US FED: Why QT stands for Quantitative Teasing, not Tightening…..and what that means for gold.

goldshine3915WHEN MARKETS FOLD, IT’S TIME FOR GOLD

The Slog argues that gold shows signs of reverting to type.

The only difference between the Chinese stock markets in at the moment and the US markets from 2010-14 is that the PBOC is directly buying stock nobody wants, whereas under US QE, the Fed hoovered up unwanted junk the banks wanted to offload. The US approach (alongside Zirp) also gave easy non-production profits to multinations unable to sell their wares.

Both are an obvious scam of manipulation, but for some months now, Fed Chair Janet Yellen has been promising Quantitative Tightening, with Vice Chairman Fischer trowelling on more false confidence at Jackson Hole. I think of this spin as Quantitative Teasing, and although geopolitically this might wind up the Beijing Politburo, very soon now the tease will have to stop: we have approximately three weeks before that moment of truth fails to deliver. And whether the delivery promise is fudged or not, there will then be at least some degree of realisation among investors that this has been more a moment of mendacity than truth.

I do not doubt, by the way, that directionalisers will pump out gallons of BS about the need to pile into the markets now that, after the rate rise ‘to come’, stock valuations must rise in the wake of such a Golden New Dawn. I think it very likely that there will be a brief pre-FOMC Bull run, and it’s even quite possible that a token 0.25% rate rise might emanate from the Fed to support this ridiculous notion. The only snag being that stock valuations are already way too high.

Whatever Yellen does later this month, it will be wrong. A big rates rise could temporarily boost the markets, but then be reversed when profits start to fall….or completely freak Wall Street out – while perhaps stopping housing activity dead. A tiny one will be seen as ho-hum, convincing more and more players that the Fed is bluffing – which it is. And bottling out of the rise will start a sell-off on the basis of OMG the silly tart’s all over the place.

In the meantime, the external news can’t be ignored or blacked out….yet. Day 5 of the the PBOC’s Quantitative Buying (QB) is running exactly to the itinerary predicted here earlier this week: smaller daily market falls, but still net falls every single day. Beijing is pumping water on a water-resistant fire out there.

The growing realisation that China is heading towards screeching brakes and a hard landing, exacerbated by further eurozone problems, will only too obviously clarify that the World is in a debt swamp and an economic slump.

The Chinese will, I suspect, find that there is no point in making stuff when real demand is close to zero. Markets will be neurotic at best, faith in debt bonds will evaporate, and most commodities will plummet. Oil refinery output will drop. Oil will plunge.

And so now just might be the time to take a punt on the Last Resort: gold.

Events have spiked the wheels of gold price destruction. Those in the central banking élite who envisaged a gentle programme of discouragement and manipulation have been given an entirely predictable shock. Over the last two days, the shiny stuff has lost $12 as things seemed to be ‘fixed’ in the markets. But in the previous 30 days it gained 4%. This year the price-destruction programme took 10.3% off the value (almost twice the 5-year’s drop) but on the six month chart the voyage looks to have been blown off course:

gold-mnth3915In March, the steady decline (1) continues, but then bad euronews and a Greek debt marathon (2) sees a slight price recovery, followed by a classic events-reaction line of goldbugs reacting to events. At point (3) eurogroupe victory is in sight, but gold drops below the line it was holding in March…suggesting manipulated overselling to me. But then China markets plunge and at (4) the line moves back to where it was. That equates net to roughly five months of zero destruction – suggestive of sentiment outgunning the ‘plan’ to make gold affordable for bank balance sheet fiddling reconstruction.

This changes the rules I have applied to myself for nearly three years on gold now. I no longer think TPTB will be able to get gold anywhere near the 850-900 level that I saw as a buy signal. The simple reason for this is evidence (at last) of gold starting to react rather than detract. Alongside other commodities, it is gradually returning to normal behaviour. And ultimately, mass sentiment should always outgun manipulation.

In the real world beyond bent paper, Western and Indian consumer demand was strong in Q2 2015 (in Europe it’s up 14%) so as always the ‘market’ haha price of gold is completely counter-intuitive to what’s happening outside the bubble. Again, the surge in Europe is to do with Greece in particular and the outlook in general: more evidence of gold returning to its traditional safe-haven role.

