Japan goes Nuclear

The Bank of Japan has agreed an aggressive fresh programme of quantitative easing (QE) measures to give more momentum to its gradual recovery.

Overnight the bank’s new governor, Haruhiko Kuroda, announced that the bank would buy roughly ¥50trn (£347.6bn) worth of government bonds a year as well as putting another ¥70-80trn into the financial system through “money market operations”.

http://www.ftadviser.com/2013/04/04/investments/japan/japan-launches-aggressive-qe-programme-ODAfVvEZxQzKrx1YC8qt3H/article.html


Fiat currency is on the decline - this is what Japan is doing, this is what must be done OR the debt burden collapses on itself.

The debts must default or be inflated away! 5 years after the GFC...QE continues

I will leave it to the doyens...express it clearly

the debt explosion has left a massive hole that is being filled via QE...but, nothing has been fixed...

Gold will call out the financial engineers on their grand experiment.
http://www.jsmineset.com/2013/02/05/golds-rise-in-price-cannot-be-stopped/



meanwhile Bill Gross keeps mentioning gold:

http://www.pimco.com/EN/Insights/Pages/Credit-Supernova.aspx

Summary

1) Why is our credit market running out of heat or fuel?

a) As it expands at a rate of trillions per year, real growth in the economy has failed to respond. More credit goes to pay interest than future investment.

b) Zero-based interest rates, which are the result of QE and credit creation, have negative as well as positive effects. Historic business models may be negatively affected and investment spending may be dampened.

c) Look to the Japanese historical example.

2) What options should an investor consider?

a) Seek inflation protection in credit market assets/ shorten durations.

b) Increase real assets/commodities/stable cash flow equities at the margin.

c) Accept lower future returns in portfolio planning.

and Kyle says:

http://kylebassblog.blogspot.com.au/2013/02/why-inflation-could-eat-into-stock.html

Bass suggests that investors "own productive assets," such as apartment complexes, oil wells, or global businesses that sell products in different currency areas.

"If you really want to protect yourself, you put long-term fixed rate debt on these businesses," he said.

People continue to scramble for yield," he said, "the U.S. rate curve is still basically flat and low. The Fed is actually doing the best job it can do, but it's also enabling the fiscal profligacy of Congress."

Mr Gundlach says re QE: "there is no exit”

 Worth a watch

http://www.cnbc.com/id/49086734

“I think it will be more likely that the Federal Reserve buys all the Treasury bonds that exist than starts selling them,” he said.

“I have no concept what the Fed exit will look like!”

 

QE has done it's job so far...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/11/19_Turk_-_This_Is_The_Chart_That_Every_Investor_Needs_To_See.html

...to lift asset values to make the debts appear manageable...some stats though you can't manage as well...the number of people on food stamps trends higher (recently).

All looks great UNTIL it doesn't

The 3 years before the GFC and the two years after. The market participants missed the extent of the carnage that was to come. Complacency? Blindsided? Blackswanned?

What is not priced in now? And by how much?

IF the "solution" to a debt bubble is "inflation" why would you be holding government bonds now? Timing though can be a killer - You can be right and very early.

I suspect few see "runaway inflation". Yet inflation has been the standard since the creation of the Federal reserve...except for some deflation in the 1930s (under the gold standard)

As Kyle Bass said recently (in his letter to investors)

The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational. It is precisely this line of thinking which will ultimately lead the sheep to slaughter.



 

 

 

What we focus on, we see

Everyone says GOLD is in a bubble. They show a chart against the USD, like the one below.
Next to the USD line is the Mexican peso...they are tracking quite close. Strange isn't it?

Yet let's look at the 20 year period starting 1980...the Mexican peso was in trouble due to their economy...(marked in red)...was gold in a bubble, going up 15 times in 5 years then another 3 times in the 1995 period?

 

It's not gold going up...it's the currency going down...think about it.

from Mr Lipps' book Gold Wars...

