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Fed To Markets: Buy Gold And Silver

by John Rubino on January 25, 2012 · 21 comments

The Fed just spoke. Here’s a slightly edited transcript:

Blah blah blah … the economy has been expanding moderately … blah blah blah boilerplate inanity blatant lie … the Committee seeks to foster maximum employment and price stability ….

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

This of course comes as no surprise to anyone. But seeing it in print had exactly the impact you’d expect. Stocks erased their early losses, the dollar tanked, and precious metals soared. With good reason. It is now the stated policy of the US government to have negative real interest rates for years to come (eons in trader-time).

The carrying cost of gold and silver bullion will remain more or less zero, while all manner of “risk-on” strategies and carry trades will generate virtually guaranteed returns. Think back a decade or so and ask your younger, more naive self what the result of open-ended zero interest rates would be. You’d have probably said “that will never happen, but if it did, gold and silver would go parabolic”. You’d be half right. Grab those junior miners with both hands.

  • Big Dick

    No just grab your ankles and bend over as Old Blowme is going to give you an injection of QE3 as directed to Dr Ben!

  • Cyrus

    There are strange things coming out of the IMF, Geo. Soros and now the FED. It is almost like they are trying to cause widespread panic. I know they are not turning over a new leaf and telling the truth. Whenever something like this comes out and sounds like they are telling the truth, then there is some other motivation behind it.

    Thanks John.

  • Willy2

    Ah, our John Rubino is still drinking the “”kool-aid”" called “”QE works”". And still an inflationista. We’re in deflation now, no matter what the FED does.

    • Goldman

      Willy2,
      I hope your comment is humor? Do you buy food, pay a water or sewer bill, or use bread or eat peanut butter? All these items are up in the World that I live in and my child’s school tuition has gone up. I haven’t encounter a town that isn’t trying to raise property taxes to cover increases in costs.

      Yes, we don’t know if inflation will cause Gold or Silver increase in value – this has been the case in many inflationary periods in the past. But, we really can’t know what the future will bring, but after reading Mr Rubino’s writings over the years – I’ve found he’s been pretty darn accurate over the last 8 years. Perhaps these price increase I’m encountering is really deflation????

      • Jason Carter

        I see the inflation/deflation rationale from time to time. The Fed is infact fighting deflation. Deflation would be the fair outcome of all the recent excesses / fascism / maldistribution of capital. All the money center banks would go bankrupt so the Fed will not allow it to happen. We do have private sector debt deflation that began in 2007 and should last about 25 years, about the same time it took to build the debt from 1982. This debt deflation is not the same as monetary deflation. I seems the result is flat to lower incomes and rising prices of necesities. So we see the price of food, fuel, electricity, healthcare, and tuition rising. However, we see the population’s savings in the form of dollars, stocks, and housing declining. Gold and silver are the major safe havens during the years of currency devaluation we have and have yet to endure.

      • Will Swanson

        Uh right! Red Box didn’t just raise their price by 25%, the dollar just became worth less?????? Still not worth a silver dime, but won’t be long.

  • http://www.myronswinningjuniors.com Myron Martin

    Today again proves that sentiment can change in a heartbeat. Any piece of news can move the prices of precious metals dramatically, up or down, so the only people who are going to make any money in that sector are insiders who have prior knowledge of policy changes, or people who regard Gold and/or silver as REAL MONEY and are in for the long haul and not easily shaken out by periodic engineered down moves. The safest course is simply to ACCUMULATE physical on DIPS to dollar cost average at the lowest possible prices. Instead of being afraid of sell offs, a smart investor is instead quite delighted when the bullion banks and their cronies drive the price down so they can buy more at a lower price. Eventually this will produce a physical shortage that will drive the REAL price for actual available bullion higher and the manipulators of the free market will end up having shot themselves in the foot by their illegal manipulations selling paper for gold that does not exist.

    • British Thermal Units

      Excellent!!!

  • Rob Harp

    Lets all buy Gold and put it in a nice safe dep[osit box. Then when there is a “Bank Holiday” OslobO will know right where to get it. We will even pay rent on the box. In retun he will leave us a nice thank you note.

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  • Bruce C.

