QE3QE∞ is HERE!
- Fed to buy $40 billion/month in MBS!!
- Fed will increase purchases over $40 billion/month if required
- ZIRP extended to 2015
- QE TO INFINITY……..AND BEYOND!!!
- GOLD & SILVER GO VERTICAL AFTER FLASH SMASH JUST PRIOR TO ANNOUNCEMENT!!
- Silver with a last of $34.94, gold to $1773!!
QE2 was $900 billion…and it was announced nearly 2 years ago. Roughly $450 billion/year if averaged by time until QE3 was announced.
Today’s announcement equals $480 billion/year, with the explicit statement that it will be INCREASED FROM THIS BASELINE AMOUNT AS NEEDED!!! $480 billion a year is the NEW BASELINE QE!!
Plus ZIRP extended, plus Twist extended, plus every other acronym for money printing Bernanke could pull out of his a**!!
Folks, This IS the BIG ONE!!! Gold and silver have responded accordingly. New all-time nominal highs for BOTH metals are now locked and loaded.
For those who have not sufficiently backed up the truck we suggest you consider calling SD Bullion now at 614.300.1094, as this train is DEFINITIVELY LEAVING THE STATION!!
Bernanke’s press conference can be seen LIVE at SD at 2:30pm EST
Full FOMC Statement below:
For immediate release
Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_silv.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/live/s_gold.gif)
F*ck yeah!
Stacked just before the announcement as well:)
Great Call Doc! Now that we know QE3 is here JP Morgan might be in for some trouble with their Silver short. Both happy and saddened by the announcement. Hyperinflation 2014.
Hello inflation
Goodbye dollar
Silver just sliced through $34 like a hot knife through butter!
May the reverse crash begin.
Mystery Solved – Jeffrey Christian is a better contrarian indicator than GS/JPMC
I’ll say this again. He’s not a good contrarian indicator. In order for an indicator to have real world meaning, it has to be more than just a stopped clock that proves correct two times a day. Christian is bearish on gold and silver 95% of the time, and therefore, looking to him as an indicator has some significant limitations. There’s value to be seen when the rising number of perma-bear voices get extra airtime in the media. I’m not dismissing that aspect of how Christian’s voice can be interpreted in the context of the overall market zeitgeist. But as a stand-alone perma-bear voice, don’t give this goofball more attention. He already gets more media attention than he deserves.
How high will gas prices go? It ain’t a trillion, but it is QE Lite. And in public, too.
Buhbye, dollar, it was nice knowin ye.
To the moon and beyond!
Good call, Doc & Co.!
I hereby retract my earlier comment in “The QE Control Room” thread, in which I said there would be no QE3.
Now to Plan B: Run a Craigslist ad to dump my ‘Mammoth cull collection’ consisting of a stack of slick Standing Liberty Quarters, worn-our Barbers, dateless dimes and holed halves.
With a fresh injection of kool-aid, the sheep will be rushing to buy silver before it goes even higher, so now it the time to convert the rejects into fiat for immediate use.
Aren’t you all glad that you bought when it was in the $20’s?
“Aren’t you all glad that you bought when it was in the $20’s?”
Try single digits, noob
JK.
Since you are retracting earlier comments, are you ready to recant your
MBBT?
Mammoth’s Bon-Bon Theorum, which states the earth’s core is full of yummy, oozing HYDROCARBONs?
LOL
Just kidding, Mammoth! GIDDY about predictions coming TRUE!
I’d hang on to the junk silver, this could be a long ride UP…
Be careful when you sell!
We need a “best time to sell thread”
hopefully this is the day of reckoning for those who have dealt treacherously with us by naked shorting gold/silver! had to know your day was coming eventually, crooks!
Again, QE3 is not the fuel that will cause this rocket to get off the pad. When there is some kind of pressure placed on the manipulators to the point that silver can have some sort of normal reaction to supply/demand then the fundamentals will kick in and for the first time in silver’s history its price will stair-step its way past the 3 digit price.
Yeah!!!! This thing is skyrocketing big time!!!
Today, we may see for the first time in 30 years a $2.00+ rise in the silver price.
SILVER
09/13/2012
13:20
34.64
34.74
+1.33
+3.99%
32.60
34.74
Actually, it just did… last 2 figures are low and high for the trading session. It was lower than 32.60 before the London Fix kicked in as well, I saw a 32.53 earlier.
I think it may top 10% FOR THE DAY , IMO
It looks as though we’ve peaked and are now on the downslope. Algos gone wild?
Now $34.57 as of 1:40 p.m. EST.
Maybe! It may plateau, or drop off a bit, back up over $34.70′s. I look at how high it is compared to the daily high, and we are still close to that figure of 34.94
Our silver value is going up today for sure. But until my wife quits her job, we have some 401K money in DIPSX and PTTRX. Even though these funds are heavy in MBS and TIPS, I’m guessing we won’t see any benefit from this. I should have listened to Warren Buffett and kept our potentially vaporized funny money in the stock mutual funds instead. I don’t understand markets enough to understand why stocks go up while MBS and TIPS funds stagnate, though the Fed is directly buying MBS & bonds.
