Bernanke will keep the PM prices high with QE3

"Bernanke Doesn’t Rule Out More Fed Bond Buying to Aid Economy"

QE1 $1.7 trillion
QE2 $ .6 trillion
QE3 ????

There was estimates that the debt service on the US National debt could triple by 2016 to over $400 billion/yr.

Well, since Congress hasn't a clue about cutting spending on the 85% of the Budget considered "entitlements", the Fed has decided to keep buying the debt sold by the Treasury...aka QE1,QE2,QE3...

QE is a polite way of saying currency devaluation, which means that PM prices in US$ will increase in order to maintain their purchasing power around the world.

Silver's high today is $35.02; Gold is $1441.30 Thank you Federal Reserve! :devil:

 

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Be careful what you wish for. You have to live in the world your mind creates.

 

Very strange comment...What did I wish for?

If I/ we could live in a world that MY mind could create it would be a far more peaceful, happier place than the "real world".

 

What does QE1, QE2, QE3 mean? Is that the same as 1st quarter, 2nd quarter, 3rd quarter? As stated in many of my posts, I know quite a few things, however there are so many more things I don't know.

 

Quantitative Easing - creating massive amounts of money out of thin air with the hope of getting the economy back on track.

 

QE1... please see :

http://www.csmonitor.com/Business/ThinkMarkets/2010/1018/What-s-this-QE2-all-about

 

QE1... please see :

http://www.csmonitor.com/Business/ThinkMarkets/2010/1018/What-s-this-QE2-all-about

 

You thanked the Fed for actions that did not warrant it. So what you believe you want and what your mind is attracted to is out of sync, that's all. Just an observation.

 

before QE2 was announced in late Aug 2010 ... silver was around $18 to $19 I believe

Now 6 months later silver has nearly doubled to $35

With continued money printing ... $50+ is not far away

 

If one may enter a note of caution, I believe ( for what it is worth) that every price increase of silver above $20-26 increases risk strongly. If the risk is acceptable to you, I respect your belief of $50+, but for others that may just be entering the silver market, they evaluate the risk financially.

Jim

 

Which.....there is nothing left here to get back on track. What we're seeing right now is pretty much what we've got left and what we'll be lucky to hang on to going forward.

As I recently have been bearish on this topic, I tend to agree with you Jim. Because nobody really knows what the immediate, direct correlation SHOULD be between the price of silver and the dollar. I don't think anybody knows what's real any more. Maybe silver should be $200 right now? If the truth was known, who knows? Maybe it should still be back at $15? Who/what entity is driving these prices based on what?

We can kind of pretend like we all know what's going on in the world and exactly "how much China is buying" on a given month but who knows for sure. There's a lot of "reporting" that may not be founded on pure facts out there too. Especially concerning World news. Often times stories are correct but they have the numbers wrong.

I guess I"m just kind of stuck in the wait and see crowd for now. If people are buying like mad now, I really can't blame them, based on the original quote I posted here. We are in a never ending downward spiral of money creation until something drastic is implemented to fix it. Maybe $35 is a huge bargain. $17 sure looks cheap now!

 

Have to agree. Whatever you're gaining with a silver hoard, you're losing (most likely multiples of) in the rest of your every day life transactions/investments.

 

I agree. If bullion were rated like stocks, they be constantly in the loser category. Just seems like a lot of people here see the economy as a bottomless pit of doom. I, personally, think it's better now than it's been in 10 years. The bubble we experienced in the 90's doesn't set a precedent for normal or future stability. If you're one of those who think the government is printing money day and night to feed a supposedly bankrupt economy (which is an oxy moron), just remember that governments have been doing that for the past 2,500 years, or more.
Guy

 

Guess you don't understand the Devil icon and sarcasm. If you read everything that I wrote rather than just the last two words you might have understood that I feel this is a problem. The price of gold and silver are simply indicators.

Congress passes an $858 Billion tax reduction bill in December, and then in February they threaten to stop paying the Gov't bills if their $61 billion spending cuts are not passed. Duh ! The Congress is so out of touch that it is very scary.

Congress takes a Big reduction to income and then they come up with a spending offset of less than 10% that will reduce jobs by 700,000...more income reductions. There are implications to their actions beyond simply cutting spending.

Congress with all their grand speeches has done nothing to balance the Total Federal Budget.

The Federal Reserve and their QE, which is a bad thing, is the only thing keeping the US financial system from a complete collapse. Yes, I say Thank You Federal Reserve, not because I like what the Fed HAS to do, but at least The Fed understands how big a financial hole Congress is digging the Nation into!