    It’s interesting (and telling) that Bernanke only mentions one of the two Fed mandates, to maintain the target level of inflation (at roughly 2% per year), and not the employment level mandate. That is indicative of the need to fight deflationary forces, its only real concern. The money supply must always increase in a debt-based fiat money system and deflation (credit destruction, drops in asset values, lack of new credit production, etc.) “consumes” money since money today is a proxy for credit. What will be most interesting is to see if the dollar rises or falls relative to other major currencies going forward. It dropped today, but we shall see what develops. It’s possible that both price inflation will continue for “hard” assets, and price deflation will continue for paper “assets”, in part because of deleveraging, but also because of second and third party risks.

    • Will Swanson

      What did they say, “The US is the best looking horse in the glue factory” or “The US is on the high end of the sinking ship” or ” The US is the caboose on the train that has left the track” I think I am getting the picture.

      • Big Al

        My favorite “The leper with th most fingers”.

  • http://codgerville.wordpress.com Cyrus

    I am a bit country and a bit simplistic. Here is my inflation/deflation measuring stick.

    In 1872, when the SAA Colt made it debut it cost $20.00, which at that time was one once of gold.

    In 1935, when gold was seized, recalled, picked up (choose your verb) the SAA Colt was $35.00 or one ounce of gold.

    Today, from the Colt factory, depending on the niceties you add, the Colt SAA from the factory will cost @$1600.00 or one ounce of gold.

    Now here is the $64.00 question. Did the cost of the gun go up? Did the price of the gold go up? or did the value of the dollar go down? Now you can determine if it is inflation or deflation, right?

    Good luck and God bless you and yours in 2012.
    CC

  • John, just a swimmer

    The Federal Reserve is a corrupt private corporation that keeps America in debt and in a continual financial crisis.

    I’m politically ignorant, only an MS degree, not an intellectual, but after watching “The Secret of Oz” I came to an uninformed conclusion that the major cause of the financial crises in America and the world is the corrupt and ignorant control of money.

    Money: bullion, printed, bonds, loans, assets, interest charges, checks, etc.

    The Federal Reserve unconstitutionally controls and directly influences the majority of all aspects of money. When the US Government doesn’t have enough tax money to pay for its expenses, it often borrows from the Federal Reserve and has to pay interest. It’s the interest on the 15 trillion that helps keep America in serious debt and in a serious financial crisis.

    Another major cause of the financial crises is that the mortgages that private banks issue are “considered assets” and the banks are allowed to loan out ten times the amount of each mortgage and only required to retain hard? assets equal to the original mortgage. Excessive leveraging? If a customer buys a house and takes out a $300,000 mortgage, the bank can loan out $3 million and collect interest on it. The $3 million that is loaned out does not exist, it’s make believe money. If there’s a run on the bank, guess what, they fail or get bailed out.

    The corrupt and ignorant also includes governments; banking systems; billionaire families, corporations and individuals; and especially the US Congress members and other so called experts that have not learned from the history of money what are the proven real solutions to the financial and most other crises in America and the world.

    I’m sincerely asking for opinions and critiques of “The Secret of Oz” that presents a pertinent history of money from the birth of mankind to the present day and shows how the corrupt control over money is one if not the main cause of the financial crises and of most world crises, wars, joblessness, poverty, homelessness, starvation, education, ect. Workable solutions are also presented.

    http://www.documentarywire.com/the-secret-of-oz

    “You can’t borrow yourself out of debt. General Motors can’t, you and I can’t, the Federal Government can’t, nobody can borrow themselves out of debt.” General Motors has not paid back their bailout – more spin, deceit and lies.

    A quote of Byron Dale, author and monetary reform expert in the film, “The Secret of Oz” produced by Bill Still.

    For a quick synopsis, copy & paste the following link and watch 5 minutes, from 0:02:50 to 0:08:16. After watching you’ll probably want to watch the full video.

    Your opinion and critique of “The Secret of Oz” and corrections to my errors and any in the film would be appreciated. I’m trying to make informed selection for the elections. There appears to be only one candidate that is honest and speaks with some wisdom that has a chance of winning. Most Congress members are full of balony and ignorance. Over half are millionaires.

    Thanks,
    John, just a swimmer.

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  • http://www.mygold.co.nz Buy Silver

    Very nice. The Fed statement changed all, and from thinking that the gold rally potentially only had one year left to run, it could now continue for longer.

    In New Zealand, buy silver and Gold with MyGold.

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  • http://none@none.com rob

    it amazes me that all you people think that someone, anyone can rule it all. Soros has much input but it all is run. It’s all fixed and you can’t change it!

  • John, a swimmer

    Ron Paul if elected would make a difference. The rest of the candidates and Obama are full of balony and would continue the status quo with the rulers of the Federal Reserve, a private corporation ruling the world.

