You know that they want to, QE that is, by the Fed. Not only do they want to, they really need to. If you recall the chart of velocity (crashing below 1933 Depression levels), the Fed absolutely MUST pump more into the system. The U.S. economic numbers, even after thorough massages are showing stagnation at best. Globally, the picture is the same, the world’s economy is in decline. But, the Fed has a problem on it’s hands, we are being told on a daily basis that everything is well and the stock markets, even without any volume are not at levels to justify more QE. This is a very BIG dilemma!
Our central planners have made a big mistake in this area, they have assured us that all is well and their “remedies” were working, they have even pumped up the stock markets to “prove” this to us. Another little blunder is the fact that we have an election coming up in less than 90 days, how good will it “look” for the Fed to ease in front of an election? I’m not positive but other than back in 2008, I don’t think the Fed has EVER eased with less than 6 months to go until an election. Then you must ask, what kind of signal will this send? Do investors put on their party hats? Does the PPT pump up equities to fulfill the script? OR… do we get some sort “pukage” event where investors think it through and begin to dump everything? The thought process could go something like…things must be really bad, or… we are 5 years, 20+ acronyms and how many easings into this thing and nothing has worked, why will THIS one be different? All I can say is that the stock market is at a very dangerous juncture and the Fed is coming very close to it’s bluff being called.
Speaking of bluffs, it looks like the East is finally after all these years calling the West’s bluff. The action in the metals has changed dramatically over the last week or more. The upside moves are taking place in N.Y. AND they are not being done in the fist 10 minutes only to be capped for the rest of the day. Ned Naylor-Leyland discusses permanent backwardation which is logically not supposed to happen in Gold and Silver, he also discusses a couple of very large trades that are testing the ability of the LBMA to deliver. Allegedly the LBMA is refusing to deliver outside of their “system”, I take this to mean that they are willing to deliver “inside” of their system as long as they get to “hold” it and “report” on it. Like the old saying goes, you can fool most of the people most of the time!
IF these trades do not get settled, the jig is entirely and completely up! The demands to deliver will jump the pond and the COMEX will be “called”. This is the “cash call” that I have written about umpteen times and is THE day of reckoning. “Force majeur” will be commonplace everywhere and those holding paper receipts will find out that they’ve been had! When it is discovered that the metal in very large part purportedly held and backing these contracts, receipts, ETF’s etc. is not there, what do you think will happen? Do you think Silver will run to $50 per ounce and then be “sold” at that “technical level”. Do you think that buyers from last year in the $40′s will be sellers and feel a sigh of relief that they can get out of the trade in one piece?
No, I’ve got news for all of the Gartman’s, Cramer;s, Nadler’s and Jeff Christians’s of the world, technical analysis, Elliot Wave counts, blah blah blah will not work. NOTHING WILL! If it is disclosed that a “failure to deliver” happens while being told that “metal is plentiful everywhere”, all hell will break loose. The moves in the cash markets will be so large that it may take WEEKS for the COMEX to catch up with it’s daily limit moves unless they just throw in the towel and settle ALL contracts for pieces of paper with numbers on them. Lat year’s “buyers in the $40′s” may be made whole (in Dollars) but the bus will leave without them at warp speed. In other words, when the world finds out that these exchanges are hollow, THE MARKET will “reset” prices whether the various governments want to participate or not. THIS is the beauty of Mother Nature and how she works on the human emotions of fear and greed. I assure you, what we are set up for will have nothing even resembling the emotions of greed!