GOLD - INTRADAY VOLATILITY ----

As the FED threatened to end its policy of limitless QE, Gold sold off rapidly.

From levels of just under $1690, Gold went all the way down to under $1630.

I would like to advise readers to take another look at Clive Maund's chart from my post on 31.12.2012.

Corrections down to the $1500-$1550, will complete the ongoing consolidation in gold bullion and will provide good buying opportunities.

Brace yourselves for volatility, and don't take your eye off the big picture.

As US Federal debt levels continue to rise, even as unemployment numbers stay stubbornly high; the US Fed will face it's toughest test yet.

The last thing that US homeowners need is a rising mortgage rate, so I remain skeptical of Bernanke's comments last week!

Bernanke: Why are we still listening to this guy?

Another link from Mish !

Just incredible how wrong an ''expert'' can be.
Be careful when you blindly follow expert advice!!!

While the crisis of 2008-2009 may have been the ''mother of all crises''; the very fact that the guys in the driving seat may have been 'making things up as we went along' is extremely disturbing.
After failing to forsee a crisis; to compound the fallout by resorting to short term fixes, instead of long term solutions is just tragic!

Sen. Bunning lashes out at Bernanke

Nothing more to add, just watch the video !

30 YEAR US T BONDS & THE RISING COST OF MONEY!!

The recent 30 year US T Bond issue may have proved to be costlier than the US Treasury first expected !
Whether you blame it on investors returning to risky assets or on the green shoots of recovery; rising bond yields will add to the 'cost of money' even as the US Budget deficit continues to widen.

In recent months, the Chinese have been concerned about the monetary and bailout policies of the US.
Bernanke is going to have to do a whole lot more, to keep 30 yr US T Bond yields down.

BANK STRESS TEST = NON- EVENT => What Next?

In the first week of March 2009, Wall Street was preparing for Financial Armageddon. Just a month later we are on the road to recovery and the stock market rally continues - totally ignoring any negative / bearish news flow. When markets totally ignore bad news or interpret any bad news as ‘better than expected bad news’ its wise to be cautious.

The Banks that were on the verge of total collapse are now quite confident of raising billions of dollars in capital from the private sector.
Gigantic derivative positions still haunt these ‘solvent banks’, and it's hard to believe these guys have enough capital to sustain further losses from derivatives/ mortgage backed securities/credit card loans.
For their sake, the economy better recover really quickly or we will be headed into round 2 of the ‘save the banks’ game.

It's important to note that as markets staged their incredible recovery, the USD has lost some ground, and commodities like Copper, Crude Oil and precious metals Gold & Silver have recovered somewhat. US Treasuries yields are also rising and the FED may have to step up its purchases here, as it struggles to keep rates down.

Rising commodity prices and rising treasury yields could derail any ‘green shoot recovery’ that the pundits claim they now see!!

Links:
Why We Are Absolutely Screwed
Bank of America May Need About $34 Billion of Capital
The Bottom
DROWNING GOP RATS BEGINS TO CLING TO RON PAUL
Preliminary Stress Test Results
Here's Ron Paul again - The one guy who still continues to grill Bernanke!




EDIT : FRIDAY 8th MAY 2009:
I just came across Ron Paul's reaction to the Bank Stress Test results.

CURRENCY WARS – INTERVENTION & MANIPULATION

As Warren Buffett recently said, the world economy is being administered medicine by the cupful, not the spoonful; so there may be side effects, but no one's worried about them at the moment.

The Swiss National Bank intervened in the currency markets yesterday, in order to weaken the strengthening Swiss Franc that was hurting exports to Europe, (the Swiss Franc has been strengthening vs the EURO.)

The Europeans feel that the weak GBP is subsidizing and supporting the weak UK economy. The Bank of England is manipulating ( sorry make that intervening in ) the UK Bond market to keep GILT yields down, as the financial centre in London has been hard hit by the financial tsunami.

Currencies in Eastern Europe that are stuck with ‘Swiss Franc’ loans and rapidly slowing economies are looking for an EU/ECB led bailout!!!

Central Banks in Asia, are quite content to see their local currencies weaken vs. the USD, as exports to the ‘West’ are collapsing. Asian Multinational companies with USD denominated debt are going to be next in line for a handout or ‘temporary suspension’ of mark to market rules as Forex Loss adjustments threaten to destroy any profitability that’s left.

