Omniscient Federal Reserve Captures The Capital Market, For Now. Gold Beckons.

Omniscient Federal Reserve Captures The Capital Market, For Now. Gold Beckons.

A cursory glance at the various financial news media this morning shows nothing particularly unusual for these unusual times. The ECB have paraded a list for stress tested banks and the market shrugged. However, there is a disturbing thread running through most of the stories to which we have become immune but which would have been considered highly unusual at almost any time in the twentieth century. And that thread is the influence of the Federal Reserve in practically every key market in the world.


The markets have become increasingly captured by Federal Reserve policy, watching what might be and what might change. “Schrodinger’s Cat” is the name given to the idea that the observer (Federal Reserve) of an experiment can by virtue of their very presence affect the subject (Markets) being observed. The Federal Reserve is far, far from a passive influence within the markets, poised to prop up the market should an unthinkable catastrophe threaten, no, now they are THE market.

They control almost every facet of the market directly or in most cases indirectly. They have almost limitless power to monetise debt and force their will on the market for as long they wish or along as enough people believe in them in the absence of alternative. And therein lies the keys: market confidence and acceptable alternative monetary systems.
Reuters report that, among other factors, last week’s slight weakness in gold was caused by fears that the Fed might signal their intention to raise rates at the conclusion of their two-day meeting tomorrow. This, despite the Fed signalling last week that rates may have to remain at their current rate in light of the situation in Europe. Bloomberg reports that the Fed is expected to keep rates stable. The Wall Street Journal doesn’t offer an opinion on the outcome but regards the issue as one of great importance.

What we find odd is how a central bank, whose function is to act as lender of last resort to banks in times of crisis has expanded its mandate to micromanage the economy itself. During the twentieth century such a scenario could never have occurred in the U.S. and Western Europe. It would have been equated with the Marxism and central planning of the Soviet Union.

Robert Fitzwilson defined capitalism succinctly in his interview with KWN on Sunday: “Capital used to be derived solely from hard work, ingenuity and productivity as a surplus after costs. That surplus capital was utilized for reinvestment by the owner or sent through financial intermediaries such as banks to people in need of capital for productive purposes.” He went on to explain how this principle has been undermined: “That centuries-old system has been virtually made irrelevant by the modern ability of the central banks to create and supply unlimited amounts of what serves in our day as capital, fiat currency.”

Now, this new style of capitalism may be viable – we wouldn’t claim to know – but it depends entirely on the honour and integrity of the people managing the system. Marxism was similarly dependent. And if “by their fruits you shall know them” then it is quite clear that the system is being managed by oligarchs on behalf of their cronies. Noam Chomsky muses over how the cures prescribed by the rich for the poor always fail but still seem to have the unforeseen consequence of making the rich even more wealthy. Over the weekend Hillary Clinton echoed the claim made by president Obama that it was the federal government and not businesses who create employment as reported by Zerohedge. Are we in the midst of the transition from free-market economy to a centrally planned one? Is this the dawn of the U.S.S.A.?

In Europe the situation is no different. The experience of peripheral nations like Ireland and Greece show that the so-called troika have taken upon themselves the job of managing national economies (while reneging on their duties such as acting as a lender of last resort). The ECB removed democratically elected scoundrel Berlusconi from office in Italy only to replace him with a former Goldman Sachs banker.

So what does this mean for owners of gold and those considering acquiring it? We cannot begin to speculate. But we would look at the experience of every other centrally planned economy in history and note that it ended in currency collapse, massive wealth destruction and tears. Our usual prescription still applies. We advise clients to own gold in fully segregated and fully allocated accounts in ultra-secure vaults in the safest jurisdictions in the world.

See Essential Guide to  Storing Gold In Switzerland here

Today’s AM fix was USD 1,228.25, EUR 967.58 and GBP 762.23 per ounce.
Yesterday’s AM fix was USD 1,230.50, EUR 970.58 and GBP 764.29 per ounce.
Gold and silver both finished last week down at 0.53% and 0.52%.

Spot gold closed at $1,226.38 yesterday and spot silver closed at $17.11 per ounce. A Bank Holiday was observed in Ireland on Monday.

Investors and traders are focused on the U.S. Federal Open Market Committee (FOMC) regular meeting today and tomorrow. Wednesday afternoon’s policy statement will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called QE(quantitative easing)3.

A delay in any interest rate rise by the U.S. Fed could boost gold, a non-interest-bearing asset.