The Role of Oil Wealth and OPEC

   
At the beginning of the 1970s, wage and price inflation soared, leading to lofty energy prices and vice versa. The Arabs were very slow to understand dollar debasement, the currency in which their
bills were paid. For a long time they did not understand they had been cheated for years. The paper money they received for their black gold had dwindled in value. In 1973 and 1979, they massively increased their prices to compensate for the increment in the American Consumer Price Index. The sudden quasi quadrupling of the oil price turned many energy producers into megamillionaires in a very short time. In 1973, one barrel of oil bought one bushel of U.S. wheat. In 1980, the same barrel of oil bought nine bushels of U.S. wheat. By the middle of the 1970s, the demand for gold by investors from oil producing countries exploded.

Not only individual investors were buying gold, but OPEC nations were also in the market. Timothy Green commented: 

.[the] single most important development in the gold market since 1970 has been gold buying by

central banks (or other government institutions) in oil producing nations: Indonesia, Iran, Iraq, Libya, Qatar and Oman have all acquired gold..



comment: maybe many of us are slow to understand dollar debasement

Bernanke goes all in!

QE3 begins "open ended purchases"

Lets call it QE to infinity in respect of Jim sinclair who called it a couple of years beforehand.

Gold loved it, so did the Stock market. A necessary action but not without consequences. The scale is massive - will the consequences be massive also?

note: Gold at over $1,770 by Friday
PM stocks had a stellar week


http://www.jsmineset.com/2012/09/13/in-the-news-today-1308/

A Golden Lion speaks about what is coming

a 43 min video worthy of your time...

http://ceo.ca/frank-giustra-long-form-interview/

By all accounts Giustra is brilliant, connected and wealthy. He made headlines in 2007 by pledging over $100 million and half of his future earnings to establish a charitable foundation with President Clinton. Outside of philanthropy however, Giustra has been reluctant to draw attention to himself, and rarely speaks publicly about investing.

The USD - walks a fine line

The USD has been very weak during this stock market correction and the flight into government bonds. This is quite surprising given the problems in Europe. I'm not sure who coined or used the phrase recently, but he said "we walk on the edge of chaos" - he is right, and the USD right now is close to crossing that line. Once it does, GOLD will go higher, reflecting the loss of purchasing power of those dollars. Never has a global reserve currency been at such a point. This may be why Mr Sinclair, an extraordinary "harmonious" market reader, sees the beginnings of a hyperbolic move. Gold looks extended - but that's the definition of hyperbolic - the next month will give us the signal.

QE3?...or QE(n)

The debate is raging. To QE or not to QE?

Bill Gross say's a form is coming. Jim Grant sees the same thing. The US economy is floundering that's after 2 version of QE. Without it this would be a modern day GREAT depression. For many americans it already is.

We need to be aware of the politics of such a move. A stealth version is my tip. "Extended period" you better believe it.


Here is what Mr Gold is saying: Meditate on these -  Thankyou Jim.

Dear Extended Family,
Today’s markets are exactly what you would expect as we enter illustration number three of the Skier.
Economic statistics are taking a hard fall.
Without QE who will buy US treasury issues?
Without QE where is the basis of world equity markets?
Without QE what do you think the chart of unemployment will look like?
Without QE how do you think the camouflage of the insolvent balance sheets of the financial industry will fare?
Without QE where is mortgage money coming from?
Without QE what do you think home prices will do?
Without QE how will the present Administration and the legislative be re-elected?
Without QE how will the States of the United States of America finance themselves?
Be prepared for a reversal of the decision to curtail QE at the end of June.
Be prepared for a snap back at a greater percentage of QE with a different name.
Be prepared for covert QE between July 1st and late August when stimulation goes wild.
Be prepared for gold to take out $1650 on the upside as magnets at $12,544 come into play.
Be prepared for the Inflationary Depression of all time.
Stand firm on your gold positions.
Stand firm on your discipline of NO margin.
Stand strong in your Swiss Franc and Canadian dollar positions.
Survive the MOPE and market manipulation that is so obvious today.
Respectfully,
Jim

http://www.jsmineset.com/2011/06/23/stand-strong/

Stealing from the people...the silent killer

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106211841dowjonesdjonline000414&title=change-to-inflation-measurement-on-table-as-part-of-budget-talksaides

By Corey Boles and Janet Hook

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.
According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.
Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.
The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.