in time for a superblast to new upside highs.
25. The
phrase being used by Ambrose is "out of control". That
phrase, out of control,
is a money manager's worst nightmare.
26. I've
talked about the possibility of a hard fall in bullion
accompanied, ironically, by a huge spike in gold stocks. That
could happen, depending on how high
an absolute level gold reaches before its next correction of
significance occurs.
27. Look
at the statements being made by the money managers. They
are saying "NO MORE" to increased deficits.
28. Ben
is not finished. His BIGGEST tools, gold revaluation
and money printing, are DEFICIT ELlIMINATORS, but also NET
WORTH DESTROYERS for everyone who is a paper money creditor,
and net worth enhancers for DEBTORS.
29. Gold
Revaluation against paper money, and perhaps money printing
itself, are JUST WHAT THE DOCTOR ORDERED, in terms of what
money managers would like to see now, given their stance on "no
more deficit increases", which is really:
30. QE
has reached its LIMIT.
31. Once
again, Elmer Fudd Public Investor has arrived on the scene and
announced QE as "here to stay" just as the END
approaches for the use of the tool in terms of practical
EFFECTIVENESS. My message to Fudd this fine Saturday
morning is: Turn on the television. It's
Saturday morning. Look at yourself on tv. The
CARTOON. Fudd should try uranium, food, natgas,
food, and gold stocks with ten cents of his money if he wants
to out get of the death grip of the banksters and stop trying
to project that what has already occurred will occur again and
again.
32. Let's
kick off this fine 2 day work week with a look at
Uranium. It's down to almost $8 basis u.to,
from $8.50. That's a lot more significant to your
bottom line, IF you have your buys in place, than any "QE
is my hero" masterplay outlined to you by Elmer Fudd. The
crisis is accelerating, in the masterful words of one of you...
33. By
Design.
34. Over
Time.
Thanks!
Caymanic
Cheers
St
out
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