The U.S. economy unexpectedly contracted in the fourth quarter, suffering its first decline since the recession ended more than three years ago as businesses …

Surely if this is the case why is Silver going up instead of down……………….. ITS ALL NUTS!
Hints of less QE and it goes down…………….. beats the shit out of me.

Prof Martin (UK) – It is all nuts! We live in a financial world where bad news is good news and good news is bad news. The contraction, which should not be unexpected to anyone, bolsters the case for more QE, which bolsters the case for gold and silver – hence the pop today. QE means more money printing, making gold and silver more attractive. Many people buy silver because, as the media repeats over and over, it is an industrial metal. I did not buy silver for that reason, I bought it for the same reason I bought gold – As a hedge against inflation, an insurance policy, and as a hard asset – gold little brother if you will. The markets, all markets are totally driven by QE right now. If the news is good (unemployment #, durable goods, real estate sales…) then the average investor thinks QE will come to an end shorted than expected and the markets go down. If on the other hand the news is bad, they think QE will continue, and all this money will find its way into the market. This is why wall street and main street are totally disconnected. As far as wall st is concerned the recession ended, according to main st it didnt. Bottom line is nothing fundementallt and structurally has changed since the credit crises. They just printed a heck of a lot on money, bailed out the losers, and left us with the bill. When the puch bowl dries up or more lilkely cracks then everything will come crashing down again on wall st as well as main st. The Fed plan is to create another housding bubble – keep interest rates low and hope home prices go up. This is absurd. Besides the fact that the government should not be dictating what home prices should be, you can’t reinflate a bubble. Bottom line is we have too much debt, we are bankrupt, and no one wants to stop the spending in Washington. That is why gold (and silver) in my mind is the only play. The CNBC crowd, like the paid cheerleader S.L. will keep throwing out garbage about how the fed is ready to start phasing out QE and how they are planning their exit strategy – this is complete B.S. Meanwhile R.S. is the only one you can really trust. As mentioned in an earliet thread – Dont believe the analyst. Any analyst! They are nothing but horse handicappers, who unlike sincere horse handicappers, have the luxury of hedging their words. Do you own thing, its the only way – Wheather its stocks, gold, or horses! Only someone who is willing the buy the stuff that no one else wants (i.e. gold at $270, silver at $4 and so called slow horses) is going to prosper. The others will miss the wedding and show up at the funeral – always one step behind. So if it seems like nuts to you thats because it is nuts! Be right and sit tight, dont let the bull throw you, the big money is made in the big move!

Thnx for posting this link. I found your Korelin blog when another site shared your link.
Too bad the mainstream media doesn’t allow intelligent discourse to take place, where someone is allowed to fully develop a position or thesis. Instead, the mainstream media gives us partisan swill and shouting matches–more emotional debate than intelligent debate..
Again, great link.

BJ…..If you have something to say , this is the place to come to why ? because we here listen…(might not always agree )….This is also the place to come to, to listen…because most times what is being said is good old fashioned common sense & logic…..No lies & deceit on this site ! …..Oh , i love the…KORELIN COLLEGE OF FURTHER EDUCATION.

Very disappointed again with gold’s close. Up $22 bucks most of the day and gave a lot back late. This ain’t good. Really took the wind out of the sails!

Irish… You are full of it

We are writing down license plate #s like the opening scene of
The Godfather.

Long before the November election my wife and I knocked on doors and tried to distribute information on critical issues. We concluded that the liberal TV networks had brainwashed their viewers to the point that they trusted no one. I think the only good tool that we American citizens have in this war is to select a target network such as CNN and drive them into bankruptcy through their sponsors.

Hey Irish, I really enjoy listening on this site and apply what passes the followup filter/research we all need to do. With all of the strange action in the PM’s and the downward moves of the miners I found some solace in the advice of Jim Sinclair on his mineset site entitled “How to effectively defend yourself in the gold market”.
It is nice to be reassured our holding firm is a contributing aggressive strategy. What say you?

