29 Sep 2011

Goodbye Operation Twist, Hello QE X+1


Remember when the Chairman did a quick drive by with the much price in Operation Twist, and the market came, saw, and plunged? That was a week ago? Two? Well, as we have been predicting since December 2010, that was merely the appetizer, or as we phrased it the same as last year's July QE Lite to last year's August QE 2. Confirming both our speculation, and the realization that Bernanke knows only how to print more money and nothing else, were his first public remarks since the launch of Op. Twist, at a Cleveland Fed forum last night in which he said that "the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly... Bernanke indicated a willingness to push deeper into the realm of unconventional policy if economic growth remains anemic. ""If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to because we do not want deflation," Bernanke said. The comment was made in response to a question about a recent decline in market-based inflation expectations, which policymakers see as a good gauge of future inflation trends." And since the key "deflationary" metric that he looks at, as wrong as it may be, is the stock market, looks for stocks to resume trading with schizophrenic abandon, surging ever higher on increasingly bad economic data. Of which we will have a lot.
More from Reuters:
It is something that we're going to be watching very carefully,"
Bernanke said in response to questions from the audience at a forum
sponsored by the Cleveland Fed.

In an effort to stanch the deepest recession in generations and help the recovery, the Fed not only slashed benchmark interest rates to effectively zero, but also more than tripled its balance sheet to around $2.9 trillion.

Despite these measures, growth has remained quite soft, averaging less than 1 percent on an annual basis in the first half of the year. Bernanke signaled he remains concerned about risks to the economy, which the Fed described as "significant" in its September policy statement.

"We have a lot of problems both in terms of recovery and in terms of longer-term growth," he said.
Essentially the Chairman has just acknowledged that a few short days after Op Twist was launched it has already been a failure, just as Zero Hedge predicted well in advance of its formal launch, as consumers are now merely awaiting even lower interest rates before they refinance. After all if Bernanke is dead set on demonstrating he is insane (in an Einsteinian sense), mortgage borrowers will be more than happy to wait him out on his latest move to make the 30 Year mortgage negative.

28 Sep 2011

The Fed wants to know when you call them WRECKLESS SPENDING FUCKTARDS!

The Federal Reserve wants to know what you are saying about it.  In fact, the Federal Reserve has announced plans to identify "key bloggers" and to monitor "billions of conversations" about the Fed on Facebook, Twitter, forums and blogs.  This is yet another sign that the alternative media is having a dramatic impact.  As first reported on Zero Hedge, the Federal Reserve Bank of New York has issued a "Request for Proposal" to suppliers who may be interested in participating in the development of a "Sentiment Analysis And Social Media Monitoring Solution".  In other words, the Federal Reserve wants to develop a highly sophisticated system that will gather everything that you and I say about the Federal Reserve on the Internet and that will analyze what our feelings about the Fed are.  Obviously, any "positive" feelings about the Fed would not be a problem.  What they really want to do is to gather information on everyone that views the Federal Reserve negatively.  It is unclear how they plan to use this information once they have it, but considering how many alternative media sources have been shut down lately, this is obviously a very troubling sign.
You can read this "Request for Proposal" right here.  Posted below are some of the key quotes from the document (in bold) with some of my own commentary in between the quotes....

"The intent is to establish a fair and equitable partnership with a market leader who will who gather data from various social media outlets and news sources and provide applicable reporting to FRBNY. This Request for Proposal ("RFP") was created in an effort to support FRBNY's Social Media Listening Platforms initiative."
A system like this is not cheap.  Apparently the Federal Reserve Bank of New York believes that gathering all of this information is very important.  In recent years, criticism of the Federal Reserve has become very intense, and most of this criticism has been coming from the Internet.  It has gotten to the point where the Federal Reserve Bank of New York has decided that it had better listen to what is being said and find out who is saying it.

"Social media listening platforms are solutions that gather data from various social media outlets and news sources.  They monitor billions of conversations and generate text analytics based on predefined criteria.  They can also determine the sentiment of a speaker or writer with respect to some topic or document."
The Federal Reserve Bank of New York intends to listen in on "billions of conversations" and to actually determine the "sentiment" of those that are participating in those conversations.
Of course it will be those conversations that are "negative" about the Federal Reserve that will be setting off the alarm bells.

"Identify and reach out to key bloggers and influencers"
Uh oh.  So they plan to "identify" key bloggers and influencers?
What exactly do they plan to do once they "identify" them?

"The solution must be able to gather data from the primary social media platforms –Facebook, Twitter, Blogs, Forums and YouTube."
Hopefully you understand this already, but nothing posted on the Internet is ever anonymous.  Everything on the Internet is gathered by a vast host of organizations and is used for a wide variety of purposes.  Data mining has become a billion dollar industry, and it is only going to keep growing.
You may think that you are "anonymous" when you criticize organizations like the Fed, but the truth is that if you are loud enough they will see it and they will make a record of it.

