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Showing posts with label rate hike. Show all posts
Showing posts with label rate hike. Show all posts

Wednesday, March 29, 2017

Rising inflation could be the catalyst to finally send gold price beyond ability for market manipulation

At long last real inflation has emerged in the U.S. economy, with even the Federal Reserve acknowledging it between the lines as they rush to enact up to four interest rate hikes before year's end.  And for gold investors who have suffered through central bank and Wall Street manipulation of the metal's price since the advent of ZIRP and QE, inflation is the best friend of gold and silver and likely to be the catalyst for the next strong leg up in this Bull Market.

Gold is poised to rally to levels last seen four years ago as rising inflation and negative real interest rates combine to boost demand, according to Incrementum AG, which says that the precious metal may be in the early stages of a bull market. 
Prices may climb to $1,400 to $1,500 an ounce this year, said Ronald-Peter Stoeferle, managing partner at the Liechtenstein-based company, which oversees 100 million Swiss francs ($101.5 million). Spot bullion -- which was at $1,249 on Wednesday -- last traded at $1,400 in September 2013. 
Gold has climbed this year as investors weigh risks that President Donald Trump won’t be able to implement his agenda, adding to uncertainty surrounding European elections and the Brexit process. Against that backdrop, investors are on alert for signs of faster inflation, with the Federal Reserve’s preferred gauge jumping recently to near the bank’s target. Policy makers raised rates this month, and kept forecasts showing two more hikes in 2017. - Bloomberg

Tuesday, March 21, 2017

As dollar has fallen 200 bps since Fed rate hike on March 15, gold has climbed more than $50

On March 15 the Federal Reserve announced their second quarter point rate hike in the past four months, and third in the past 15 leading the markets to believe that central bank was finally serious about tightening the cost to borrow money.  However, the reactions from the dollar and gold have been exactly the opposite of what should have been expected due to the Fed's efforts to attack rising inflation, and this has all but revealed that the markets as we used to know them are completely broken.

In just the past six days since the Fed raised rates on March 15, the dollar has plummeted 200 bps on the Dollar Index, and gold has risen every single day to its current position of $1244, which is a climb of more than $50 in that period.

Dollar Chart


March gold chart

Live New York Gold Chart [Kitco Inc.]

Gold chart for March 21

Saturday, March 11, 2017

Fed gold cycle number three: Severe pullback and selloffs before next rate hike on March 15

As we enter into the coming week of expected turmoil and potential extreme chaos in the economic and geo-political worlds, one asset appears to be following the same path it did just prior to Federal Reserve rate hikes that took place in December of both 2015 and 2016.

Leading up to the first rate hike in nearly a decade back in Dec. of 2015, the gold price was taken down under the expectation that higher interest rates would be an anathema for the precious metal.  And for a short time following the hike in rates, gold did indeed drop to a multi-year low of $1048 before subsequently skyrocketing to $1250, and later $1380 in 2016.

Image result for gold price chart 2015 fed rate hike

Then following the 2016 Presidential elections in November we began to see this same cycle occur as expectations of a another interest rate hike by the Fed in December rise in probability.  And sure enough gold was taken down into the $1100's before moving back up near the beginning of 2017.

Image result for gold price chart december 2016

And now in March of 2017 we stand on the cusp of another rate hike by the Fed, expected to occur from their meeting on March 15.  And like clockwork since the probability of an increase in interest rates shot up in late February, gold has been slowly declining for a month leading up to the decision.


Three cycles all occurring with the same price action for gold.  Which means that if the historic trends continue as they have for the two previous rate hikes in December of 2015 and 2016 respectively, we can expect the gold price to rebound within a couple of weeks after the March 15 decision.

Thursday, February 2, 2017

Entering into February of 2017, gold following same trek upward as it did in first two months of 2016

Back in January we published an article showing how the gold price was following the same path here in 2017 that it did last year following rate hikes made by the central bank during each of the past two Decembers.

And as we enter into February, that trend appears to be continuing like clockwork with the gold price having risen 3% and 5% respectively in each of the past two Januaries.

January 2016


January 2017


The one difference however between January of 2016 and the same month in 2017 is that the price started off the month $80 higher this year, and ended $100 greater than what it closed out at on January 31 of last year.