I’m in watch and wait mode along the following lines; what you do is your business, and this isn’t advice because I’m not qualified to give it. I shall:

  1. Watch gold over the next two weeks until just before the FOMC, and be greatly encouraged it it is oversold
  2. Buy at anywhere between $1000-1075 – in bullion, not paper
  3. Hold for at least a week while the Fed, the stock markets and the Brics run around like headless chickens
  4. Hold for longer, buy more if the price tops $1250.

That’s as long as any plan can be in today’s investment climate. Onwards and, er, upwards or downwards – whoTF really knows any more?

Yesterday at The Slog: Roll away the Stone as Ginger Minge-Wader rises from the Dead.

45 thoughts on “US FED: Why QT stands for Quantitative Teasing, not Tightening…..and what that means for gold.

  1. From what I see, the markets are not concerned with the truth, the truth is plain for all to see, it’s confidence that seems paramount, for if the lie is believed by all it becomes the truth in their eyes, and that keeps the plates in the air and spinning.

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  2. Murphys’ Law of Unforeseen Consequences kicked into play when the Fed introduced QE & ZIRP.
    The CEOs’ of major Corporations,unable to produce higher profits from productivity and thus higher share price, decided en-mass to borrow cheap money and use it to buy back their own Corporation shares. This ensured that their bonuses and stock options produced windfalls for them. This is nothing but stock manipulation and looting.
    This is not the Capitalism of Adam Smiths Hidden Hand. Just about everything is manipulated. We are shortly due a massive reset to reality.
    A recent little reference to the finance meeting at Jackson Hole,in Wyoming, referred to as the gathering of, ‘The A–holes at the J–Hole.
    They got that right at least.

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  3. @Ricoh.
    These are not migrants or asylum seekers, they are refugees from Western created wars.
    The UK did Washingtons dirty work by involvement in the wars in Afghanistan, Iraq, Libya and surreptiously in Syria. Connect the dots and we have millions of refugees from these regions seeking to escape the hell holes created by these wars, The UK , and NATO are used as Washingtons attack dogs in their proxy wars.
    ISIS is a proxy mercenary army creation of Zionist Israel ,Turkey and the USA. Just their name changes, depending on the theatre of operations, whether in Afghanistan or Chechyna against the Soviets,,Libya against Ghadaffi, in Syria against Assad ,and in Iraq to recreate 3 new states,Shiastan, Sunnistan, Kurdistan.
    Cui Bono,
    Saudi and Qatar wish to run a gas pipeline via Syria. Washington wishes to disrupt Russian near monoply of gas supply to Europe. The new Silk roads of trade from China to Europe are disrupted by Middle East Wars., Turkey wishes to make a grab for the oil rich Kurdish area near its borders.
    A cabal of evil at play in the Great Game of Geo-political dominance.

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  4. @Salford Lad

    This is O/T, but my last word is – you are sadly very wrong. We have to put up with too much modern pc b***s***t, and this classic.

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  5. @Ricoh, I think Salford Lad hits it pretty much on the head.

    What we have here is the endgame of a 70 year chess match between Saudi and the USA – these people are ideological enemies but were forced to engage in a bipolar toxic dependency. Most of the events we have seen played out have been a result of the massive Machiavellian skulduggery required to keep this tenuous arrangement on track up until now.

    With the petrodollar hegemony now under threat this game is getting very nasty indeed.
    The Saudi Wahabbist regime is locked in a battle for survival with the US, the battleground is Europe and the refugee crisis is engineered. The Wahabbists are effectively ethnically cleansing their homelands of all the ‘wrong’ muslims and leaving only those who subscribe to their ultra-orthodox interpretation of the religion.

    If you don’t get it, try Adam Curtis’ eloquent discussion. (Apologies for quoting this again but Ricoh clearly needs to view it).

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  6. If you buy gold then you must

    A. Trust a facility to store this gold or

    B Fortify your house and guard this stash 24/7

    Either way someone who reads “The Slog” will someday show up at your place in France looking for your Gold.

    Good luck with that.

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  7. If one waits for long enough, an opportunity vanishes. Critical mass is approaching as large loud influences coalesce. Paper begins its return to proper valuation (Voltaire) and that which was thought to be of value might appear to us natives to be of value again. Alas, if we wait to “invest” in gold, it won’t be an investment any longer. It wil have turned into money again, and the value will seek its natural place and it won’t be measured in currency. Right now it is an investment because its price is fixed low by banks and their governments that need their paper to appear to have greater value than the golden alternative. Those same people appear to be buying every lick of the gold stuff to prop up their orifices and use the interim to their advantage. They crashed our economy by design and are buying gold to store away. They use their hands to accumulate, and their voice to denigrate and conceal their actions. Gold and silver are the money that paper money has always been based upon. Soon the critical mass will be in front or behind us and it will be too late. Paper pushers panic in a F.I.R.E. economy. Don’t get burned.

