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Date Created: 12/21/15
Is The Federal Reserve Going ToAttemptA Controlled Collapse? by ZERO HEDGE | JULY 8, 2014 The Federal Reserve could be preparing to do exactly what it said it wouldn’tAs most Fed watchers know, last week was interesting because Janet Yellen, speaking at IMF came out and said something quite surprising. In a nutshell, she said “It’s not the Fed’s job to pop bubbles”. While many market participants immediately took this to mean, “To the moon,Alice!” and started buying equities hand over fist, there’s another possible explanation for Mrs. Yellen’s proclamation of unwillingness: The Fed could be preparing to do exactly what it said it wouldn’t. Here’s a quick re-cap of events: In the recently releasedAnnual Report of the BIS: Bank for International Settlements (commonly thought of as the “central bank’s central bank”) the BIS made a rather ominous recommendation to it’s member banks: Pop this bubble now. Their specific language wasn’t quite so direct, but the message was just as clear. The risk of normalising too late and too gradually should not be underestimated… The trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on. Few are ready to curb financial booms that make everyone feel illusively richer. Or to hold back on quick fixes for output slowdowns, even if such measures threaten to add fuel to unsustainable financial booms,” … “The road ahead may be a long one. All the more reason, then, to start the journey sooner rather than later.” As we noted last week, there are a couple of fascinating things to note about this recommendation. First, for anyone who thinks that the concept of intentionally crashing the stock market is the stuff of conspiracy theorists, that notion is now dead and buried. It’s extremely clear from the BIS’language, that the concept of initiating a collapse is openly discussed as a policy measure. This was a direct recommendation to bring on the crash – or as they say so colorfully, to “bring forward the downward leg of the cycle”. More kabuki? But what else is fascinating is that just days after the BIS report was released, Janet Yellen seemed to counter the BIS in her presentation to the IMF: “At this point, it should be clear that I think efforts to build resilience in the financial system are critical to minimizing the chance of financial instability and the potential damage from it. This focus on resilience differs from much of the public discussion, which often concerns whether some particular asset class is experiencing a ‘bubble’and whether policymakers should attempt to pop the bubble. Because a resilient financial system can withstand unexpected developments, identification of bubbles is less critical.” What Yellen seemed to be saying — quite possibly in direct response to the BIS’s recommendations — is that the Fed isn’t in the business of popping bubbles, nor does it see a reason to intervene in their development. So to summarize: The BIS publicly recommended popping the bubble now… and Yellen said no. So what’s going on? We could take all of this at face value if we chose: The BIS playing hawk, and the Fed playing dove. And that might well be the case — as to some extent Yellen is still something of an unknown entity. But there is one more twist to the puzzle: Yellen has openly stated that she would not be offering clear guidance to the market as her predecessor had advocated. The age of Fed-glastnost is apparently coming to an end. So indulge us for a moment as we present another possibility: Yellen is going to orchestrate a controlled collapse. Or, at least one which we hope is controlled. There are political considerations to be made, however: The Fed, which has not only come under intense fire for overt market manipulation, but which is also deeply concerned with market perception, simply cannot afford to be perceived as an instrument of the market’s collapse. To be seen as the instigator of a crash could do irreparable harm to the institution. Pop bubbles? Who us? itself as a stalwart dove to shield itself from the public fallout of it’s orchestrated financial calamity. A particularly sound play from a political perspective in the event that things don’t go as smoothly as planned. One thing is certain at this point: An intentionally orchestrated crash is the direct recommendation of the BIS, per it’s annual report. That this action exists as a potential policy measure is now confirmed. The remaining question is: Would the Federal Reserve pursue such a policy measure openly, or behind the same curtains from which most of their historic policies were enacted. As we re-think Mrs. Yellen’s speech to the IMF, we are less certain that the Fed is as unwilling to intervene as Mrs Yellen would have us believe. Bringing forward the next leg of the cycle, may well be on the Fed’s agenda. END THE FEDERALRESERVE SCAM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Hedge Funds Shifting MoreAssets Into Gold by MARVIN G. PEREZ | BLOOMBERG | JULY 8, 2014 Gold is precious again. After investors sent bullion tumbling in 2013 by the most in three decades and kept dumping the metal earlier this year, demand is now up and prices are defying bearish forecasts. Money managers increased net-long positions for a fourth straight week through July 1 and holdings in exchange-traded products are climbing