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ROG. You might not think it’s much of a report,……But we still appreciate it. Thank you.
Been with you and Al for a few years, your wisdom and exsperience is great… You know all this is very wierd?….. a bit like 2008-9……… The calm before the perfect storm…. perhaps this is the eye of it and the back edge is coming soon. All opf us thankss ROG and AL for you shows…….. RL
Can you comment on Steve Saville’s article today, RE: QE?
It was posted at news.goldseek.com
here’s the direct link:
thank you for the update.
Thought this might be of interest. Nothing changes. Same thieves just another way of stealing.
Another good article:
Bianco, president of Bianco Research LLC, provides top-down economic and market research that influences the buy and sell decisions of many large institutional investors. What is his view of the U.S. economy today? Corporate executives are passengers, and government policy makers, starting with Federal Reserve Chairman Ben Bernanke, are driving the ship.
Or to put it bluntly: It‚Äôs Ben‚Äôs world, and we‚Äôre just investing in it.
‚ÄúStock picking is a dead art,‚ÄĚ Bianco said in a recent telephone interview. ‚ÄúThe most important man in investing decisions is Ben Bernanke. It shouldn‚Äôt be, but it is. We are in a post-crisis environment where the Fed is running the most extreme policy it‚Äôs ever run; Europe is even more extreme. That affects all investment decisions.‚ÄĚ
Moreover, Bianco added, investors can either follow the Fed using short-term tactics that anticipate policy makers‚Äô moves, or fight the Fed with a longer-term, defensive stance. Neither choice is particularly attractive, he said.
So Bianco is straddling both sides. Investors can expect ‚Äúsome version‚ÄĚ of additional quantitative easing from the Fed, or ‚ÄúQE3,‚ÄĚ before June, he predicted. That will lift stock prices, but absent economic improvement, these gains will be fleeting.
Then, Bianco said, defense will be in order.
1. Go light on stocks
Bianco isn‚Äôt a big fan of stocks. Investors need robust corporate earnings growth to justify buying equities, and, Bianco said, ‚Äúthere isn‚Äôt any.‚ÄĚ
Instead, stocks have soared on the back of quantitative easing, ‚ÄúOperation Twist‚ÄĚ and other Fed actions geared to boost an anemic economy ‚ÄĒ but fundamentals remain weak, Bianco added.
‚ÄúI‚Äôm worried that the stock market has been manipulated higher,‚ÄĚ he said. ‚ÄúWe have had a rally produced by policy out of the Federal Reserve.‚ÄĚ
More disturbing, Bianco said, is that the U.S. market rally hasn‚Äôt created a wealth effect that fills corporate coffers and encourages retail investors to buy stocks through mutual funds and other avenues.
‚ÄúIf Bernanke really wants to instill confidence, he needs to tell us in clear and precise language how the Fed intends to get out of this,‚ÄĚ Bianco said. ‚ÄúI get it that you‚Äôve put us on this ‚Äėsugar high,‚Äô rammed interest rates down and stock prices up. But tell me how you‚Äôre going to stop, so this is not going to wind up like the fall of 2008 or the summer of 1979 with inflation.‚ÄĚ
‚ÄúHe can‚Äôt,‚ÄĚ Bianco said of Bernanke. ‚ÄúI don‚Äôt know how we get out of it without it being ugly, and he can‚Äôt tell me how.‚ÄĚ
2. Hang on to Treasurys
While Bianco doesn‚Äôt have much faith in stocks, he‚Äôs confident that the Fed will keep buying Treasurys. This allows him to tune out the rising chorus of investment strategists and experts warning that Treasurys are in a bubble.
Said Bianco: ‚ÄúThe investing world is telling you there‚Äôs no value in [Treasury] bonds; why own them?‚ÄĚ Because, he said, ‚Äúthere‚Äôs this entity in Washington printing money to buy them.‚ÄĚ
Welcome to the new reality, Bianco said. The sooner investors accept it, the clearer the path will be.