The Chinese continue to voice concerns about USD T Bonds, even as they continue their shopping spree in the industrial Commodities market. Are the Australians going to be cool with the Chinese holding controlling stakes in their mining companies!!!!

In the US, the big banks are claiming to be profitable for 2009, but given what they did in 2007 and 2008, I’m not taking their word for it! Bernanke is still unwilling to release the names of ‘Leper Banks’, so I guess we have a few more surprises in store.

Some are intervening, some are manipulating but most have no clue what they are doing!!

One thing’s for sure, they are damaging whatever credibility they have left and more and more people are starting to realise that the clowns in the hot seat are perpetually behind the curve and that they have also been consistently wrong.

The average Joe may not understand the complexities of the derivative webs on Wall Street, but he has heard the story of ‘ the boy who cried wolf’ and thus can no longer believe the empty promises. He has been lied to over and over again and can no longer believe that ‘its going to be all right’

GOLD tested levels under $900 this week and has recovered somewhat over the last couple of days. Yesterday was especially curious as Gold, Crude Oil and the Stock Markets all rallied together. In these choppy markets, day traders are as confused as long only investors!

The Equity markets rallied from extremely oversold levels, and short covering probably also contributed to part of the rally. We have not had a decent dead cat bounce thus far as any attempted bear market rallies have been repeatedly stamped out by the unending flow of bad news.

Clearly there’s more manipulating and intervening left to be done!!

THE BAILOUT MASCOT

Hat tip to The Cranky Banker for this one. Do visit the blog, I'm adding it to my blogroll.

I still don't know who came up with this, but as the cartoon says.......its 'damn accurate'

Excellent work!

Capitol Hill Marathon : Just smile and wave, boys. Smile and wave !

Listening to Bernanke and Timothy Geithner on Capitol Hill yesterday, I was reminded of Skipper the Penguin from the movie Madagascar (2005)


Private the Penguin: Skipper. Shouldn't we tell them that the boat is out of gas?
Skipper the Penguin: Nah! Just smile and wave, boys. Smile and wave. [all four penguins waving]

While they promised to take any action to prevent systemic failure and talked of a ‘deep loss of faith’ in the financial system, they said that actions must be as large as the problems we face!!!

More promises of fixing, addressing, and facilitating….and so on.
A housing market strategy is also due in a few weeks.

Here are Breaking News Flashes from CNBC of the Q&A session on Capitol Hill with Ben Bernanke.


Fixing ‘too big too fail’ problem should be a top priority.

Should work hard to restore ‘fiscal balance’ as soon as possible.

Credit markets no longer frozen by subprime problems.

Current financial crisis worst since the 1930’s.

Need strong action to boost economy.

We can’t expect immediate results.

95% of Fed’s Balance Sheet in very safe assets.

Doesn’t expect Fed will lose money on AIG & Bear Loans.

Concedes ‘too big to fail’ is not fair to smaller banks.

We’re not trying to prop up the price of housing.

Fed is trying to get lending going again.

Bank of America’s failure would have had bad consequences.

Fed watching AIG to make sure its expenditures are proper.

Foreign demand for U.S. Treasuries remains strong.

Feels comfortable Fed not facing large losses.

Eventually economy will recover & Fed will raise interest rates.

Thinks Fed would have a role in more systemic oversight.

Federal Reserve already has ‘substantial’ systemic responsibilities.

Doesn’t think earlier monetary policy was main source of Credit Crisis.

Credit markets now frozen due to economic concerns.

We have no ‘nefarious’ scheme; just trying to help economy recover.
Opposed to releasing information on overnight loans to banks.

Federal discount window borrowing shouldn’t be stigmatized.

Important to also get credit flowing outside the banks.

There was‘confusion’ over how to spend first $ 350 Bn of TARP.

Credit markets no longer frozen by subprime problems.

Congress should consider liquidity facility for municipalities.

Actions we’ve taken have prevented a much worse situation.

Inflation becomes more of a problem as the economy recovers.

Main risk of ‘Stagflation’ is if banking system is not fixed.

TALF program will be up and running in a couple of weeks.

Fed’s Balance Sheet is ‘profit center’ not a ‘loss center’.

Fed makes money by loaning at higher interest rates than it borrows.