As we begin the month of February, expectations of this trend continuing are just as prevalent as they were last year when the price made even greater moves than they did in January.  In fact, at the end of the second month of 2016 gold had climbed another $110, or 9% on top of the 3% rise the month before, and set the stage for gold climbing to its highest level since 2011.

February 2016


 Projecting this same percentage gain for February of 2016 forward into 2017, at the end of this month we could expect to see a gold price of around $1326, or a gain of $109 above what it started out the month.

Wednesday, January 18, 2017

Demand for gold surging as paper gold in the GLD ETF running at levels not seen since 2011

2011 was the year gold reached its all-time high against the dollar when it climbed from $1325 at the end of January to over $1900 by early September.  And during that year investments in the GLD ETF were also at record highs.

Subsequently traders saw the gold price fall over the course of the next four years, ending its bear market run in January of 2016.  But as we enter into a new Presidency in January of 2017, and conditions looking very similar to what occurred last year in the gold markets following the central bank's first rate hike in over a decade, something else is occurring that is sure to spark a run in the gold price and it is happening once again in the paper gold market.

On January 17, the GLD ETF had risen 13 of the last 15 trading days, creating a scenario for gold not seen since it rose to its all-time high back in 2011.

Gold chart for September 2011 when it reached its all-time high 
The popular gold-tracking GLD ETF has risen in 13 of the past 15 sessions through Tuesday, the first time it has done so since summer of 2011. 
Gold has suffered a precipitous drop since peaking in mid-2016, with Donald Trump's election and the Federal Reserve's rate hike serving as two notable bearish catalysts. 
Each of the events sent the dollar surging and yields rising — both of which are bad news for gold. After peaking at nearly $1,380 per troy ounce in July, gold found itself below $1,130 per troy ounce in the middle of December. 
Since then, gold has staged a subdued but nonetheless persistent rise. In the 15 sessions since Dec. 22, gold has risen more than 7 percent. 
The last time the GLD rose as consistently was in the 15 sessions ended July 26, 2011, which similarly saw the ETF rise a bit less than 7 percent. 
To be sure, 2011 is not a year that gold fans remember fondly. The metal topped out just a few months later, in September, at $1,923.7. A gut-wrenching decline was ahead, and the value of the metal has pretty much been declining ever since. - CNBC
Gold price to date for 2017

Thursday, January 5, 2017

Gold price starts off 2017 the same way it did in January of last year following Fed rate hike

When the Federal Reserve raised interest rates for the first time in a decade back in December of 2015, the price of gold fell for the remainder of the the month only to reverse and climb by nearly 20% in early 2016.


Fast forward to December of 2016 where the central bank once again mirrored their 2015 actions by raising interest rates by a quarter point, and as before the gold price stagnated for the last few weeks leading up to the end of the year.

After the first five days of 2017 we appear once again to be seeing a similar move in the precious metals that took place exactly one year ago.  And although it is far too early to predict whether the outcome in the gold markets will mirror that which took place in January and February of 2016, the signs are pretty good that support levels have been established and that we will see a higher move in the gold price thanks to the Fed, and uncertainty in the global financial markets.


Thursday, June 16, 2016

Gold shoots through $1300 following the Fed's capitulation for raising interest rates

It took approximately a month and a half to recover from the cartel's last smackdown of the gold price to reach and surpass $1300 per ounce, but thanks to Janet Yellen and the Federal Reserve's capitulation to not raise interest rates at yesterday's FOMC meeting, gold has once again breached that resistance level and is on its way towards new 52 week highs.

I think the first rate hike cycle is over. What Janet Yellen said in response to my question, and if you look at what has happened to the rate hike cycle, is pretty profound. It’s as close to the Fed getting to capitulation as I’ve ever seen, about the efficacy of Fed policy, about the outlook for the economy. - Steve Liesman, CNBC
Perhaps what was most interesting about yesterday's FOMC decision not to raise rates was the fact that for the first time in many months, there was not a single dissenting voice as the choice to do nothing and leave rates where they are occurred with a unanimous vote.

Despite Yellen's usual rhetoric in saying everything and meaning nothing in her followup to the FOMC announcement, the underlying reality is that central banks around the world are running scared of deteriorating economic and financial conditions that threaten the banks, bond markets, and economic growth.  And this is why hedge fund managers money managers, and billionaires like George Soros are shorting the stock markets and buying into gold since they recognize it is the only real safe haven for what is coming.

