The Gold and Silver Thread

[Toro]

I think the jobs numbers will be lower than expectations dispite the hot ADP jobs report today. This should boost Gold & Silver with more expectations of QE.

I think it will be higher. The previous three months were affected by weather.

 

[Toro]

why would that cause deflation???

Default on or non payment of debt causes deflation. Just like when people failed to pay their home loans. Money is created (inflation) when money is borrowed. Money is destroyed (deflation) when debt is wiped out or not repaid.

DEFLATION?????

If the US fails to pay its on its bonds as specified by contract, that will cause the largest INFLATION ever.

US specie would become entirely WORTHLESS

The Fed won't write down their holdings. There's no reason for them to do so. The Fed is going to keep nominal interest rates below nominal GDP to essentially monetize the debt.

 

[Toro]

I think the jobs numbers will be lower than expectations dispite the hot ADP jobs report today. This should boost Gold & Silver with more expectations of QE.

I think it will be higher. The previous three months were affected by weather.

80k v 100k expected, so KM was right and I was wrong!

Gold popped $10. This will be forgotten by Monday.

 

[Trajan]

If you want to make some fast money in commodities - Buy Soybeans!

I bought several contracts over a month ago @ $13.65 when this dry heat wave began. Soybean crop has now failed or suffered major damage in the USA, Russia, Brazil & Australia this year. Corn has also had bad yields. The Government stocks & positions report is bogus claiming there is 8% more soybeans in storage this year than last year. Farmers have been buying back their futures contracts because they are not going to raise enough soybeans to deliver & fulfill those futures contract obligations.

Stock up your pantry people because food prices are going way up!

corn up 40% in the last year..

 

[Toro]

Gold is down nearly $30 since the NFPs came out, so this was forgotten in about 10 seconds. PMs going back to test support.

 

[Trajan]

stand fast!!!!!!!!!!

 

[KissMy]

Default on or non payment of debt causes deflation. Just like when people failed to pay their home loans. Money is created (inflation) when money is borrowed. Money is destroyed (deflation) when debt is wiped out or not repaid.

DEFLATION?????

If the US fails to pay its on its bonds as specified by contract, that will cause the largest INFLATION ever.

US specie would become entirely WORTHLESS

The Fed won't write down their holdings. There's no reason for them to do so. The Fed is going to keep nominal interest rates below nominal GDP to essentially monetize the debt.

The fed can't let rates on the debt rise or we will not be able to make the debt payment. But they will have to raise interest rates to stomp down gold & tame inflation. Last time Paul Volcker had to take rates to 21% to kill gold. The only way to do this & not miss a debt payment is to sterilize the debt by having the fed buy long bonds at near zero interest or to write down the debt they own. When debt is written down it causes deflation. Sterilized debt write-off may not cause deflation or inflation. Inflation is caused when debt is created. Operation Twist is the set-up for just such action. Central banks have also bought a lot of gold so they can dump it every time gold starts to rise. It is a big game that they are planning on winning because the population is not sophisticated to figure it out & house always wins.

 

[Toro]

DEFLATION?????

If the US fails to pay its on its bonds as specified by contract, that will cause the largest INFLATION ever.

US specie would become entirely WORTHLESS

The Fed won't write down their holdings. There's no reason for them to do so. The Fed is going to keep nominal interest rates below nominal GDP to essentially monetize the debt.

The fed can't let rates on the debt rise or we will not be able to make the debt payment. But they will have to raise interest rates to stomp down gold & tame inflation. Last time Paul Volcker had to take rates to 21% to kill gold. The only way to do this & not miss a debt payment is to sterilize the debt by having the fed buy long bonds at near zero interest or to write down the debt they own. When debt is written down it causes deflation. Sterilized debt write-off may not cause deflation or inflation. Inflation is caused when debt is created. Operation Twist is the set-up for just such action. Central banks have also bought a lot of gold so they can dump it every time gold starts to rise. It is a big game that they are planning on winning because the population is not sophisticated to figure it out & house always wins.

Writing down debt isn't deflationary per se. Withdrawing reserves from the system is deflationary. Those are two different things. Theoretically, if the Fed wrote down its debt by any significant amount, it would make the Federal Reserve System technically insolvent. That's why they'll never do it under any circumstance. The Fed doesn't mark to market its assets so there is no need to mark it down. If the Fed wants to tame inflation, it can do so by withdrawing liquidity from the system. If the Fed wants to reduce its balance sheet, it will just let its debt holdings run off without replacing them.

 

[Trajan]

50, 100 year bonds anyone?Screw my great, and great great grandchildren, I won't even know them...

this shit is so tired. the political system even if we deferred all of our short term debt. that far out, would just see any gain there by, as an excuse/opportunity to keep spending, our debt to GDP is pretty much at the point where, IF we don't start 18.5% of a robust economy soon, I don't care if they have a millennium bond.....we start eating ourselves despite any yield curve.

 

[Toro]

The plan is a simple one. The government is monetizing the debt. They intend to keep nominal interest rates below nominal GDP, just like they did for years after WWII.

 

[Trajan]

and the downsides of monetizing debt. and spending at a 25% to gdp?

 

[Toro]

and the downsides of monetizing debt. and spending at a 25% to gdp?

Well, that's why we are in the Gold and Silver thread, aren't we?

 

[KissMy]

The low rates are killing the Social Security Trust Fund making that mandate even further under water & will add to the debt problem.