In London, gold in Swiss storage traded up 0.2% at $1,227.86 an ounce by 1033 GMT, off an early low of $1,222.20 an ounce, its lowest since October 15th. U.S. gold futures for December delivery were down $1.40 an ounce at $1,227.90. In other precious metals, spot platinum was up 0.3% at $1,251.90 an ounce and spot palladium gained 1% to $785.25.

Data reported yesterday showed China’s net gold imports from Hong Kong jumped to a six-month high in September as purchases ramped up ahead of its National Day holiday.

Get Breaking News and Updates on the Gold Market Here 

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Systemically Important Pic-A-Nic Basket Yogi

Two couples went on a picnic together in Jellystone Park.  One couple was Mastercard & Visa.  The other couple was American Express and Discover.  Along came a grizzly bitcoin bear named Boo Boo.  The Amex/Discover couple asked the MC/Visa couple “Do you think we can outrun that grizzly bear?”  The MC/Visa couple said “It’s hard to say for sure, but we’re not worried about outrunning Boo Boo.  We just need to out run you two.”

After winning the foot race, Mastercard & Visa sat down to enjoy their pic-a-nic when suddenly who appeared…

More consumption, selfies & fatal masturbation!

The Artist Taxi Driver? No, It’s an ‘authentic’ Paul Mason @PaulMasonNews on the Ch.4 news youtube channel

To Protect and Perve – California Cops Share Nude Photos Stolen from Citizens’ Cellphones

The worst thing about the government’s reckless response to the financial crisis of 2008, even worse than the trillions in taxpayer bailouts and backstops granted to the financial criminal that created the disaster, is the primary lesson that it sent to American society as a whole. Some people like to call it “moral hazard,” but in more pedestrian terms it really just boils down to: The Bad Guys Got Away with It.

While the negative results of this can be witnessed throughout all aspects of American life, it becomes most dangerous when it takes firm hold within institutions that wield considerable authority, whether that be banks, the IRS, or police departments. While I have spent countless hours documenting the impact within all of the above (and many more), this article focuses on the latest example of the abuse of authority from a domestic police force…

Read more here.

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Brand Tells LBC He Won’t Run For Mayor’s Role

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

 When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin: Read more ›

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What the Swiss Gold Referendum Means for Central Banks

Unlike the rest of us, the lucky Swiss get to go to the polls next month and tell their central bank what to do about gold. A yes-vote will send shock waves through the gold market and shake central banks around the world at their foundations.

Read….. What the Swiss Gold Referendum Means for Central Banks

Why Gold Is Undervalued – And poised to re-price upwards from here

Gold has been in a bear market for three years. Technical analysts are asking themselves whether they should call an end to this slump on the basis of the “triple-bottom” recently made at $1180/oz, or if they should be wary of a coming downside break beneath that level. The purpose of this article is to look at the drivers of the gold price and explain why today’s market value is badly reflective of gold’s true worth.

Read the full article here

Your Right To Substrate

Wasn’t it Michael Scott with Dunder Mifflin Paper Company who originally articulated your right to be a substrate?  If the medium is the message and your transaction history is the message while your mobile phone is the medium/substrate, what does that make you – a simulation?  Introducing CurrentC a training program whose unintentional consequences may be an opening of the flood gates bringing blockchain technologies to the well-trained masses and death by a thousand ant bites to Apple Pay.

Carrot and Stick propaganda,Water Pack Storage and Willful Neglect

A source has said that, for many many years, slothful and lackadaisical workers from Dublin corporation, (whom the corporation were afraid to sack due to pressure from the Unions), were always sent to the water service. Was this a case of willful neglect of our water service so that we would eventually, in frustration, demand privatization?

A prominent County Councillor from Ireland’s East coast has evidence that Irish Water are paying An Post (Irish Postal Service) to hold onto the hundreds of thousands of unopened ‘welcome packs’ that the public have sent back to Irish Water, until further notice.

Separately on government Carrot and Stick propaganda-  another gem from Gene Kerrigan. They’re tinkering with timelines and pricing models - anything to get us signed up

[KR671] Keiser Report: Sinking British Ship

We discuss the increasingly bankrupt British government as a sinking ship on George Osborne’s river of denial. We also discuss the remedy for the ‘too many poor people’ for democracy problem being global trade deals like TTIP and TPP whereby elected leaders can claim ‘their hands are tied’ by contractual obligations. In the second half, Max interviews Helena Norberg-Hodge of about the Economics of Happiness in a time of rising inequality.

More info on the first Crypto Sasquatch to be named ‘Stacy.’

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