at the fastest pace since 2012. “Gold’s performance has proven the bears wrong so far this year,” John Kinsey, who helps manage about C$1 billion ($935 million) at Caldwell Securities Ltd. in Toronto, said in a telephone interview yesterday. “We look for further strength through the balance of the year.” While the latest government data point to an improved U.S. economy and Goldman Sachs Group Inc. and Societe Generale SApredict prices will retreat by year-end, inflation concerns and pockets of unrest are sending investors into gold as a haven. Prices extended gains after the Federal Reserve signaled earlier this month that it will keep interest rates near record lows and violence spread in Iraq and Ukraine. The bulls are being rewarded. The value of the gold funds rose by $4.6 billion this year as prices rallied 9.5 percent. The metal has rebounded from last year’s 28 percent plunge that was triggered by muted inflation and as investors shunned the metal in favor of equities. Gold has rebounded from last year’s 28 percent plunge that was triggered by muted... Read More Futures slid 0.1 percent to $1,316.20 an ounce on the Comex in New York at 12:35 p.m., after five straight weekly gains, the longest streak since January. The Bloomberg Commodity Index of 22 raw materials climbed 5.2 percent in 2014, while the MSCIAll-Country World Index of equities rose 4.9 percent. The Bloomberg Treasury Bond Index gained 2.8 percent. Gold Wagers The net-long position in gold rose 20 percent to 136,929 futures and options contracts in the week to July 1, according to U.S. Commodity Futures Trading Commission data published last week. That’s the highest since March 18 and up fourfold since the start of the year. Short holdings betting on a drop retreated 29 percent, a fourth straight decline. Assets in bullion-backed global ETPs increased by 12.6 metric tons last week, the most since November 2012. Holdings are rebounding after six straight quarterly declines that began before gold entered a bear market in April 2013. he U.S. central bank has kept its benchmark lending rate near zero percent since December 2008, even as it trimmed its monthly bond-buying program to $35 billion, after five straight cuts of $10 billion each since November. There is no need to change current monetary policy, Fed Chair Janet Yellen said July 2. Bullion jumped 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs at an all-time low. Mint Sales Gold sales from Australia’s Perth Mint climbed to 39,405 ounces in June, a four-month high. Sales of American Eagle gold coins by the U.S. Mint totaled 48,500 ounces in June, up 37 percent from May and the most since January. For the first six months of the year, the sales totaled 266,000 ounces, the lowest for the period since 2008. The 2014 rally will reverse as global economic growth gains traction, according to Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp. and the second-most accurate forecaster for precious metals tracked by Bloomberg in the past two years. Bullion will retreat to $1,150 by the end of the year, he said by telephone last week. Societe Generale’s Robin Bhar is the first-ranked forecaster. Goldman View Prices will drop to $1,050 in 12 months, Goldman analysts reiterated in a June 23 report, unchanged from their outlook at the start of the year. The U.S. added 288,000 jobs in June, bringing the unemployment rate to 6.1 percent, government data showed July 3.8, Gold futures dropped 0.8 percent that day, the most since May. “Precious metals had risen because of the short-term concerns about inflation as well as geopolitical instability in many parts of the world,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion in assets, said by telephone July 3. “As the global economy improves and the U.S. enters an acceleration of economic growth in the coming months, gold prices will reverse and move lower.” Combined net-wagers across 18 U.S. traded commodities fell 2.3 percent to 1.29 million contracts as of July 1, the CFTC data show. seven straight sessions through yesterday, the longest slide since December 2009.ntermediate dropped for Farm Bets Ameasure of net-long positions across 11 agricultural products slid 7.4 percent to 597,480 contracts, the eighth drop in nine weeks. Cotton fields in Texas, the biggest U.S. grower, are recovering as drought conditions recede. Recent rains will help send inventories to a six-year high before the 2015 harvest. Investors cut their bullish wagers 34 percent to 16,346, the lowest this year. The corn net-long holding fell for an eighth straight week, the longest slide since 2008. Prices entered a bear market in Chicago last week on the outlook for ample global supplies. Output in the U.S. will jump 2.8 percent to 14.314 billion bushels, the most ever, researcher The Linn Group Inc. estimated in a July 1 report. “It’s hard to see that if you have record acres and record yields, how prices can go up in the face of that,” Sameer Samana, a senior international strategist at Wells FargoAdvisors LLC in St. Louis, which oversees $1.4 trillion, said by telephone July 3. “We’ve had acres planted go up pretty substantially over the last few years, so it’s really a matter of the weather just cooperating.And it looks like it’s going to.” INFOW ARS.COM BECAUSE THERE'SAWAR ON FOR YOUR MIND
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