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  8. @ IP
    More patronising nonsense adds nothing to the facts. Don’t worry, its the norm today.
    I’m happy in my own skin and in my own head.

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  9. Silver is a better option,apart from the 20% Vat charge. It is more portable and exchangeable, For 5000 years its value ratio to gold has been approx 15. Recent years this has gone to over 70. It will reset to the mean eventually.
    The ancient relic should not be bought as an investment, but as insurance against catastrophe. This period in Financial history could be that moment.

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  10. @Ricoh
    on SEPTEMBER 3, 2015 AT 12:59 PM
    You said that this would be your last word.

    (Bought a camera off you once though. Nice job.)

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  11. They are the ultimate guardian breed KFC, they will adopt you + kids as ‘the flock’ everybody else….beware.

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  12. Vlad has 1500 tonnes of the stuff. China probably 10,000 tonnes and rising. Both have been dumping US treasuries.
    Your move Janet.

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  13. Right on the money, wasn’t it the Clinton woman who said that Russia has too many natural resources? If they haven’t got the balls to take them they will try as hard as they can to stop them from selling them.

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  14. salford lad celtic gold in estonia, no vat!!. i have used them several times, no problem. ps canadian maples are the best, -9999/silver. atb cc

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  15. Don’t expect to get rich (it’s not what it’s cracked up to be), just hope to survive and – if possible – maintain a standard of living somewhere on the comfortable side of penury.

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  16. Guinness and unfortunately are not naturally inclined to be found in each other’s company: occasionally, however and strictly for the purposes of academic research, it is necessary to test the old adage that you can have too much of a good thing – a theory the veracity of which should not always be taken for granted. In my humble opinion.

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  17. http://www.telegraph.co.uk/news/uknews/immigration/11842760/Prepare-yourselves-The-Great-Migration-will-be-with-us-for-decades.html

    I rest my case.

    The exhibition of ignorant discussion above is just one example of how we as a nation are rapidly going to the dogs due to the lack of intelligence to safeguard our futures and that of our children.
    For example, I watched Sky tv last night. The Labour leadership debate. Corbyn’s age was noticeable, and with it his real life wisdom and experience. By the way, I am tory inclined as socialism is wrecking the world.The other three were obvious and noticeably inexperienced and unsure of themselves. Who are they trying to be leaders?? Who are the eu people trying to be leaders?? There is no leadership today. Too many indians mouthing off. No chiefs. At the end of the day – TOO MANY PEOPLE. Who invited the whole world to come and live on my land?? It’s not right – and there will be consequences for YOUR CHILDREN.
    I personally will not be affected as I am retired and have made my own arrangements in the light of what is happening today, so when I read the comments of my so called compatriots , I just despair.
    Thanks for reading this. Thank you JW for hosting my views. If you ban me again – which you will probably- so be it.
    Thank you……………God Bless us Christians …….PLEASE!!

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  18. American Foreign policy is defined by the Wolfowitz Doctrine which, simply stated says the US cannot have anybody get in the way of American hegemony. http://en.wikipedia.org/wiki/Wolfowitz_Doctrine. This plus the overwhelming influence of what Eisenhower called the “Military Industrial complex” backing this doctrine informs the all of the Foreign policy decisions. Anther influence is the retention of the Reserve currency status of the Dollar. Everything flows from these two issues.

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  19. +1, IP.
    Except this deliberately disjointed & confusing film portrays 9/11 as not a false flag, ie as a Muslim caused event.
    This, & the build up of anti-Muslim hate I see in the MSM leads me to suspect the Bankster PTB have in mind WW III
    West vs Mulims.
    Though with Obarmy’s Iran deal, & the pivot to Asia, perhaps the mad Empire now has China/Russia in its sights?

    John Doran.

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  20. Too many non ‘christians’ seems to be your claim.

    Too many indians not enough chiefs.

    It is estimated that by 2030 India will be number 3 in the world inthe global league table of GDP.

    May be the world would be better if there were more Indian Chiefs?

    Just a thought.

    And by the way why do you believe that the world should decrease the number of humans?

    And given that you say you do why do you believe you are not an excellent candidate for elimination?