Bernanke – My Goal is to Wreck Social Security

 

[Trajan]

and the downsides of monetizing debt. and spending at a 25% to gdp?

Well, that's why we are in the Gold and Silver thread, aren't we?

 

[Trajan]

The low rates are killing the Social Security Trust Fund making that mandate even further under water & will add to the debt problem.

Bernanke – My Goal is to Wreck Social Security

wow.....depressing.

 

[KissMy]

The low rates are killing the Social Security Trust Fund making that mandate even further under water & will add to the debt problem.

Bernanke – My Goal is to Wreck Social Security

wow.....depressing.

It's likely doing the same to all the federal, state & local pension funds that are backed by us tax payers. We are also on the hook for private pensions through the Pension Benefits Guaranty Corp (PBGC).

 

[Toro]

A massive Risk On rally occurred on June 30 when the EU leaders surprisingly announced an agreement which would allow the ESM to recapitalize the banks, i.e. EuroTARP. However, as with all of these Euro summits, cracks are now appearing.

Euro-zone countries would still have to guarantee the loans their banks receive from the region's permanent bailout fund, the European Stability Mechanism, even if it directly recapitalizes them, a senior European Union official with direct knowledge of the situation said.

The remarks Friday cast doubt on what was seen as a breakthrough at a euro-zone leaders' meeting last week, where it was decided that once a central euro-zone bank supervisor was in place, the ESM would be able to directly recapitalize banks.

"I need to make clear what the ESM can do: The ESM is able... to take an equity share in a bank. But only against full guarantee by the sovereign concerned," the official said. He added that while the member state's guarantee wouldn't directly show on the government's official debt burden, the loan "remains the risk of the sovereign."

Allowing the ESM to directly recapitalize banks was meant to snap the link between sovereign-debt and bank woes. Each time a country receives bailout assistance to help prop up its banks, the government's debt burden rises, deepening investor worries about the sovereign's situation and lifting borrowing costs. That, in turn, hurts the banks whose portfolios are stuffed with domestic government bonds.

Doubts Emerge in Bloc's Rescue Deal - WSJ.com

EuroTARP is a promising start to a possible resolution of the European crisis but I remain very skeptical. If it appears that the agreement is unlikely to pass, or if it is not as investors thought, then the market will turn to Risk Off. This would most likely cause a sell-off in gold and silver, threatening to break support levels.

FTR, I am short silver a bit here, so I'm talking my book.

 

[KissMy]

why would that cause deflation???

Default on or non payment of debt causes deflation. Just like when people failed to pay their home loans. Money is created (inflation) when money is borrowed. Money is destroyed (deflation) when debt is wiped out or not repaid.

DEFLATION?????

If the US fails to pay its on its bonds as specified by contract, that will cause the largest INFLATION ever.

US specie would become entirely WORTHLESS

Why would you believe that? They did it in 1933 when they confiscated gold & again in 1971 when they took the dollar off of the gold standard. All they have to do is write down the "US Treasuries" held by the "Federal Reserve Bank" & then raise interest rates back up to stop inflation.

 

[KissMy]

Fed trio move closer to QE3 Sound alarm on outlook

A trio of influential Federal Reserve officials on Monday sounded the alarm on the economy, and suggested that the central bank is close to starting another round of asset purchases.

In a speech to a bankers’ convention in Idaho, John Williams, the president of the San Francisco Federal Reserve Bank, said progress on bringing down the unemployment rate is now running at a “snail’s pace,” and perhaps even stalled.

He said the Fed is on the “edge” of being forced from the sideline to once again prop up growth.

Fed Chairman Ben Bernanke told reporters last month that the Fed was watching the labor market closely to decide whether or not to undertake more easing steps.

Earlier on Monday, two of the most dovish Fed officials speaking at a conference in Bangkok, also expressed concern that the economy was struggling and said they would support more quantitative easing.

Boston Fed President Eric Rosengren said more quantitative easing is appropriate as labor market growth has slowed fairly noticeably and the global economy is vulnerable to financial shocks...

Chicago Fed president Charles Evans repeated his call for aggressive action to counter the weak outlook.

“I support using our balance sheet to provide additional accommodation,” Evans said.

On the other hand, Richmond Fed president Jeffrey Lacker, one of the most hawkish Fed officials, downplayed the recent soft data.

“We are just in a situation where growth is going to fluctuate between somewhat satisfactory and disappointing,” Lacker said, in an interview with Bloomberg Radio.

Lacker, who voted against Fed efforts to stimulate the economy last month, said there was little the Fed could do about the unemployment rate because structural factors were keeping it elevated.

“Employment is close to maximum right now” given “the constellation of impediments and challenges this economy has had over the years,” Lacker said.

In his remarks in Idaho, Williams said the Fed was facing a “sobering set of circumstances” that requires “extraordinary vigilance” from policymakers.

 

[Toro]

I have covered more than half my silver short at a slight loss. I may close the position out.

Clearly, someone is not letting silver fall below $26.30. A fall below $26 and there is nothing but air down to $17-$19. However, despite the stress in the market, and the generally negative technicals, it can't break support.

The reason is because of the market's belief of another round of QE. My own opinion is that QE is becoming less and less effective. Frankly, I've heard "QE" so much, I want to puke my fucking guts out. It's appalling the amount of market manipulation that is going on. It signals a desperate Fed. But the market doesn't give a rat's derriere what I think. I'm in this to make money. And if the dummies in Washington want to play this ridiculous card again, I can either bitch and complain about it or make some money off it.