‚ÄúThe typical things you‚Äôve learned about investing have not worked since 2008 because we‚Äôve now got the Fed printing money,‚ÄĚ Bianco said. ‚ÄúStop looking at traffic in the mall,‚ÄĚ he advised, ‚Äúand watch Bernanke speak.‚ÄĚ
‚ÄúThis is the environment we‚Äôre in right now. It should not be this way, but it is,‚ÄĚ he said. ‚ÄúThere is no value in [Treasury] bonds; there hasn‚Äôt been value in bonds, but would I sell bonds? Would I be afraid to lose money? No. The Fed won‚Äôt allow that to happen.‚ÄĚ
3. Don‚Äôt fall for corporate bonds
Safety-minded investors have been pouring into bond mutual funds and exchange-traded funds, but most of these portfolios are largely committed to investment-grade and high-yield corporate bonds, not Treasurys, Bianco pointed out.
Corporate bonds are a different animal, he said. Corporate debt, especially high-yield securities, is closer to stocks than to government bonds. Corporate bonds are less risky than stocks, perhaps, but are exposed to both interest-rate fluctuations and the stability of the issuer.
‚ÄúIf I‚Äôm worried about the stock market,‚ÄĚ Bianco said, ‚ÄúI‚Äôm also worried about the corporate market.‚ÄĚ
4. Avoid europe, favor emerging markets
If the U.S. market is a poor choice, Europe ‚ÄĒ in Bianco‚Äôs estimation ‚ÄĒ is completely off-limits.
‚ÄúThe euro is a flawed instrument,‚ÄĚ he said. ‚ÄúThe fix for the euro is untenable.‚ÄĚ
Emerging markets seem relatively attractive to Bianco ‚ÄĒ with the exception of China, which is seeing its economy slow.
‚ÄúI don‚Äôt think they have the problems we have,‚ÄĚ Bianco said of emerging markets. ‚ÄúThey‚Äôre attractive because their set of problems hasn‚Äôt really changed a whole lot, but the developed world‚Äôs problems have.‚ÄĚ
5. Gold still glitters
Given Bianco‚Äôs view that policy makers are taking investors into unfriendly territory, it should be no surprise that the strategist believes in gold.
Gold, he said, has a role in a portfolio whether the world faces inflation, deflation, financial crisis, or errant policy makers.
Bianco said he prefers owning physical gold over gold miners, such as SPDR Gold Trust (NAR:GLD) ¬†and other ETFs will provide. Silver ETFs, such as iShares Silver Trust (NAR:SLV) , can offer similar protection, he added.
‚ÄúGold is the place you put your money when you have lack of faith in the financial system,‚ÄĚ Bianco said.
The system ‚ÄĒ and those in charge of it, that is.
‚ÄúThey are central planners,‚ÄĚ not central bankers, Bianco said about monetary policy makers nowadays. ‚ÄúIt is a big problem that is permeating all of the investment choices we have.‚ÄĚ
Added Bianco: ‚ÄúIf we were to try capitalism, I would be a lot more bullish.‚ÄĚ
GLad you changed your mind, and decided to post…..
…..See , your comments do add to the site…., thanks for picking up the slack,
some of us get tired after awile…..ootb….
Now, that is the first article where a person talks about treasuries in a way that doesnt make want to up-chuck….With that said, I still don’t like the idea of putting “money” in an instrument that is completely eroding in terms of purchasing power and very quickly losing its effective use as a currency for goods and services. I am and will be a gold and silver guy until the BRICS and others coming “on-line” will effectively end US DOLLAR dominance and the principle dictator of economic activity. Excellent – excellent article regarding Bernanke and the Fed……thank you for that. They do control the markets MORE than ever. Gold and silver are the only defense against the “superman mentality” of the Feds!
All the best,
Marc, I couldn’t agree more!