Thanks Irish, I agree the cliff that is coming is theirs, not ours. My anchors are God for the spirit and Gold/Silver for the time I have left in this world. Cheers!

Bob P……amen….

The conventional markets look dicey here. The VIX is scrapng the bottom but looks like it wants to move up. ONE VERY INTERESTING CHART—–the dow/gold ratio chart which for the first time in weeks to months to years has seen the ratio close over the 200 week MA last week. This is not to be taken lightly. The PMs should pull back the next couple of trading sessions——we continue to watch paint dry with the PMs and should expect it for awhile until the charts start to show a significant change. There is no evidence at this time of a “drop out of the bed” for the PMs. The PM charts are starting to look very positive from the standpoint of the odds of any major downturn in the future.

Re German repatriation of gold. I’ve read from several sources that the US charges Germany nothing for storage of billions of dollars worth of gold. Really???!! That would be a first, especially for a nation which has proclaimed “The business of America is business”. Nobody takes big risks in protecting valuable assets for free. If I were safeguarding somebody else’s valuables as a favour, I’d be ever so happy to let them take it all back home as soon as possible, yet we hear all kinds of questions as to why Germany would want their valuables in their own possession. Duh! Would you let your friend or neighbour keep your most valuable possessions without accounting for it or even letting you check to see if it was even still there?

Ben came up with something really new: more QE. What else does he know how to do? He only knows the print button. Why the market waits to hear the same thing again and again makes no sense. Ben will continue buying toxic mortg.backed securities from the banks. The banks slammed gold down as it approached 1684.
GDP has been negative all along if you back out gov’t spending. There is no recovery and the market will soon realize that. The market has gone parabolic since November and will correct soon. Franklin Sanders is calling for 2350 gold
QE is to continue until we get 6.5% unemployment. That means QE forever because I don’t see how unemployment will ever come to those levels again with trilllion plus deficits every year and no confidence in the economy. Companies will not hire or invest enough.

Update from expected returns:
GDP “unexpectedly” fell 0.1% in the 4th quarter of 2012, creating some fear that a recession is around the corner. However, the consensus seems to be that this is a temporary blip for our economy due to fears about the fiscal cliff in the 4th quarter. Businesses cut back on inventory due 100% to a lack of confidence, and somehow this problem has been solved moving forward? If anything, the collapse in confidence will get worse because before the end of the year at least there was a glimmer of hope that our leaders would do the right thing for the economy. Now all hopes are gone and higher taxes are locked in. I am absolutely positive that businesses are starting to change their plans because of the tax environment. I certainly am.

The one positive in the GDP report was that consumption rose. Unfortunately, there are numerous factors that will weigh against consumption in the future. First and foremost is the increase in payroll taxes, which affects all Americans. The second factor comes from housing because when banks work through all the foreclosures, strategic defaulters will now have to pay rent. Believe me, banks will magically increase foreclosure activity as soon as interest rates tick up. At the end of the day, it’s about profit; banks want to issue new loans at higher rates.

And finally, we have the bond crisis that will hit pensioners the hardest.

At this point, people still grossly misunderstand the dynamic of bonds in all of this. Let’s say average interest rates historically are 5% on the 10-year. The assumption is that until rates rise to 5%, we have no problem. The reality is that reactionary purchases of bonds have brought rates down to below 2%. As rates rise towards 5%, a portion of bond investors (who need the income to survive) are taking a loss. This suggests that long before rates reach 5%, we will see a sharp upturn in rates due to a sell-off in bonds. This is just predictable human nature, not theory. We already understand our precarious debt situation where even a small uptick in interest rates is catastrophic for our economy. The way markets work, we will probably see the rate of increase in interest rates rise moving forward, meaning our government is going to be totally blindsided by all of this.

I’ve said repeatedly that 2013 is the year it will all start falling apart. Today’s GDP report is just the start. Expect more of these “unexpected” economic reports in the future. And when interest rates do rise this year, watch out: we will be seeing some serious fireworks in markets.
Disclaimer: 1. This newsletter is for informational purposes only. I am not a registered investment advisor and I am not responsible for any actions taken by subscribers.