FOMC, the great & mighty, hath spoken!
Ahh, me. They said they would taper -- well, sort of. They will reduce long term Treasury bond purchases from $45 billion a month to $40 billion a month, and Mortgage Backed Securities purchases from $40 bn/mo. to $35 bn/mo. That's a total $10 billion reduction from the current $85 bn monthly rate.
Y'all are saying now that I ought to eat crow because I said they wouldn't taper but they did. I say, y'all can eat your own crow, because this is no substantial action, only cosmetic. Lo, I shall explain.
Say you had a REALLY obese friend who got up to 700 lb. by eating 6,000 calories a day. Now say he calls you up and tells you he is changing his lifestyle and reducing his daily calories to 5,294. You would deduce he is not serious about trimming his waistline, right?
The Fed's $10 bn/mo. reduction amounts to the same drop, 11.76%. Instead of creating $1.02 trillion a year, they will be creating only $900 billion a year. Wait, wait! Don't I remember that in September 2008 when the Fed cranked up the money creation machine that the Fed's entire balance sheet was only $939 billion, and it had taken 95 years to get there? And now, after adding $3 trillion in new money, they are going to "taper" by adding "only" $900 billion a year.
Aww, shucks! That sure sounds like a solution to me, like buying another case of bourbon is a solution for an alcoholic with the shakes.
But trembling Wall Street was relieved to find the Fed would keep on pumping out new money plus promised to keep interest rates low, which they cannot do without continuing to buy bonds. Dow leapt 292.71 (1.84%) to a new high at 16,167.97. Nor was the S&P500 far behind, adding 29.654 (1.66%) to a new high at 1,810.65.
Shucks, the millennium has arrived, & the Fed is planning to teach fried chickens to fly so they can just fly right into our mouths. Won't even have the trouble of picking up a drumstick.
I will now plainly tell you what the Fed is doing: they are ruining the American economy. They climbed on that tiger of pumping out money to bail out the banks' balance sheets (y'all know, the banks that are Too Big to Fail run by bankers who are Too Big to Jail), keep Wall Street rising, and suppress interest rates. They can probably do this for quite a while, but at some time it will explode all over the Fed, the dollar, and America. They are destroying the economy pimping for the banks. A time for jubilation? Nay, a time to weep and grieve.
Dow jumped enough to make a new CLOSING but not a new intraday high, and closed at the top of its range. S&P500 made a new closing but not a new intraday high. From here it must climb or die. 'Twould be very weak if it stops here & vacillates. Seasonally it should rally into year end in any event.
On an end of day basis the Dow in Gold made a new high today at 13.28 oz (G$274.52 gold dollars). Oddly enough, the Dow in Silver did not make a new high, but closed above its 20 DMA. Ended at 820.08 oz, up 2.95%.
On the announcement that the Federal Reserve would further and surely depreciate the US dollar, the US dollar index -- rose 33 basis points (0.41%) to 80.55. Sure. Right. That makes sense to me. Oh, yeah. This came after a low at 79.50.
To the US dollar index's rise the euro fell like a piano off the third story, down 0.62% to $1.3684. Japanese yen crumpled 1.56%, falling to 95.92 cents per Y100, by far a new low for the move and way below the May low at 96.41c.
Clearly, I have stumbled through a gate in time/space & landed in a dimension where cause and effect does not work. How, O how, do I get back to earth?
Comex closes before the FOMC vomits out its decision, so gold closed up $4.90 at $1,236.10 while silver gained 22.2 cents to close at 2001.4.
Then the FOMC news hit, and gold dropped 1.7% to a low at $1,215.20. Silver lost 58.4 cents (2.9%) to a low at 1942c. Both climbed after that, gold back to $1,220.90 and silver to 1976c. Like the dollar rising, this makes no sense.
How is this positive? News that took stocks way up to new highs didn't drive silver & gold to new lows, & they bounced a little after their lows. They act sold out, that is, their woe is not attracting new sellers.
But it's too soon to say. Let's see what they do tomorrow. It would be a good sign if they held on above today's lows, & a sign of lower prices if they break those marks.
Wait patiently. A low is near. SPECIAL OFFER: British sovereigns
One of the world's most common gold coins is the British sovereign, thanks to the British empire. It is 22 karat (91-2/3% pure gold) & has a net gold content of nearly a quarter ounce, namely, 0.2354 troy ounce.
We bought a slug of sovereigns today, & would like to find them a happy home. Yes, these are great survival coins, since they're in a small size & widely recognized & very liquid. These are all old sovereigns, i.e., minted before 1934, so may show a little wear but I guarantee the gold content. They will be a mixture of George V, Edward VII, and the various Victoria types. Head of the sovereign appears on the obverse and Pistrucci's unforgettable St. George slaying the dragon on the reverse.
Ten (10) each British Sovereigns, mixed types but all minted before 1935 at $301.95 each, a total of $3019.5 plus $35 shipping for a total of $3,054.5 Based on spot gold at $1,220.90, that's a premium of 5.1% over the gold content and five bucks per coin LESS than our current retail price. Great survival coin (US Air Force used to put them in their downed pilot survival kits). Sorry, I have only Sixteen lots at this price and cannot re-order except at higher prices..
LIMIT two (2) lots per customer.
First come, first served, and no re-orders at these prices. I will write orders based on the time I receive your e-mail.
We will not take orders for less than the minimum shown above.
All sales on a strict "no-nag" basis. We will ship as soon as your check clears, but we allow Two weeks (14 days) for your check to clear. Calls looking for your order two days after we receive your check will be politely and patiently rebuffed.
It increases your chances of getting your order filled if you offer me a second choice, e.g., "I want to order Two lots but if not available will take One lot." ORDERING INSTRUCTIONS:
1. You may order by e-mail only to firstname.lastname@example.org. No phone orders, please. Please do NOT order by replying to this email, because it will delay your email.
Your email must include your complete name, address, & phone number. We cannot ship to you without your address. Sorry, we cannot ship outside the United States or to Tennessee.
Repeat, you must include your complete name, address, and phone number. Our clairvoyant quit without warning last week, I tripped, dropped, & smashed my crystal ball, & our fortune-teller is on strike, so I can no longer read your mind.
2. When you buy from us, we cannot later change or cancel the trade. We are giving you our word that we will sell at that price, & you are giving us your word that you will buy at that price, regardless what later happens in the market, up or down.
If you break your word to us, we will never again do business with you.
3. Orders are on a first-come, first-served basis until supply is exhausted.
4. "First come, first-served" means that we will enter the orders in the order that we receive them by e-mail.
5. If your order is filled, we will e-mail you a confirmation. If you do not receive a confirmation, your order was not filled.
6. You will need to send payment by personal check or bank wire (either one is fine) within 48 hours. It just needs to be in the mail, not in our hands, in 48 hours.
7. "No Nag Basis" means that we allow fourteen (14) days for personal checks to clear before we ship. Want your order faster? Send a bank wire, but that's not required. Once we ship, the post office takes four to fourteen days to get the registered mail package to you. All in all, you'll see your order in about one month if you send a check.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger