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  Jim Kingsland

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  10/25/12

  First, A little self horn tooting. A website called Commodity HQ has ranked my Financial Balderdash blog #4 in the “Personally Run” gold blog category. This is an honor to be in the company of Peter Schiff. Jim Sinclair, Jimmy Rogers, Nouriel Roubini and Mark Faber to name a few. See here: http://commodityhq.com/2012/the-top-100-gold-blogs/

  Stocks and gold are moving higher today. However, the upside action in stocks for today could be limited by the inertia of all of the variety of negative factors that have been discussed in recent days in this space.

  Bernanke and company as usual were good for gold. Following the FOMC, gold bounce off the lows on Wednesday and continues a bit higher. The agenda is simple at Fed headquarters…

  •*FED SAYS HOUSING SECTOR SHOWS SOME FURTHER SIGNS OF IMPROVEMENT

  •*FED SAYS U.S. HOUSEHOLD SPENDING ADVANCED `A BIT MORE QUICKLY’

  •*FED REPEATS `EXCEPTIONALLY LOW’ RATES AT LEAST THROUGH MID-2015

  •*FED REPEATS IT WILL CONTINUE OPERATION TWIST THROUGH YEAR-END

  •*FED TO KEEP BUYING $40B A MONTH OF MORTGAGE-BACKED SECURITIES

  •*FED REITERATES `SIGNIFICANT DOWNSIDE RISKS’ TO ECONOMY

  Note the last point. Am I the only one who recognizes this situation? From my readings of Facebook and Twitter and even in conversations, many do not recognize that our own Federal Reserve is saying the economy is teetering. If I had the energy, I would go into a written tirade about this. This near zero interest rate policy is going to last for 3 more years, according to the Fed.  QE3 will go on for as long as it can last and color me skeptical that Operation Twist ending at the end of the year.  Some people dare to call me a bear, but the real bear is the Federal Reserve!! Folks out there ought to realize what the Fed is saying and pause and think and do more reflection on the possibility that dollar wealth could evaporate due to unlimited QE steps that continue to have less efficacy going forward.

  Gold may still break $1700, but thanks to Bernanke, gold’s best friend, it got within a few dollars of $1,700 and turned around.  Gold remains caught in the paradigm of dollar hegemony – it is still the world’s reserve currency. That’s all going to change one of these days when the Fed destroys dollar credibility because of “over printing”, but as I’ve said before, be careful what you wish for. $10,000 an ounce gold, or whatever number is being bandied about will come with miserable social and economic consequences.

  The latest piece of economic data is pending home sales. One day we’re told the housing market is seeing improvement, then more head scratching data is released to the housing optimists.  From CNBC: “In a sign of a still struggling housing market, signed contracts to buy existing homes were essentially flat in September from August, edging up just 0.3 percent according to a monthly index from Realtors.”

  No doubt, there is some housing recovery, but the recovery is still tentative a la the infamous green chutes of a little more than a year ago.

  Adding to the economic noise, is yet another slide in  jobless claims and a rise in durable goods, or more confusing data that goes opposite the grain of weak Q3 earnings and the unprecedented steps of the Fed.

  Here’s something for the fans of silver….. Silver Demand In China For Wealth Protection To Climb to Record 7,700 Tons | ZeroHedge http://www.zerohedge.com/news/2012-10-25/silver-demand-china-wealth-protection-climb-record-7700-tons

  Realated Reading: Unions acting for striking gold miners in South Africa agree pay deal aimed at settling long-running dispute http://bbc.in/TCZes7

   

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