Saturday, June 4, 2016

June Fed rate hike chances crushed as new jobs collapse and uncounted non-workers soar

Over the past few weeks we have spoken alot on the Fed’s use of public announcements by its cadre of regional Fed Presidents to try to sway markets into believing that the central bank was sure to hike interest rates in either June or July.  And of course, inside most of this rhetoric is the single key component that is normally ignored by the computer algorithms that make up 75% of all trades, and that being the concept of data dependency.
Well in June 3, data dependency just went bye bye.
May’s non-farm payroll report just came out a couple hours ago, and it sent a shock through the entire financial system.  That is because the report printed a jobs number of just 38,000 new hires, which is the lowest single month since the height of the Great Recession back in 2010.

Friday, June 3, 2016

Gold jumps $30 while dollar drops 100 bps as jobs report kills any chance of June rate hike

So much for the Fed sending out President after President last month to jawbone the central bank assuredly raising interest rates this month.  That is because on June 3 the newest jobs report came out, and it was perhaps the biggest blow to the long-standing meme that the economy was in total recovery.

In fact, the economy only created 38,000 jobs, which is the lowest number since September of 2010, and the smallest print since the height of the Great Recession.  But perhaps what is most chilling in all of this is that the report noted that 548,000 Americans simply vanished from the labor force, meaning they not only are out of work, but are also no longer counted by the government.

The worst jobs data since September 2010 has thrown ice cold water on The Fed's decision-making process and thrown a spanner in the market's narrative that everything is awesome. June rate hike odds crashed to 2% and July rate-hike odds plunged from 48% to 36%. The reaction to this sudden revelation of reality is striking as stocks plunge, gold soars, the US Dollar dumps and bond yields spike lower... - Zerohedge
In the meantime gold popped up $30 from the release of the jobs numbers and the dollar collapsed more than 100 bps now that the expectation of a rate hike for June has gone through the floor.

Wednesday, June 1, 2016

As the Fed jawbones recovery and normalizing interest rates, debt defaults at highest levels since December

Nearly all alternative media economists have gone public to state that it is both unlikely, and irrational for the Federal Reserve to raise interest rates now, and in the near future.  And this despite the central bank’s recent jawboning on mainstream television of a potential rate hike as early as next month.
But the problem is that the Fed and other central banks have waited too long, and gone too far in their zero interest rate policies, and quantitative easing programs.  And with the odds of a rate hike shooting up since the middle of May, debt default levels, especially for credit default swaps on the 10 year Treasury, are at their highest levels since the Fed raised rates a quarter point back in December.
fed-dollar

Wednesday, May 25, 2016

As central banks dump dollars and accumulate record levels of gold, outstanding demand for Comex delivery could finally bust the system

With the Fed flip-flopping around the mainstream media in an attempt to manipulate the dollar and force down the price of gold without ever having to implement an actual rate hike, central banks around the world are no longer fooled and are continuing to dump dollars at high rates.  And in their place, these same banks are continuing to accumulate gold at record levels to ensure their reserves remain intact.

But perhaps what may be even more interesting is that demand for gold delivery at the Comex is suddenly increasing to dangerous levels, and if the trend continues into the June delivery date, it could be enough to finally bust the Comex once and for all.


The May gold contract is a non active contract.  Yet we started the month with 5.67 tonnes of gold standing and it has increased every single day and today sits at 6.68 tonnes of gold standing: 
The amount standing for gold at the comex in May is simply outstanding at 6.8740 tonnes. The previous May 2015, we had only .08 tonnes standing so you can certainly witness the difference as the demand for gold by investors/sovereigns is on a torrid pace. This makes the excitement for June gold that much more intense as more players are refusing fiat and demanding only physical metal. 
I will be reporting daily as to how which is standing for delivery through the active month of June.  June is the second largest delivery month after December. - Silver Doctors
Meanwhile, as pressure builds to break the Comex, China is enlarging their control over the entire gold market through metal and mining acquisitions, vault purchases, and agreements with nations like Russia to expand the gold trade markets.
Not only is the Chinese central bank continuing to expand its gold reserves, the country is steadily becoming a major player in the world gold market. Earlier this month, the largest Chinese bank bought one of the biggest gold vaults in Europe, as it expands its influence on global gold trade. 
Central banks accounted for about 14% of the world’s gold demand last year.
As central banks continue to buy gold, many are dumping US debt. So far in 2016, global central banks have jettisoned $123 billion in US debt. Last year, they sold off $226 billion. According to the Treasury Department, central banks are selling US Treasuries at a pace not seen since at least 1978. - Schiffgold

