Bernanke's FED Remarks and the Bulllion Market

It looks like we have Mr. Bernanke's remarks today to thank for the sudden drop in bullion price:

http://www.kitco.com/reports/KitcoNews20120229AS_goldupdate.html

In the past almost every time he has opened his mouth in a policy declaration, the metals have surged. I don't have specific statistics on this, I'm sure Zero Hedge is going to be on the case, though. It looks like the unliklihood of QE3 was the reason this time....

 

Log in or Sign up to hide this ad.

Hopefully it falls right back to about $20

 

http://www.zerohedge.com/news/ron-p...vernment-because-you-lie-them-about-inflation

 

It seems like that is what all the alarmists wanted (no more QE).

 

They don't have to QE3 yet. The ECB just did it for them by injecting $713 billion into their banks.

The global money supply is still growing, so I'm looking at this as a buying opportunity.

 

Yes, all precious metals fell because Bernanke made no mention of QE3. However, he did reaffirm that rates will be held at their current (near zero) levels. I still hold to my prediction that gold will hit $2100 this year.

 

A lesson in how foolish people are. One man makes a statement, (which may or may not be believable) about a decision that can't fix the ongoing crisis either way, and people rush to sell PMs like they have been given some divine knowledge. Laughable.

 

Bernanke is a pawn.. A front man.

 

amazing how much power one corrupt man's words have

 

I don't think Bernanke is corrupt. He is trying hard to prevent the economy from sliding into a depression. He is making the most out of the cards he inherited.

 

This is nothing new...it's called "jawboning the market" and it's just one method to drive prices down.

This is an election year and energy prices are heading higher...not good for incumbents. Steps WILL be taken to get energy prices down. If other commodities get in the way...that's just collateral damage. Understanding these pressures can make you some money! :thumb:

 

where's the money to be made right now?

 

I think it's funny that people think mere words from Bernanke caused this drop in bullion prices. For days we have had it stated here that silver will continue to rise, unabated due to his policies and yesterday, he did not announce any change in said policies. Things are as good (or bad) as they were on Tuesday. For example, IBM, a big beneficiary of Obama progressive economic stimulus via printing from the Fed, announced that it is laying off another 1400 people in the USA on Tuesday.

The only thing that Bernanke can say, which he can't say because they are on the fiat death spiral of their own creation, is that he is raising interest rates, ..... substantially. This is the only thing that will bring gold and silver back in line.

If one truly believes that just his words can affect bullion prices, then you should get out of PMs now. Else, if you truely believe it's fundamentals of the economy and how it is being handled, then his words are irrelevant. You guys should be happy because this is an opportunity to get some more bullion for cheap, compared to where it's going.

 

This is what ZH said, but I disagree. If the drop was due to QE3 being priced in then it would have also hit the stock market.

According to:
http://jessescrossroadscafe.blogspot.com/2012/02/today-is-first-notice-day-for-silver.html?m=1

This is why I contend that the paper contracts are skewing the price discovery mechanism.

 

Silver had been up a bunch the past week on speculation. The stock market hadn't risen nearly as much.
So it would be normal for silver to take a larger hit on the news.

 

I agree, the speculation goes both ways, and silver was way up. However, it was not way up in anticipation of QE3. It was because of margin requirements being lowered. If lack of QE3 was the reason then the stock market would have dipped more than half a percent, where as silver dropped 8%.

 

Well I just don't know....I respect yakpoo and fatima, buy now or wait? :binky:

 

John Maynard Keynes [regardless of what you think about his economic theories] was a brilliant investor who made a lot of money for himself and the college endowment fund he managed. He didn't use fundamentals, or charts, or even his own economic theories to invest. He said something to the effect that the stock market is a beauty contest. Stocks are the contestants and investors are the judges. Except that in order to win the judges aren't trying to pick the contestant that they think is prettiest. They are trying to pick the contestant that they think the other judges will think is prettiest. And when all of the judges are doing this at the same time, strange things can happen to the results. So when the winner turns out to be a contestant that nobody in the audience would have picked if they were a judge, it will appear to them that the outcome must have been fixed.

I think this applies to PM prices. Enormous amounts of money are moving into and out of this relatively small market, not because of the fundamentals, or technical analysis, or what Bernanke says. The speculators move the money based on what they think the other speculators will think about the fundamentals, technical analysis, and what Bernanke says. And enough of them are playing this game that you end up with exaggerated price movements, and a lot of armchair gold and silver "experts" arguing over the reasons for each move. In the end, the chaos appears to some as manipulation, because no other explanation fits.

So to be successful at this game, you have to correctly guess what the smart money players believe the other smart money players are doing, while at the same time fully recognize that all of the smart money players are doing the same thing to each other.

And it is fun to watch so many people absolutely certain that they have this figured out.

 

Sounds to me that if you do what's in your first sentence, then you have accomplished what is in sentence # 2. So when you say "fun" do you mean it to be that you are happy that people are successful, or that it's funny because you believe it to be impossible.