As long as the rally holds into the close we will finally have the breakout from the huge triangle consolidation we've been waiting for. Plus a close above 580.
I read a daily newsletter that gives very similar advice to your column. They urge to get into gold/silver physical and stocks.
Today they issued a warning. They feel that at the end of April, the Fed will actually announce the end of QE2 and no QE3. For literally years this service has said the printing will not stop, now they feel that high commodities (inflation) are forcing the Fed's hand.
This of course would result in a strengthening of the dollar and most likely a large correction in equities and commodities like oil/gold/silver.
I would love to hear your thoughts on the likelyhood of such an event. I know you have previously mentioned as much, but could it happen as soon as 3 weeks from now?
Well, there's this one little problem. The Fed has painted itself into a corner. QE is a way to finance current government pending. So if there is 'No QE3(tm)' there is no way anyone else is buying treasuries to finance our government spending.
The Chinese won't do it. The Europeans won't do it. Who will? The House of Saud? HA! That's right, the Fed has to print money to keep our government spending going. That's what QE2 does NOW.
Think we'll magically end QE because the economy is 'better'? I don't think so. QE yes, QE no, it is all a dog a pony show. They may announce no QE3 for a short time to let some things bottom out. however, the Fed MUST PRINT, privately or out in the open, to finance our government, END OF STORY.
Until the U.S. government gets it's fiscal house in order, our dollar is DOOMED. Plan accordingly.
You're fooling yourself if you think QE won't end. It will end. The dollar will put in it's major three year cycle low and rally, probably for at least a year.
Breaking the dollar is much much worse than trying to support bonds. And there will be buyers for our debt. It will just come at much higher interest rates.
Just basic economics 101. In order to compensate for added risk rates must rise. They will rise to a level where buyers feel the reward is worth the risk.
People you really need to quit reading all this ridiculous conspiracy nonsense. The world will continue to run based on the laws of supply and demand no matter how much the Fed temporarily warps them.
Interest rates will rise to levels where an avalanche of buyers will come into the market.
You are wrongly assuming that interest rates will remain at this level. And yes at this level there will be no buyers. But if the Fed quits buying debt then bonds prices will fall and interest rates will spike.
At some point the reward outweighs the risk and buyers will flood into the market.
Not me personally. I don't know the cycle timing behind bonds but i do know how supply and demand works and it works the same in the debt markets as in any other market.
I also notice the dollar is trying to go down past $75.60. Our dollar implosion has begun in earnest.
ReplyDeleteToby/Gary,
ReplyDeleteI read a daily newsletter that gives very similar advice to your column. They urge to get into gold/silver physical and stocks.
Today they issued a warning. They feel that at the end of April, the Fed will actually announce the end of QE2 and no QE3. For literally years this service has said the printing will not stop, now they feel that high commodities (inflation) are forcing the Fed's hand.
This of course would result in a strengthening of the dollar and most likely a large correction in equities and commodities like oil/gold/silver.
I would love to hear your thoughts on the likelyhood of such an event. I know you have previously mentioned as much, but could it happen as soon as 3 weeks from now?
Well, there's this one little problem. The Fed has painted itself into a corner. QE is a way to finance current government pending. So if there is 'No QE3(tm)' there is no way anyone else is buying treasuries to finance our government spending.
ReplyDeleteThe Chinese won't do it. The Europeans won't do it. Who will? The House of Saud? HA! That's right, the Fed has to print money to keep our government spending going. That's what QE2 does NOW.
Think we'll magically end QE because the economy is 'better'? I don't think so. QE yes, QE no, it is all a dog a pony show. They may announce no QE3 for a short time to let some things bottom out. however, the Fed MUST PRINT, privately or out in the open, to finance our government, END OF STORY.
Until the U.S. government gets it's fiscal house in order, our dollar is DOOMED. Plan accordingly.
You're fooling yourself if you think QE won't end. It will end. The dollar will put in it's major three year cycle low and rally, probably for at least a year.
ReplyDeleteBreaking the dollar is much much worse than trying to support bonds. And there will be buyers for our debt. It will just come at much higher interest rates.
Just basic economics 101. In order to compensate for added risk rates must rise. They will rise to a level where buyers feel the reward is worth the risk.
People you really need to quit reading all this ridiculous conspiracy nonsense. The world will continue to run based on the laws of supply and demand no matter how much the Fed temporarily warps them.
I'm all ears to how the U.S. government handles it's spending then. Oh wait, government shutdown. Riiiiight.
ReplyDeleteGary, who else will buy our debt at the levels we need?
Interest rates will rise to levels where an avalanche of buyers will come into the market.
ReplyDeleteYou are wrongly assuming that interest rates will remain at this level. And yes at this level there will be no buyers. But if the Fed quits buying debt then bonds prices will fall and interest rates will spike.
At some point the reward outweighs the risk and buyers will flood into the market.
Just simple economics 101.
"Interest rates will rise to levels where an avalanche of buyers will come into the market."
ReplyDeleteOh? So are you going to buy bonds now? :)
Not me personally. I don't know the cycle timing behind bonds but i do know how supply and demand works and it works the same in the debt markets as in any other market.
ReplyDeletehey gary, i m a subscriber but should i ask questions on this public forum?
ReplyDeletenice site. powerlifting looking good
bro. thanks greg