To QE or not QE. That is the question.

Lots and lots of chatter on whether we QE or don't QE.
Deflation blabber rising to new heights (again).
Lot's of talk about getting in front of steam rollers and getting flattened if you go long gold or silver now. It's all crap. Nothing more and nothing less than crap. It's noise. Nothing more nothing less than noise. The reasons why we will get more QE have been laid out in a million essays all across the intertubes so there is no need to repeat them. The bottom line is we are broke and printing is the easy option.

The biggest fear is there will be a gap or or the Bernanke will allow a market dive in order to get the go ahead for QE. The FOMC meetings. More noise. The internal struggle within the Fed more crap and noise. If you are still in doubt do a little reading this weekend and you will come to the realization the USA is boxed in. The world knows it and they are taking steps via their central banks to secure as much gold as they can.
When the markets look a little shaky Bernanke or one of his minions whips out the QE3 carrot out. You get a peek at it but not so much that you are sure you are going to get the carrot. When you start to worry that you won't get the carrot he will take it out of his pocket to give you another peek at it.

The question is when not if we get QE3.

The EU wants Portugal's gold to pay off their debts. Not going to happen because it would require a change in their laws for this to happen.
The EU is suggesting Greece sells a few Islands or whatever else they can get their hands on to pay their debts.
DSK arrested and some are suggesting it was because he dared suggest a new basket of paper money that would end the Dollar as world reserve status. Probably right but he is still a lousy example of a human being.

The sell in May and go away mantra is in full swing and the HUI has been taking a merciless beating. Accepted common wisdom would tell you to get out now while the going is good. So you have to look around and ask yourself what are the big boys doing? What is the smart money doing? We know Sprott dumped a bunch of PSLV in favor of mining stocks and he is so far on a loser on that one. Even buying into miners in Bolivia for example APE. There is still the threat of nationalization in Bolivia.

Soros dumped Gold in favor of ????? Did he redeem for physical?
JPM are holding a lot of meetings with a lot of miners.
Pimco out of treasuries and their portfolio of hard assets is growing in one fund while their Bonds funds sit there in cash. Charging admin fees to the clients while doing nothing with their cash btw.
He is supposedly short bonds as well which is interesting because the Fed is the one selling the puts. 

Take a look at your favorite miners and look at the 14 day RSI on them over a period of at least a year and that will show you how beaten up they are.

The politicians talk about deficits like they know what the hell they are talking about. Rand Paul talking about trillions in deficit cuts. Republicans talking about billions in cuts. It's all crap. They know it's crap and they are just playing to the percentage of the population that is still completely clueless and is still buying this good cop/ bad cop routine. The percentage of the population that still buy the Red / Blue argument.
Ron Paul saying we should sell our Gold to pay our debts. What he is really doing is trying to bring the Gold argument to the public level. He would no more exchange the gold reserves of the USA than he would sell his own guns or Gold.

Geitner has shown his hand to the world by starting the process of going cannibal on Public Pensions. The stage was set with public anger being whipped up against the Unions and public workers.  I don't see anyone up in arms about this as it is assumed to be temporary. It's temporary until it's not.
It also sends a message to our Creditors that we will steal from our workers and their children if necessary to pay our debts. It kicks the can down the road a few more inches.

I'll leave you with these charts from "Uncommon Wisdom" I received this morning. Place your bets. Unless you are trading futures and in and out of the market then screw your courage to the sticking point.


GM Jenkins said...

My untutored perspective on the inflation/deflation topic is as follows. I see no reason why the stock market can't crater (say, Dow Jones back to 6000), catalyzing a massive unwinding of all risk trade, which will send oil to $50/barrel and most commodities beneath their 2008 lows. I certainly buy the argument that global growth is entangled with US economic health in the short term (which could be years), and I see that the dollar pretty much only has notable rallies when the S&P 500 falls. But I'm also pretty sure of 2 things. The first is what Marc Faber always throws at the deflationists, namely that TPTB are better prepared this time to print on the order of trillions at the first sign of such an eventuality. And second (related, of course) that the dollar won't rally more than it did in 2008, as people have wised up; and gold, which rebounded very quickly in 2009, would rebound even faster this time around. So for the buy-and-hold precious metals investor, I don't think there will be much ultimate downside given such a scenario, especially with respect to gold's purchasing power vs. the dollar's. On the other hand, I could also see the Dow never crashing, with the plunge protection team more in control than we can even imagine, and TPTB's "managed retreat" with respect to gold and silver going on steadily for years to come.

Related to this, back last fall when I started getting into this macroeconomics stuff, I discovered a guy on the kitco website named Howard Katz. I went through all his archives. He blasts the threat of deflation as a tool used by "the paper aristocracy" for a hundred years to strengthen itself at everybody's expense. He made the supremely contrarian and revisionist argument (that appeared well-researched), that the Great Depression was essentially propaganda, that the common man wasn't really much worse off at all, and that it was orchestrated (and portrayed) fraudulently by bankers and their allies (like FDR) to recover their stock market losses and centralize their power. Katz had been making these arguments well before 2008.

Anyway, the not soon after I discovered the guy, I read a short and unceremonious obituary on kitco saying he died. The guy appeared to live alone in New Hampshire, and he was 72, but I confess I was a bit spooked, since after 2008 he had really started to attack TPTB with fire and brimstone.

GM Jenkins said...

Here's Katz' last piece on the Great Depression, a summary of his ideas.