"The solution must provide real-time monitoring of relevant conversations.  It should provide sentiment analysis (positive, negative or neutral) around key conversational topics."
Why do they need to perform "sentiment analysis"?
If someone is identified as being overly "negative" about the Fed, what will they do about it?

"The solution should provide an alerting mechanism that automatically sends out reports or notifications based a predefined trigger."
This sounds very much like the kind of "keyword" intelligence gathering systems that are currently in use by major governments around the globe.
Very, very creepy stuff.
Are you disturbed yet?
For those of us that write about the Federal Reserve a lot, this is very sobering news.
I wonder what the Fed will think about the following articles that I have posted on this site....
*Unelected, Unaccountable, Unrepentant: The Federal Reserve Is Using Your Money To Bail Out European Commercial Banks Once Again
*Celebrating Independence Yet Enslaved To Debt
*19 Reasons Why The Federal Reserve Is At The Heart Of Our Economic Problems
*Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?
*10 Things That Would Be Different If The Federal Reserve Had Never Been Created
What is their "Social Media Monitoring Solution" going to think about those articles?
Unfortunately, this is all part of a very disturbing trend.
Recently, a very creepy website known as "Attack Watch" was launched to gather information on those saying "negative" things about Barack Obama.
Suddenly, everyone seems obsessed with what you and I are saying.
This just shows how the power of the alternative media is growing.
Not only that, but it seems as though the government also wants to gather as much information on all of us as possible.
For example, a new rule is being proposed by the Department of Health and Human Services that would force health insurance companies to submit detailed health care information about all of their customers to the federal government.
Every single day our privacy is being stripped away a little bit more.
But now it is often not just enough for them to know what we are doing and saying.  Instead, the "authorities" are increasingly stepping in to silence important voices.
One of the most recent examples of this was when Activistpost was taken down by Google.  We are still awaiting word on why this was done.
Sadly, the silencing of Activistpost is far from an isolated incident.
Hordes of YouTube accounts have been shut down for their political viewpoints.
Quite a few very prominent alternative media websites have been censored or attacked because of what they stand for.
So why is this happening?  Well, it turns out that the power of the alternative media is growing.  According to a new survey by the Pew Research Center for The People & The Press, 43 percent of Americans say that they get their news on national and international issues from the Internet.  Back in 1999, that figure was sitting at just 6 percent.
The American people are sick and tired of getting "canned news", and they are increasingly turning to the Internet in a search for the truth.
As I have written about previously, the mainstream media in this country is overwhelmingly dominated by just 6 very powerful corporations....
Today, ownership of the news media has been concentrated in the hands of just six incredibly powerful media corporations.  These corporate behemoths control most of what we watch, hear and read every single day.  They own television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and even many of our favorite websites. Sadly, most Americans don't even stop to think about who is feeding them the endless hours of news and entertainment that they constantly ingest.  Most Americans don't really seem to care about who owns the media.  But they should.  The truth is that each of us is deeply influenced by the messages that are constantly being pounded into our heads by the mainstream media.  The average American watches 153 hours of television a month.  In fact, most Americans begin to feel physically uncomfortable if they go too long without watching or listening to something.  Sadly, most Americans have become absolutely addicted to news and entertainment and the ownership of all that news and entertainment that we crave is being concentrated in fewer and fewer hands each year.
The "news" that we get from various mainstream sources seems to always be so similar.  It is as if nearly all mainstream news organizations are reading from the same script.  The American people know that they are not getting the whole truth and they have been increasingly looking to alternative sources.
The monopoly over the news that the mainstream media once possessed has been broken.  The alternative media is now creating some huge problems for organizations that were once very closely protected by the mainstream media.
The American people are starting to wake up and they are starting to get very upset about a lot of the corruption that has been going on in our society.
But it turns out that the "authorities" don't like it too much when Americans try to actually exercise free speech in America today.  For example, you can see recent video of female protesters in New York City being penned in by police and then brutally maced right here.
Are you sickened by that?
You should be.
What the "authorities" want is for us to shut up, sit in our homes and act as if nothing wrong is happening.
Meanwhile, they seem determined to watch us more closely than ever.
So are you going to be afraid to talk negatively about the Federal Reserve now that you know that they are going to be watching what you say on the Internet?
Please feel free to leave a comment with your thoughts below....

