The Fed Has Crossed the Rubicon, Stops Stock Market Correction

The Fed very deliberately stopped a market correction and managed to turn the equity markets around, very consciously, in order to end their taper without any negative effects to Wall Street.
Last night the Bank of Japan announced a more aggressive quantitative easing AND pledged a portion of their national pension fund to buying not only Japanese equities but also the equities of foreign markets.

Gold and Silver – Good Morning Fiat Nam

It is a mistake to underestimate the depths of self-serving policy error to which Wall Street and the ruling elite will sink in order to kick the can down the road and maintain their positions of privilege. Every time I think they can go no further, I am surprised. Shame on me.
The Fed has never seen a bubble it didn’t like. And if the trickle down isn’t working, keep doing the same thing, but even more. Tempting fate doesn’t begin to cover it.

More Weakness in Bitcoin Price

To the point: speculative short positions, stop-loss at $377, take-profit at $307.
Jon Matonis, the executive director of the Bitcoin Foundation has resigned, we read on the NY Times website:
The Bitcoin Foundation announced on Thursday that Jon Matonis, one of the foundation’s founding board members, was stepping down as its executive director, effective on Friday. Mr. Matonis will remain on the foundation’s board until Dec. 31.

Mr. Matonis, who was named executive director in July 2013, will be succeeded by Patrick Murck, the foundation’s general counsel.

Pretium – Canadian Golden Elephant

Elephants are the world’s largest land animals.  And though there aren’t many, they can still be found scattered across the planet.  In the mining industry, super-large-sized deposits are often referred to as elephants.  Like the animal, these deposits aren’t all that common.  But also like the animal, they can still be found.
Elephant country is somewhere miners tend to gravitate towards in their hunt for meaningful discoveries, as elephants can usually be found in herds.  And one of the world’s most prolific gold herds is found in British Columbia’s Golden Triangle.

Election Result – Labour Wins South Yorkshire Police and Crime Commissioner

The mainstream press were once more caught out by an apparently surprise Labour win in the South Yorkshire PCC by-election, as the press had increasingly built themselves up into a fever pitch of expectations for an upset UKIP victory all in the wake of the single issue of the Rotherham child abuse scandal as illustrated earlier by the likes of Channel 4 news –
“A UKIP victory here would be especially embarrassing to Labour as Ed Milliband is a South Yorkshire MP. It would be a sign that Nigel Farage’s party poses as much as threat to Labour as it does to the Conservatives and a sign too that in many parts of Northern England just as in Scotland that Labour can no longer depend on its working class base” – Michael Crick, C4News (28th Oct 14)

The Deflation Boogeyman

Here we go again.  A plunge in oil prices has spurred a bevy of articles from the bought-and-paid-for media, as well as quasi-governmental agencies, alerting us of pending disaster if deflation were allowed to make an entrance, however briefly. Never mind that there is no theoretical or empirical evidence to justify this fear of deflation. (explanation here) According to the St. Louis Fed:
“While the idea of lower prices may sound attractive, deflation is a real concern for several reasons. Deflation discourages spending and investment because consumers, expecting prices to fall further, delay purchases, preferring instead to save and wait for even lower prices. Decreased spending, in turn, lowers company sales and profits, which eventually increases unemployment.”

Gold Prices in The Post-QE World

Lacking a distinctive catalyst, gold prices have languished in recent weeks after a failed turnaround attempt earlier this month. Gold’s primary form of price propulsion is fear and uncertainty; as long as investors are worried what the future might hold, gold is treated as a financial safe haven and its price tends to appreciate due to increased demand. When investors aren’t worried, however, gold is typically ignored and risk assets (viz. equities) become the preferred choice.

FOMC Hits Gold and Silver

Trading in precious metals was quiet until Wednesday morning, when prices began to soften. When the FOMC meeting released its policy statement at 2.00pm EST, gold and silver responded by falling heavily, with gold breaching the $1200 level yesterday (Thursday) and silver crashing through $17 to a low of $16.33.
This morning (Friday) gold and silver fell further in overnight ahead of the London opening, with gold trading down to $1173 and silver at $16.00. It is clear that the bears, including the bullion banks with short books, mounted an attack on the $1180 level, where there were stops to take out.

EUR/USD – Double Bottom Or New Lows?

Yesterday, the U.S. dollar strengthened against other major currency pairs after the Fed said it would end its monthly bond-buying program but keep rates near zero for “considerable time”. As a result, EUR/USD declined below the medium-term resistance zone, which triggered a sharp decline to sligthly above the recent lows. Will they withstand the selling pressure and we’ll see a double bottom in the coming days?

Only a Pawn in Their Game

The deputy sheriffs, the soldiers, the governors get paid
And the marshals and cops get the same
But the poor white man’s used in the hands of them all like a tool
He’s taught in his school
From the start by the rule
That the laws are with him
To protect his white skin
To keep up his hate
So he never thinks straight
‘Bout the shape that he’s in
But it ain’t him to blame
He’s only a pawn in their game.

More Downside Ahead for Gold and Silver

Last week we argued that the underperformance of the gold miners during Gold’s rebound was a bad sign. Since then the miners have plunged to new lows while Gold appears to be at the doorstep of a major breakdown below $1180. It shouldn’t be a surprise as it would simply be following the miners and Silver. The current bear market is getting very long in the tooth but it is not yet over. We see more losses ahead before a potential lifetime buying opportunity.

China’s Gold Strategy

China first delegated the management of gold policy to the Peoples Bank by regulations in 1983. This development was central to China’s emergence as a free-market economy following the post-Mao reforms in 1979/82. At that time the west was doing its best to suppress gold to enhance confidence in paper currencies, releasing large quantities of bullion for others to buy. This is why the timing is important: it was an opportunity for China, a one-billion population country in the throes of rapid economic modernisation, to diversify growing trade surpluses from the dollar.

The End Of An Era: Is The US Petrodollar Under Threat?

Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.
The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China’s need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the U.S. dollar, and that could have a profound impact on energy markets.

QE Is Dead, Now You Tell Me What You Know

It seems like every blue moon or so I need to return to Groucho’s definition of chaos theory, it keeps on popping up. The first time I used it in an article goes back to at least May 2009, incidentally for many people the starting date of the financial crisis in their part of the world. This time around, it’s there because it’s what a lot of people in the financial markets must be feeling. And I mean ‘must’ in the sense of ‘should’ be feeling, though I don’t think they are. Yet.

Welcome to the World of Volatility

My last column “Regime Uncertainty Weighs on Growth” (October 2014) stressed that market participants do not know what the Big Players (Read: governments and central banks) will do next. This regime uncertainty is creating an economic undertow. No wonder there have been so many recovery false dawns.
In the past month, markets have become very volatile. Equity and oil markets are the most notable. Why? Well, regime uncertainty continues to be ramped up. Indeed, Berlin-bashing by Paris and Rome over fiscal austerity has become the latest political rage. On top of that, weak economic data from the Continent and a spat of surprisingly weak U.S. data moved the world’s stock markets. If that wasn’t enough, there were some so-called mixed economic signals emitted from China. We must not forget the International Monetary Fund’s (IMF) World Economic Outlook report that was unveiled at the World Bank — IMF meetings in Washington, D.C. The report contained a major policy flip-flop, switching mantras from fiscal austerity to fiscal stimulus. The volatility mixer was stirred further when the Saudis clarified that they would not cut back on oil production to prop up crude prices. The Kingdom wants to retain, or increase, its market share. To top it off, Ebola has reared its ugly head. All of this confirms what I call the School Boy’s Theory of History: it’s just one damn thing after another.

Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start

The stock market has once more confounded the crescendo of bearish market expectations of not even 2 weeks ago when the widespread assumption was that an end of U.S. QE would trigger the long anticipated bear market that had so far failed to materialise for some 5 1/2 years! But were promised that this time would be different, for this time the stock market most definitely had topped and was destined to embark on a severe bear market with figures such as Dow 6k being bandied about, with further assumptions the the bear market would likely would start with a destructive imminent crash.