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The overnight and early morning rally in the metals was met with heavy liquidation selling around noon in New York. Gold finished down only 14 dollars from yesterday's close, but it was a much larger intraday reversal.
I think the Street and the monied interests are prepping the markets for QE3. The Fed meets next Tuesday.
I took a little time from my 'vacation' today to put some money to work in the market in the latter half of the New York trading day.
There was a major selloff in Europe and the US today as fears of slowing economies and a sovereign debt crisis intensified.
There was a flight to safety in the dollar and Treasuries, and early on in gold. But the price rise in gold and silver was cut short as selling increased and it turned into a general liquidation.
Non-Farm Payrolls will be released tomorrow morning.
The Federal Open Market Committee will be meeting next Tuesday. The cynical part of me suggests that this week is a setup for QE3.
The Bank of New York Mellon will begin paying negative interest rates on very large cash savings deposits, over $50 million, this week.
As an aside, we wonder why the Fed does not similarly reduce the interest they pay on bank reserve deposits with them to zero from the current .25 percent?
It should be noted that Bank of New York Mellon has a current dividend yield of 2.06%. Are those dividends taxable? Will depositors be able to claim a lost on the negative interest they pay to BNY Mellon?
Not a sign of deflation if you understand it, although I am sure some will tease that conclusion out of this. Negative real interest rates are the hallmark of quantitative easing, which are artificially low interest rates and the creation of non-organic money, printing paper if you will. It is just they are nominally positive on the longer end of the curve. When they go nominally negative on the short end for a sustained period, you know we are not in Kansas anymore, Toto.
This is a clear sign of a topsy turvy financial system, of dysfunctional markets, of predatory banking, distorted risks and returns, and a broken economy with negative real interest rates that are likely to become...more negative. The US can get by with this because of who they are, and what the dollar represents to world trade.
There is a major bear raid on gold today, capping the earlier flight to safety. I think this is more indicative of extremes at the short term in the trends of stocks, bonds and dollars. But the Non Farm Payrolls are tomorrow, and the market is watching them and the situation in Europe rather nervously.
Remember this story the next time someone says that the problem with gold bullion is that it pays no interest, and there are costs to store it.
If the Fed can create it, they can also confiscate it, and transfer it to their friends, creating winners and losers, and sometimes almost at will. And that is the problem with fiat money and the banking cartel that surrounds it.
WSJ
BNY Mellon to Charge for Some Deposits Above $50 Million
BY LIZ RAPPAPORT
Bank of New York Mellon Corp. is preparing to charge some large depositors to hold their cash, in the latest sign of the worries roiling global markets.
The biggest U.S. custodial bank said this week in a note to clients that it will begin slapping a fee next week on customers that have vastly increased their deposit balances over the past month.
The bank cited the massive dollar deposits it has received over recent weeks, as investors and corporations retreat from financial markets amid Europe's debt crisis and the recent debate over U.S. government ...
Gold was romping today until it was smacked lower in the thinly traded late day market. Silver was up sharply.
I posted some thoughts intraday on gold and silver which you might wish to scroll down to review if you have not yet seen them.
I think silver, if it can break up through 50 and hold it, can run to 80 to 100 in a shorter period of time than most might imagine. However, if the equity markets fall out of bed, silver will get beaten and badly. So it is a volatile bet, higher reward with higher risk. And yet it has been one of my best long term trades.
There are troubles ahead. Dark times and great times are coming.
Gold is being bought by the developing world's central banks. This will continue to put a bid under it until the world's reserve currency issues are resolved. And don't hold your breath for that one, as the Anglo-American banking cartel are fighting and delaying the most widely desired solution, a broader basket of currencies including gold and silver, tooth and nail.
The Anglo-American banking cartel is hanging on to their positional strength with some vigor. They are supplying the world's banking system cheap dollars in the hopes of getting them further hooked, and dependent on the buck.
This is why I think M3 was discontinued, and why it is so hard to estimate now. Benny is flooding the world with eurodollars. And like domestic bank reserves, it really is not showing up in the more immediate money supply figures, but is being held off shore in vaults.