Marc…..I agree, I did not say I agreed totally with Jerry M.,,,,
I just said, I appreciate his post and contribution…..,although
I was kind of joking with him, because when he first came to the site,
he and I had a discussion, a gentlemen’s discussion, with different views,
which is ok, and now I think we can talk to each other respectfully,
and respectfully agree or disagree, I really like some of his contribution,
because, at this point , we are still traveling the road to higher learning,
plus, I am trying to wear out” his tolerance cap” , so I can send him another
one…..(this is for Jerry m…go gators)
Hey Matthew, Jerry and ALL,
Since we are all friends and share thoughts together; I am AMAZED nobody asked me about my voice – SO for anybody that cares or could care less – ha, ha. Here is goes – short – I promise! I “blow out” voice at the very first PADRES playoff game (ever) against the Cubs in 1984. The Cubs, sent tickets back to SD, thinking it would be one and done for the PADS. Got tickets right BEHIND home plate – at face value – “$20.00! Needless to say, as a college kid, I was stoked. Anyway, I “broke” my voice by screaming at the game and it never came back! It was misdiagnosed for years and the very small bone reset in a place it shouldn’t be – and wha laa! My voice is raspy! Way too much money to fix now and any ways I don’t really care –
There you go…..and all the best!
That should I “blew out”…..I think much faster than I type!
Wow. Good thing you weren’t singing for a living!
Don’t worry about what others think of your voice, much less, what they “think” of you. You have shown a TREMENDOUS amount of moral character from what you have blogged here on Big Al’s Family webpage. I think you would be rather surprised at how many people suffer from insecurities of some kind. That’s what’s nice about this blog. We get to see the inner person from how they respond and not the outer person, which is nothing but a shell for the soul. You got a good soul, Marc…don’t worry about what people think of your voice.
DITTO….I DID NOT THINK A THING ABOUT IT,,,SOUNDED OK TO ME….
Hey Mark A., Matthew and Jerry, et al
Thanks so much…just thought I would let you good guys know – that’s all! You guys are the best AND all the best. Hopefully, our paths WILL cross in person. High-quality individuals here – that’s for sure! :).
Rog, Al and everyone,
Do you think that politics and the re-election campaigns have something to do about supressing the gold and silver rallies? Do you think it will have a limiting impact until Nov this year? thanks, Jim
In my humble opinion, absolutely yes, I think that could be a huge mitigating factor for metals prices leading up to Nov. of this year. Actually, I stated earlier in a post about two weeks ago that silver might “only” trade in a range of 30 to 37 for the entire year leading up to the elections. Once that is settled – watch out! Just an opinion..but hey, you are thinking that way too is seems!
All the best,
James C…..some of the experts, two years ago, indicated that the
presidental cycle, who effect the pm market…..This cycle is only
an interruption, in long term…..gold and silver are going high…..
if gold and silver went up alot this would also get Ron Paul more attention, and powers that be wouldnt like this at all. yep I’m with James C here..
Excellent point Barry.
You are DEAD on! Along with the fact, that Ron Paul is picking up delegates that Romney is not. Everything that represents individual freedom is being attacked and not just from the higher powers, but from those sheeple who have become indoctrinated with the toxic slime of the inability to think and act for themselves.
Great line….Mark A.!
Al and roger say thanks for the thanks we received above. Bianco is a good analyst and we listen when he talks. Re: QE-2 QE-3: We prefer not to respond to other essays that often but offer this: QE-3 was done in stealth fashion the day after QE-2 expired June 31, 2011. First Benny did the TWIST… exchanging shorter paper for longer paper- kick the can.. then they swapped as much as TARP One;
$600 Billion + with the ECB… trading slightly better crap paper for really crappy paper. This is to prop europe. Madame LeGarde has been pleading for more cash for her pet IMF to prop europe. Japan offered $60 billion of their paper. All of this trashy paper is just trash. The day of reckoning is coming. When bond land confidence is lost, the bankers, central bankers and all specious credit, circles the drain. Then we start over with debts erased and hopefully the federal reserve dissappeared. – Traderrog
I am an investor (speculator?) in PEM. I am totally confused as to what is going on. On the Stockhouse bullboard there is a lot of negative comments about management. Tjey claim that the financing is complete at .15 even though it has not been announced. The stock is now .10 , what on earth is happening?
You can call Premium Exploration directly and they will talk to you. Give them a call and ask. I have only come across a few companies that seem hesitant to answer questions. When that happens, don’t invest. Stay calm and give them a call.