The Fed is trying to buy us time, hoping that Congress wakes up before time runs out.

 

How much time do you think we have left? A decade? A couple decades? I guess I'm just wondering how much longer this mess can continue.

I have some people tell me how stupid it is that they want to cut govt spending because they can't. They say everything has to be funded no matter what. The govt. has to keep spending, even if that means creating the wealth out of thin air as they do now. I ask them if that is ok to do. They say Yes, of course.

So my natural response is why don't they create enough wealth to pay off ALL the debt, govt. and consumer as of today's date? Wipe the slate clean for all of us. Then all of a sudden the answer is, "no." Well, we can't do THAT. That's not ok. But a 'little' for governments sake IS ok.

I just have to laugh. Society has come to have a disconnect with what the government is. They don't think of it as my responsibility, your responsibility. At the federal level, it's always somebody else's money or, it's not even considered real money at all anymore. A govt grant is just manna from heaven.

 

I remember just 2 months ago a large hoard of people on this board saying silver was in a bubble and way overpriced at $27 and that it would soon crash back to $19 -- and a boatload of people saying they were selling their silver into these obviously overpriced prices. Since that "bubble" price of $27 was broached, it's up another 25% to nearly $35.

With Bernanke completely ignoring all signs of inflation and the FED with their pedal to the metal with QE2 ... I think $50 silver in 2011 is likely. Did you guys know that the inflation adjusted price of silver back in 1980 was somewhere between $128 and $365 (in 2011 dollars) an ounce depending on how you measure inflation.

So when you look at the price of silver in that context ... that silver is selling for 1/4 to 1/10th of the price (as measured in 2011 dollars) it was selling for at the peak in 1980 (and yes I realize the Hunt brothers were the reason silver soared that high in early 1980) silver looks cheap at $35.

Silver Price Charts Adjusted by Inflation

 

Enjoyed your post. I'm hearing more and more that QE3 is unlikely (CNBC, Bloomberg) but of course nobody knows for sure. Instead I am hearing/reading that QE2 may be stretched out over a longer period of time, maybe until the end of the year. In the following article Bill Gross talks about the QE2 program and what it means for the economy:

http://www.cnbc.com/id/41867238

With the Fed buying 70% of treasury bonds, no wonder the yield has remained so low. It is also amazing the impact that stimulus has on equity markets but if the QE programs have merely masked not cured the underlying economic issues, the results may be dire. Not really new news but Mr. Gross is a heavy hitter and I generally respect his input. Equity market traders are all over this juiced up market but I have a feeling that many will exit and start shorting the market as the stimulus dries up.

Regards,

Bluesboy65

 

There were other differences also in the marketplace. Even telephone trading was very difficult. Very few people considered a need for PM as a portfolio sector and precious metal prices were futures and delivery based, mainly for industrial or jewelry use. The Hunt bros are often portrayed as total criminals, but IMO, they were small potatoes compared with some on wall street and bullion marketmakers today Their ingeniousplan was to corner the market, and was very legal (IMO) when they started. The common investor had no real way to invest in silver, except to buy and sell physical items such as coins, candlesticks, flatwear, etc. As Hunt's total contracts increased and their leverage became extreme, the exchange changed their margin and limits. Hunts couldn't provide or borrow enough to cover and were forced to sell their contracts into a plunging market.

Today their contracts would be covered by entities that were not around then. Bullion suppliers to the public, ETFs such as SLV, etc. Internet trading of contracts is now worldwide, basically 24hs a day, and fluctuation of prices can occur overnight in Asia, and prices not realized until we awake and our exchanges open.

I am not debating that silver may reach $50 this year, as it might, but instead the volitility and risk factors. Few analysts can do the depth that requires multi continents demand/supply studies to estimate the true "basic value of silver" without external factors such as fear, etc.

To me it is not important to even guess the price of silver at the end of the year, as I expect to be in and out of that market several times by the end of December if I survive the market
good luck.

Jim

p.s. As an interesting note, a decade or so, the Bass bros. bought a lot of land in Imperial county that used water from the Colorado river. Their intent was to fallow the land and sell the water. Even though this appeared legal then, laws and federal regulations were nudged to make this less feasible. Someday, maybe there will be a commodity fund for fresh water
http://www.hcn.org/issues/269/14589/print_view

 

is this figured off the inflated bubble that the hunt bros. made? I wouls say it only matters if this is just another manufactured bubble like that...