    What is happening is the consequence of western colonisation and the mistaken belief that it is exceptional by genetically inherited effortless arrogance IMO.

    What goes around comes around and the ill begotten wealth extracted from the demeaningly defined third world is now begining to be asked to pay the price for their forebearers exploits.

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  21. After a reasonable start, the abomination Piers Morgan slips in the gun control poison pill.
    As if the US general public had bombed & invaded 6 Muslim countries since the 9/11 false flag.
    Que?
    Historically, gun confiscations have led to genocides: Hitler & the Ottoman Empire, for example.
    I googled: after gun confiscation. I youtubed: gun confiscations genocides.
    Take your pick.
    The Piers Prick wants the US public sheeple disarmed & as ready for slaughter as The Stony Bliar has prepared us.
    Won’t happen.

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  22. The ‘claims per ounce of gold’ deliverable at current prices has spiked higher once again, to 126:1

    The Financial Times has finally noticed that the price for ‘borrowed’ gold bullion that is taken to Switzerland for re-refining and then final shipment to Asia for purchase and withdrawal is rising.

    These are signs that one might expect to see in a late stage gold pool in which the manipulation of a market has gone too far for too long.

    http://jessescrossroadscafe.blogspot.ca/2015/09/gold-claims-per-ounce-spikes-back-up-to.html

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  23. Ricoh thank you for at last giving me something to reply to,
    1 this very poor article,poor because it defines the facts not the causes of those facts that actually means it doesn’t have to be this way! because of throughout history humans have breed dry destroyed civilians,we only have to take the North American Indians has one example
    But lets take Nigeria,Nigeria should have a economy as robust as certainly Scotland probably Britain,it should be a powerhouse behind the African continent being uplifted close to European standards of living,but it isn’t because it like the Indians it lands & resources have been pillaged & when the natives fight back displacement takes place
    Under flat earth economics this was always going to happen,humanity can only fall into depravity,starvation,migration,if you don’t believe me look at Britain now concentration of wealth around London the depravity,hunger & wastelands of our own lands.So this very unchristian economic system creates depravity,just before the industrial revolution a few million left farming & headed to the new Towns & cities being created,migration of bettering yourself in any economic system isn’t new,but such concentration of wealth makes it inevitable particularity in a global economy.
    OPEC is a cartel & in the last 45yrs if real market forces were really driving economies would have no place in that world,so why has it? Why can’t the coffee growers,Milk producers & many other forms of producing including Nigerian oil become wealthy & stimulate national economies worldwide,why did Afghanistan turn fields into poppy growing & not other crops,the financial system that very unchristian one,but to claim that these people are fleeing to better themselves is wrong,otherwise why didn’t they flee 10 yrs ago,because the system has reached the level were revolution or migrating are the only options,staying & building is a no goer
    I will prey that you stop being a Christian & become a good Christian,Stop allowing these people their freedom to better themselves by attacking those that deny them.Cross the road to aid the victims & showing up the contempt of those that brought us here! for i can assure you most humans don’t want displacing & only great events force such migrations!

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  24. “At the end of the day – TOO MANY PEOPLE. ”

    You need to google Agenda 21 and the NWO. It exists and it is terrifying. There is LOADS of space on this earth – just drive across Mongolia and Russia.

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  25. Oddly enuff I’d make an exception with going Guinless, as the old black soup does fill you up, unlike certain beers I could mention.

    When I came to Germany 15 years ago the weissbeer here filled you up after 3-4 then you got horrible farting afterwards. Today it ain’t so and you drink and drink – i think they’ve changed the barley/malt since then.It is still “Reinheitsgebot” but the malt is no longer kosher.

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  26. What will hasten the demise of Europe is the flood of Muslim leaches pouring into Europe. Hundreds of thousands of Muslims all looking for lifelong welfare that most of the Muslims currently living in Europe are living off. It won’t be long till Europe becomes an Islamic Caliphate. These are not refugees pouring into Europe, its an invasion of untold numbers. And in a short time many of them will end up in this country thanks to the liberals running this country and Europe.

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  27. What will hasten the demise of Europe is the flood of Muslim leaches pouring into Europe. Hundreds of thousands of Muslims all looking for lifelong welfare that most of the Muslims currently living in Europe are living off. It won’t be long till Europe becomes an Islamic Caliphate. These are not refugees pouring into Europe, its an invasion of untold numbers. And in a short time many of them will end up in this country thanks to the liberals running this country.

    Like

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