Take in the economic scenario the Fed faces, then ask yourself what the Fed will do about it and which planet will the silver price orbit after the dust settles. Here are the facts that should calm investor fears:
“Let us be honest. The U.S. is still trapped in a depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP,” The Telegraph’s Ambrose Evans-Pritchard penned in a Jul. 4, 2010 article.
Now look at Shadowstats economist John Williams’ chart, below. GDP is again dropping, 18 more months later, from Evan-Pritchard’s last year’s Independence Day article. (The real GDP is calculated by Williams, shown by the blue line.)
Now, take a look at the number of U.S. food stamps recipients? Does the graph, below, square with an employment rebound?
If the economy has been on the mend, slowly creating jobs for nearly a year now, why have there been 4 million more food stamps recipients in the U.S. since July 4, 2010?
Note the blue line in John Williams’ graph, below. That’s the real unemployment rate (approximately 22.5 percent)—the rate that would have been reported by the BLS during President Ronald Reagan’s first term (1981-85).
And the jobs created which blunted a crashing jobs market have been the throwaway kind. See BER article, Gerald Celente: Brace for Economic 9/11. The trends forecaster describes the type of jobs created, mostly the type of local jobs that you would find on the tropical island of Fiji, not the high quality jobs found in Germany or Switzerland.
And it’s about to get worse, as Celente predicts.
The U.S. is “tipping into a new recession,” ECRI’s Lakshman Achuthan told Bloomberg Radio on Sept. 30 “We don’t make these calls lightly. When we make them, it’s because there’s an overwhelming objective message coming out of our forward-looking indicators. What is going on with the leading indicators is wildfire; it’s not reversible.”
Okay, the Fed faces a U.S. economy that’s rolling over—again—from an already negative GDP, according to John Williams.
So, what will the Fed print to prevent an economic collapse?
Watch it; it’s a trick question! Jim Rogers explains in a Dec. 14 interview with TheStreet:
TheStreet Reporter: What should the Fed do at their upcoming meeting, aside from QE3? We’ve seen more Fed presidents come out and call for more monetary easing. What should they really do?
Jim Rogers: They’re already, Alex, they’re already . . . QE3 is already here, Alex. Get out the numbers for non-seasonally adjusted M2, and you will see that Mr. Bernanke said, in the summer, we’re going to keep rates artificially low. You can’t just say the words, you got to do something.
Rogers goes on to say that the Fed hasn’t stopped printing money since QE2; it just wants people to think it has. And thanks to a complicit media, whose been told to repeat the con over and over in an effort to prevent a bona fide run on currencies, some investors still believe the Fed has stopped printing.
Look at the chart, below. A couple of months ago, the Fed was expanding M2 money supply by 20 percent! That’s a rate that even former Fed Chairman under President Nixon, Arthur Burns, would blush at, as the maestro of the 60s and 70s presided over the highest U.S. inflation rate since the Civil War.
The Fed never stopped printing!
Silver investors now wait for Bernanke to announce even more printing! That’s when the top blows off the gold (NYSEARCA:GLD) and silver (NYSEARCA:PSLV) market, according to Jim Rogers, Peter Schiff, Jim Rickards, Marc Faber, James Turk, James Sinclair and FX Concepts John Taylor.
That signal could come in late January, maybe tomorrow, or next week, but it’s coming. Let’s see what more Fed money printing will be called this time.
Back to the Rogers interview. Notice how the scripted question by TheStreet reporter was written in a way to fool the public into thinking that the Fed hasn’t been printing money since so-called QE2 ended on June 30?
It’s the ol’ leading the witness trick, with a false premise to plant a lie in the minds of the observers, to throw them off the track to the truth. At least TheStreet reporter didn’t stoop to the, “Well, of course you’re going to say that, Jim, you sell your Rogers Commodity Fund” line, or something along those lines.
Here’s another example of the vicious propaganda thrown at some pretty smart guys who warn of a coming tsunami of commodities price inflation in 2012: Witness the Marc Faber interview on CNBC, last week.
In his interview with CNBC’s ‘working girl’, Maria Bartiromo, Marc Faber got the better of the dullard Bartiromo, working her over pretty well (if she noticed). Faber’s had 20+ years experience dealing with such nonsense during his time living in Thailand.
Bartiromo, after hearing Faber’s gruesome assessment of the world economy, said, “Okay, you think the world is ending, so which five stocks would you buy?”
By the way, if you didn’t listen to the Bartiromo interview, Faber outdid himself with yet another one his great Faberism. He retorted, “I Have A Very Special Stock Tip For You. The Symbol Is G-O-L-D.” Now, that’s a great Faberism!
And finally, and more dramatically, The Hat Trick Letter’s Jim Willie explains the Fed con in a really classic Jim Willie style—his style is the rambling and information-packed rant! See BER article and link to audio interview here. Willie covers almost everything in this interview that silver investors should know.
So we see sub-$30 silver.
Now for the question that’s on everyone’s mind . . . drum roll please. . . how far will the silver fall?
And the answer is the same as it has been since the bull market began in 2002: When every last ripe apple falls from the shaken tree. That’s when the price will stop falling.
And right now, the tree needs to be shaken as hard as the Fed can shake it, because the next move up in silver will most likely be akin to the last one.
You remember, the move from $17.50 to $49.94, from August 2010 to April 2011, a 177 percent price explosion higher within 8 months?!
The Fed would just prefer the base of the next move for silver (gold, too, as well as oil and other commodities) is lower before the massive catapult higher. Also, remember, north of $50 in the price of silver unleashes the metal; there is no resistance levels above that price. This is the last stand for the Fed, and it will make the best of it.
Related: ProShares Ultra Silver (NYSEARCA:AGQ), Sprott Physical Silver Trust ETF (NYSEARCA:PSLV), SPDR Gold Trust (NYSEARCA:GLD), ProShares UltraShort Silver (NYSEARCA:ZSL), iShares Silver Trust (NYSEARCA:SLV).
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