Thursday, May 19, 2016

Central bank jawboning: Gold smashed 3% despite the fact the Fed won't raise rates in June

An interesting thing happened in the markets yesterday, and is the crux of how the central bank uses rhetoric to manipulate paper markets without ever having to administer any actual policies.  On May 18 the Federal Reserve published their minutes from their April FOMC meeting (which was when they chose not to raise rates due to deteriorating economic conditions), and the records appeared to be almost the exact opposite of what Fed Chairman Janet Yellen reported during her speech on central bank policy one month ago.


Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June. - Zerohedge
Yet this was what Janet Yellen said just 22 days ago during her April speech (you will notice that the Fed minutes from that same date are in complete opposite of what Yellen reported).
"Economic activity appears to have slowed," despite job market gains, the Fed said in its statement. It also noted that household spending had "moderated." 
That tepid language greatly lowered investors' expectations for a June rate hike. Before the announcement, about 31% of investors called for a rate increase in June. After the announcement, expectations immediately dropped to 19%. - CNN Money
So how can the actual reporting from April 27 by Yellen be so different from the meeting's minutes and discussion on both rates and the economy?

Market manipulation.

The central bank knows that markets are controlled primarily by High Frequency Trading (HFT) computers that take news in their algorithms and instantly push through billions of trades to coerce markets in the direction they desire.  None of this has anything to do with factual data, but simply in lowering or raising price values for the dollar, gold, bonds, and stocks as they see fit.

And for two days now they accomplished their nefarious goal as gold was smashed over 3% and the dollar was artificially strengthened above 95% on the index.

But know this, the Fed minutes were not the sole catalyst for the crushing of gold and propping up of the dollar.  Prior to the meeting minutes, three central bank Presidents all went public on May 17 and jawboned that the June rate hike was a probability, and a tightening of credit was nearly a sure thing.

Yet if the Fed was now completely set on raising rates, why didn't they just do it yesterday rather than allude to waiting until next month?

Because they cannot raise rates anymore, and they have no intention of doing so.  The whole purpose of the press conferences were to manipulate the market for a few days, and suppress gold prices which were pushing the magic resistance levels of $1300.

Friday, April 1, 2016

Jobless claims jump to highest rate in two years, bringing new questions on recession

Contrary to the ‘head on the sand’ rhetoric that is coming from the Fed and mainstream business news regarding jobs, employment, and how the economy is really doing, the bottom line numbers have already signaled recession in the manufacturing side of the economy, and all that remains is for the service sector to hop on board.  But as the central bank Chair earlier this week pointed towards uncertainty in the markets that are now having an effect on their ability to raise interest rates as promised in December, new data out today pretty much ensures there won’t be a rate hike for at least several months, if not at all for the rest of the year.
This is because on March 31, new jobless claims numbers came in and they were discovered to be at the highest rate in two years.
With both ISM Manufacturing and Services employment indices collapsing, endless headlines of layoffs, Challenger-Grey noting Q1 as the worst since 2009, and NFIB small business hiring weak, it is no surprise that initial jobless claims is finally waking up. For the 3rd week in a row - the longest streak since July 2015. The last 3 weeks have seen a 9.1% surge in jobless claims - the biggest such rise since April 2014. - Zerohedge
jobless claims

Friday, March 11, 2016

ECB head Mario Draghi validates that markets are tied to interventions, not fundamentals

On March 10 the European Central Bank (ECB) issued its highly anticipated policy announcement, and the shift from simply watching market action from the shadows is now over.  This is because ECB head Mario Draghi rocked the financial world with a Euro denominated bazooka, and proved once again that markets no longer function on fundamentals, but instead on credit based interventions.
Although not quite going full tilt into negative interest rates, the ECB did lower rates at its primary lending facility to zero from 0.05%, and dropped its deposit rate 10 bps to -0.40 which is an indication the central bank wants Europe’s financial institutions to borrow and spend rather than borrow and save.