    If not Ron Paul, the third party candidate that the Occupy movements gets behind. Otherwise, anarchy and violence. Americans are fed up.

    I’m tired of reading about useless solutions to the financial crises in America and the world that don’t and won’t work.

    What are the proven solutions to the financial crises and other crises that hundreds of years of American and world history have proven successful, but are kept hidden by those that maintain the corrupt control of money?

    I present the following material to inspire and educate others about “The Secret of Oz” and to elicit other real solutions for the financial crises and other crises in America and the world. Yes, some of the material and my comments have mistakes. Look beyond the mistakes. I’m politically ignorant and apologize. Correct the mistakes and submit real solutions.

    Damn it, wake up Americans. The Federal Reserve(the Fed) is an illegal “private corporation” that unconstitutionally controls and directly influences the majority of all aspects of money. Its owned by 4 American and 6 foreign private banks or maybe not, so much contradicting history. And, possibly the Bank of England or other giant foreign banks strongly influence that own part of the FED.

    The Federal Reserve’s main purpose is making money for its shareholders by keeping America in debt by controlling all aspects of money: bullion, printing, circulation, interest, etc.

    When the US Government doesn’t have enough tax money to pay for its expenses, it often borrows from the Federal Reserve and has to pay 6%? interest. Other countries buy US treasury securities with interests. It’s the interests charges on the US debt of 15 trillion dollars of which supposedly the Fed owns only 2 or 3 trillion of that helps them maintain both control of money and a serious debt. But, is the debt of the banks associated with the Fed included? The mass news media is owned and controlled by the corrupt billionaires, some that own portions of the Fed. Accordingly, don’t believe much or anything of the mass news medial.

    I present the following material to inspire and educate others about “The Secret of Oz” and to elicit other real solutions for the financial crises and other crises in America and the world. Yes, some of the material and my comments have mistakes. Look beyond the mistakes. I’m politically ignorant and apologize. Correct the mistakes and submit real solutions.

    “When the depression hit, FDR called in the very same people responsible for setting up the same house of cards.” Sounds familiar…. http://therepublicanmother.blogspot.com/2012/01/wall-street-and-fdr-chapter-6.html

    “Certainly the results of the FED’s money creation speaks for itself: 2000%+ cumulative inflation since 1913; this has been an egregious erosion of the spending power of all Americans every bit as criminal as the clipping of coins in antiquity. This is no accident, but rather a willfully orchestrated theft perpetrated against the American people (if not the world), that benefits very few elite interests at the expense of the masses. http://theantigov.com/?p=490

    The control of money (bullion, printed, electronic, credit), it’s interest rates, circulation and how it’s added to the economy determines the wealth, prosperity and health of every individual and country in the world

    “You can’t borrow yourself out of debt. General Motors can’t, you and I can’t, the Federal Government can’t, nobody can borrow themselves out of debt.”

    Quote of Byron Dale, author and monetary reform expert in the film, “The Secret of Oz” produced by Bill Still.

    “The Secret of Oz”, a 110 minute video presents the pertinent history and story of money from the birth of mankind to the present day and how the corrupt control over money is one if not the main cause of the financial crises and most world crises, joblessness, poverty, homelessness, starvation, education, wars, ect.

    For a quick synopsis, copy & paste the following link, then watch 0:02:50 to 0:08:16, 5 minutes.
    After watching, you’ll want to watch the full video. Some repetition, do something while viewing.

    http://www.documentarywire.com/the-secret-of-oz

    Another major cause of the financial crises is that the mortgages that private banks issue are “considered assets” and the banks are allowed to loan out ten times the amount of each mortgage and only required to retain hard? assets equal to the original mortgage. If a customer buys a house and takes out a $300,000 mortgage, the bank can loan out $3 million and collect interest on it. The $3 million that is loaned out does not exist, it’s make believe money and as it’s loaned out $30 million of make believe money is created. If there’s a run on the bank, guess what, they fail or get bailed out. The phony bank millionaires, criminals are then bailed out.

    Your opinion, critique of “The Secret of Oz” and corrections to my errors and any in the film would be appreciated. I’m trying to make an informed selection for the elections. There appears to be only one candidate that is honest and speaks with some wisdom that has a chance of winning. Most Congress members are full of balony and ignorance. Over half are millionaires.

    Thanks,
    John, just a swimmer.

    “The Secret of Oz” film awards and references of financial experts in film and film links at bottom.

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