WOW! 152 words that changed the landscape! If you followed my advice, you bought gold and gold stocks yesterday and would be sitting on 12 to 18% profits depending on which stocks you bought. Enough said!
As of now, the DOW is down 79 at 7,406, the NAS is down 7 at 1,483, the dollar is down 1.18 (1.52%) at 82.92 and gold is up 14.00 at $955.50. I would suspect that we are not going to test $845 at this time!
Big Day for Gold, Sad Day for U.S.!
152 Words That Will Live In Infamy!
I knew it was time to buy gold, as I have been telling you, but to be honest with you, I had no idea that the Fed was going to throw in the towel and admit that they had reached desperation time already. We are not but some 60 plus days into this administration and it is apparent that the “Montessori Children” have no idea of what they are doing when it comes to the economy. We are in for a tough four years! These guys make Jimmy Carter look like a genius! I am sure that “Jimma” is supportive of the cover, but real Americans will pay the price! Read these words from the Fed carefully because they are telling you that they prefer HYPER-INFLATION to solving the financial crisis. Why is that, you might ask? Because, for them it is not about solving the economic crisis, its about Socializing America. Welcome to “change” America, you asked for it and you are going to get it in ways that you never dreamed of!
“In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.”
(I added the bold because the Fed obviously didn’t think it was worthy of note. If your currency is of concern, print more. What????)
In July we lived in the “land of the free and the home of the brave“, a mere 7 months later, I wish that I had bought 700 million gallons of gray paint so that I could have profited on the quick change to Marxism. For those of you that have not visited a socialist country, the predominant color of the buildings is gray.
These could be the worst 152 words (for those of you that like to point out mistakes, it could be 150 t0 160 because I counted quickly, so go back and ask for more talking points from socialist central!) that the Obama administration has ever heard! The Fed, which is not, nor has ever been in any way, associated with the Federal Government, other than as a lapdog, admitted that, the tax cheat in command of the Treasury Dept, Timothy Geithner has no idea how to fix the financial crisis. Remember that both Rahm Emanuel and Hillary Clinton said that they “should never let a good crisis go to waste”. How did the “kids” get in charge? Oh yeah, America voted for “change”. OK, I’ll get off my soapbox and look at what the numbers are.
On the news that the Fed would be buying $300 billion of long-dated Treasuries, the bond market jumped out of the plane and as of yet has not pulled the rip-cord. As of yesterday, the yield on the long bond went from 123.25 to 132.18. To say the least, the yield curve flattened considerably. Can you spell “the dollar is dead’?
This administration is, without a doubt, the most inept in the history of monetary policy! Maybe what we are looking at here is an intentional move to tank the dollar and the country, because no government could be this inept. As I said yesterday, buy gold and gold stocks, to protect yourself, because “change” is not your friend if you are responsible citizen. If “change” is what you voted for and want, then go long the dollar, because printing more of it will make it more valuable, right? Not!!!!
I sincerely hope that most of you took my advice, of yesterday morning, and bought gold and gold stocks because the timing was right! The mining shares (check out the HUI and the XAU) embarked on technical breakouts crushing the 40, 50 and 10 day moving averages and broke horizontal resistance levels at the same time.
In the news this morning, Newmont Mining, NEM, is entertaining a merger with the world’s largest gold miner, Barrick ABX. As I have told you in the past, ABX will be the consolidator of the mining industry going forward. Today, the CEO of Barrick said,
“If you can figure out how to share synergies, that is an obvious thing for us to have happen at some point, but it has been there in the middle of that table for a long time. It hasn’t happened yet, so we’ll see.”
NEM and ABXÂ each own 50% of the Kalgoorlie Super Pit and combined, they are projected to produce more than 12.4 million ounces of gold this year. O’Brien said that Newmont had held off on big acquisitions because large mergers were often accompanied by significant dilution of share holder value, unless there were material cost savings available.
“Generally, other than areas where we have overlap with somebody like Barrick in Nevada, which is right there in front of us, there really aren’t a lot of synergies by combining operations that might be disparate around the world or disparate in a country.”
Newmont will soon operate Australia’s largest goldmine, when its $2.6 billion(U.S.) Boddington project is operational this summer. NEM controls the project after buying a one-third stake from AngloGold Ashanti for about $1 billion (U.S.) this year. Mr O’Brien went on to say,
“The mine will be a cornerstone of our operations in Australia, clearly with 1 million ounces per year plus. When we think of cornerstone think how long we’ve been in business in Nevada and that we still are. This will be that kind of cornerstone for us.”
I hope that you bought ABX yesterday, but if not, there will be more opportunities in the future.
Yesterday, after the Fed announcement, ABX was up 10.10%, NEM up 9.64%, GG up 10.26% and RGLD was up 8.73%. This morning ABX is up, after opening gap up, 3.51%, NEM up 6.75%, GG up 5.2%. and RGLD is up 5.54%. I will alter my call for today only. Buy gold and gold stocks, yesterday! All kidding aside, hold on for the sell off and accumulate more as profit taking settles in, which it will, at some point in the future. Do not take profits at this juncture, there are a lot more to come between now and the beginning of summer!
Till next time, good luck and good trading!
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Ordinarily people don’t want change as change is usually associated with the unknown. I was somewhat surprised during the election that a political party could rally around “Change” as a good thing. Looks to me like regular old common sense that feared change was the right way to go after all.