Source

27 Sep 2011

Gold and Silver Bubbles, Panics and Stink Bids

With gold falling more than $300 in the last three weeks from highs over $1,900 to under $1,600 and silver plummeting from over $42 to under $30 in the same time period, the mainstream media was ablaze with talk of popping bubbles. Of course, the fact that mainstream media has never, in its history, called a bubble top correctly - or even recognized a bubble - is besides the point.
Charles Sizemore at Marketwatch.com raced to his keyboard, "Is it Time to Call the (Gold) Top?" he questioned, although it sounded more like a statement. Marketwatch has been dying to call a gold collapse for a while. Remember, Cody Willard's brazen call in June 2009 to "Sell Gold Now - It's Headed Below $500/oz"? Nice call, Cody.
If/when we do reach the end of this gold bull market there is one thing that is certain: it will not be called by the mainstream media. In fact, the nightly newscast will likely lead off with the "news" readers telling you to rush out and buy gold.
For now, gold and silver haven't even entered into a bubble yet. They are still catching up to the price of everything else... and lag dramatically the one true bubble. The bubble in government debt.
US Nominal Price Change Percentage from 1980-2010


PANIC IN PHOENIX

The sentiment on the street also does not signal any sort of top in the gold/silver market.
In Phoenix, on Thursday and Friday of last week, after gold and silver had fallen dramatically there was a panic. A buying panic!
According to a good friend and Dollar Vigilante subscriber who lives in Scottsdale, the Coin Gallery (off I-17 in Dunlop) had lines stretching well outside of the store on both Thursday and Friday. Our friend has visited the store on many occasions to purchase gold and silver coins and told us that on any given day there are usually a decent amount of people buying and selling.
But, when he arrived on Thursday he couldn't believe his eyes. The lines were long and every single person was there to buy. By the time he reached the front of the line they were sold out of almost everything except for a few silver bricks. He ended up getting into a pushing match to be able to buy them as the crowd fought over them.
Finally, he prevailed and asked management what was going on. They told him that they had sold over 12,000 ounces of gold and silver in the last 24 hours (note: entrepreneurs, open precious metals coin stores!).
As the crowd began to filter off after hearing that there was nothing left to buy, my friend headed to the parking lot where someone offered to buy his silver at a profit over what he bought in the store.
If gold and silver were going up dramatically in price and we heard of this type of panic buying at physical shops we would be wary. But, the fact that this type of panic buying comes in AFTER a large correction shows the amount of real physical buying power that underpins the metals.
The Coin Gallery says they won't have any new supply until Wednesday or Thursday of this week.
I arrive in Phoenix on Friday night as I am speaking at the Casey/Sprott Summit, "When Money Dies". I am hoping that gold and silver remain at these levels or below until Monday and I will go to the Coin Gallery myself to see if they have any physical left to sell.
It is my belief that this is probably the last chance to buy physical gold and silver at these levels. As the bull market moves on it will become increasingly difficult to buy any physical metals in quantity.


STINK BIDS

The Canadian junior markets have all kinds of colorful colloquialisms. Dead cat bounce and "stink bids" are typical market-speak around the old Vancouver Stock Exchange (now called the TSX Venture Exchange, or TSX-V).
A "stink bid" is a term for putting in a ridiculously low bid on a stock on the off chance that market illiquidity and a distressed seller (usually on a margin call) makes it so that you get the stock at a truly cheap level.
Times like we have had last week and possibly for the next week or two are prime "stink bid" environments. Friend, and TDV subscriber, Danny Deadlock of the excellent Microcap.com newsletter, recounted how some lucky stink-bidder hit the jackpot last week:
In one of the harshest cleanouts I have seen yet - and it was so aggressive I wonder if it wasn't a margin call and a forced sell - Lignol Energy (LEC.V $0.11) which I was just discussing last night.
The stock has been trading at 0.12 and 0.13 all morning. Mid day someone through QTrade dumped 240,000 shares "at market" - what an idiot !! They collapsed the stock from 0.12 to 0.03 within seconds and someone sitting with a stink bid of 60,000 shares at 0.03 was filled.
It didn't take long for the stock to clean back up 200% with buyers trying to get cheap paper near 0.08 and 0.09 - myself included with no luck. I am leaving the buy order sit there till month end and maybe I will get equally lucky. I am just mad I wasn't the guy sitting at $0.03 who just had someone hand him 60,000 shares.


CONCLUSION

If prior to last week you hadn't bought your full allotment of gold/silver and precious metals stocks, you've been given a gift. A short term "sale" on those assets.
And for those who follow our newsletter and recommendations, we have been very clear about keeping a 20% cash cushion for exactly times like these. Put in stink bids on any/all of the stocks in our portfolio for the coming days and see if you can take advantage of the imprudence of others who bought on margin - something we NEVER recommend in these markets... they are just too volatile.
A number of the stocks in our portfolio were hit over the last few days so use this time to purchase some more with the 20% of your portfolio that is in cash. As well, in our October 1st Premium issue of The Dollar Vigilante (sign up to receive it), Ed Bugos will be featuring an exciting near-term Canadian gold producer that has also been hit by the recent turbulence.
As Steven Saville of Speculative-Investor.com recently stated, "Buying gold stocks following a multi-month decline into the October-November timeframe is one of the surest ways to make money in the financial markets. At least, it has always worked that way over the past 10 years."

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