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Tuesday, October 23, 2012

Even The Suggestion of Another Bag Holder Could Open Pandora's Box

Jim excellent bag holder reasoning, if it plays out, will have significant implications on confidence and capital flows.  Any interruption to QE at this point will produce dire social, political, and economic consequences that would draw comparisons to the opening of Pandora’s Box in Greek mythology.

Any student of history is quite familiar with the old phrase, "anything is possible."  When future generations study the great gold bull market of 2000-2020, they will quickly realize that "anything is possible" and there's not a damn thing central planners do to prevent it was the real driving force behind the trend.

The A-wave price delay marked marked by a series of violent dips and rallies until the 'invisible hand' regains paper control of the trend continues to unfold.


  • Spec and retail trader sentiment towards gold varies inversely with short term trend.  The short term trend is down, so fear rules the day as expected.
  • The invisible hand uses the above relationship to regain control of the trend during short-term sell offs.  Probabilities favor a short-term reversal once Total Assets WA Stochastic falls below 0.80 after the first count.  WA stochastic fell has likely fallen below 0.75 as of 10/23 (today).
  • Gold, silver, and equities are trading together.  A turn in one with coincide with a turn in the other.

Chart:  London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic

My Dear Extended Family,   
Believing what you read in the pre-election weeks, especially what is attributed to friends, is risky business. However, let us assume that there is some truth to this. What would it mean?

When Greenspan's term was up what did it mean? It meant pretty much the end of the monetary system was at hand, and Bernanke was Greenspan's bagman for the fallout. If Bernanke leaves then the monetary mushroom cloud is visible in the horizon and he has no tools to prevent it. The new Chairman could be nothing else but Bernanke's bagman for a disaster of colossal proportions.

If Bernanke leaves, the jig is up.

No tools exist in any tool bag other than QE to handle national bankruptcy and the attendant conditions. There can be no other interpretations. That could be the signal for those who have contingent plans to grab the "Bug Out" of whatever type bags and run financially or physically.

Bernanke probably won't stand for third term at Fed: NYT  October 23, 2012 7:14 AM ET

(Reuters) - Federal Reserve Chairman Ben Bernanke has told close friends he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election, the New York Times reported.

Republican presidential nominee Mitt Romney has already said he would not re-nominate Bernanke if he wins the presidency. Bernanke's term as chairman ends in January 2014.

Bernanke, who was first appointed to run the U.S. central bank by former president George W. Bush and was given a second term by Obama, has declined to comment publicly on whether he would accept another four-year term.

"I am very focused on my work, I don't have any decision or any information to give you on my personal plans," he told a news conference last month after the Fed announced a new and open-ended round of bond buying to support the U.S. economy.

The Fed's unconventional efforts to spur growth have been criticized by many Republicans and some economists who argue that they threaten future inflation and abet profligate spending in Washington.

Treasury Secretary Timothy Geithner has already made it clear he wants to leave by the end of the year.

Former Treasury Secretary Lawrence Summers would be at the top of Obama's list to replace Bernanke, although his reputation for not being a team player could count against him, New York Times columnist Andrew Ross Sorkin wrote.



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