@silvermeddler: If the Fed wasn’t buying Treasuries and MBS the size of the loss you’d see in those funds (especially anything focused on MBS more so than TIPS) would be large. Interest rates are being artificially pushed down, which pushes the price of bonds up — and pushes the value of those funds up. I’d give some serious consideration to getting the heck out of those things, the sooner the better. Most 401k structures will permit holding funds in a money market fund. Heck, even a pure TIPS-focused fund would be better than having anything “heavy in MBS.”
Time to buy a loaf of bread, get the wheelbarrow!!
WOOP, THERE IT IS!
UndeRGRound, that comment I made the other day – about the Earth being a gigantic bon-bon filled with light, sweet crude – was just a tongue-in-cheek sarcastic comment about the abiotic theory and no, I will not retract this.
Your suggestion of a ‘best time to sell thread‘ is a good one. Why not write something up as a guest-post and email it to the Doc? This could become a lively debate, as there are those who have stated here that they will NEVER sell their stack.
Cheers,
Mammoth
I had Kcast desktop running in the background. As soon as I saw that vertical jump, I knew without even looking online that QE3 was announced. A good day for silver & gold, a lousy day for the $USD!
So if anybody watches Pawn Stars they know the Old Man has a 1 ounce silver coin made with his face on it and they sell it for 65 bucks. Now if we made a 1 ounce coin with Bernankea face on it, who would buy it and for how much? I love silver!
Jailer 08, there may not be a Bernanke coin out there, but the Moonlight Mint made a coin along those similar lines. Here is a link for you to check out: http://www.dc-coin.com/2008hardtimestoken536minted-2-3-1-1-1-1.aspx
I will retire to the dunce room…. I can’t believe they just fugged over JPM. this is going to be a huge short squeeze..
Am I the only one who does not see this as the massive QE announcement we were expecting? Only $40 bil a month? Most speculation around the site was between $500-$800 billion.
At this rate we need 20 straight months of QE to reach the expected target. Be ready for PMs to fall back some later this afternoon after the initial emotion fades.
Don’t get me wrong this is good for PMs long term and I suspect we will continue to see gold and silver rise in the coming weeks, just not the rocket launch many here are expecting.
@LastStraw – QE2 was $900 billion…and it was announced nearly 2 years ago. Roughly $450 billion/year if averaged by time until QE3 was announced.
Today’s announcement equals $480 billion/year, with the explicit statement that it will be INCREASED FROM THIS BASELINE AMOUNT AS NEEDED!!! $480 billion a year is the NEW BASELINE QE!! Plus ZIRP extended, plus Twist extended, plus every other acronym Bernanke could pull out of his a**!!
This IS the BIG ONE!!! Gold and silver have responded accordingly. New all-time nominal highs for BOTH metals are now locked and loaded.
@LastStraw: Actually, those of us that were talking about $500 to $800 were right. We were talking about numbers that would approximate the total program value, not the monthly value. My forecast nearly nailed exactly what was announced (click here to read what I wrote). I noted there would be no explicit limit as to time and value, but that the dollar value that would be put out before the markets would have to be at least in the $500 billion range for the markets to take the program seriously. That’s what $40 billion per month with the note that it might be larger if needed approximates. 12 months times $40 billion = $480 billion. Clearly, the Fed was shooting for messaging that would have people thinking about $500 billion annualized, basically exactly what I predicted as the lower boundary of the program. And again, this is just the lower boundary. In the long-run, they’re going to end up printing MUCH more, due to the duration of the printing taking place over a longer period of time than 12 months, and due to the sheer dollar value being larger to deal with the intractable bond market mess they’ve created. I also stressed that MBS was going to likely be in the picture — and I don’t think anyone else was including that in their forecast on this site. But don’t be fooled. The Fed is just focusing on MBS for political expediency. They’re going to be buying Treasuries as well because creating new money for MBS purchases simply creates the opportunity for creative Fed balance sheet accounting to conduct other operations – namely, direct purchase of Treasuries too.
YUP!!! $40B is the starting point, and OP. TWIST overspent, and there is the rumored $12T “unannounced” Euro Bailout,
so you can assume they announce one thing, then actually “overspend” LOLz
Dimon must be hitting the sauce bigtime and ripping into Blythe,lol
ugh, the mental picture you just painted…
So the guy caved in to pressure and decided to do something but I really don’t see how this is going to help the guy out of work. He’s been spending billions per month already and things have gotten steadily worse. Now maybe in the last month he loaded up on silver and gold and decided he wanted to retire and live the life of a bullion man.
I’ll take anything he wants to give as I already figured the dollar was on its way down and has much further to go. So having the stack is always good and just made better. So JPM has a lot of shorts to cover and this leads to Mr. Murphy’s comments of JPM coming into public headlines soon. This will certainly help that. So what devious plan do they have up their sleeve? They have to have something?
Gee iam glad i did not listen to Christinson of the cftc ,pun intended.
WOWWWWWW!!!!
Looks like JPM and the Squid were honest this time, and Jeff Christian was a liar – part of that is confusing
Here the deal as I see it. Right along with Mammoth, I would have bet money on no QE until the blowup in the ME yesterday. The potential for $120-150 oil and the Europeans doing their own QE tap dance with the German court saying yes and no with same breath, leaving Greece to fail and go bankrupt and Spain in systemic bank and central government failure now creates a very fluid environment.
Ben got trapped in the last two days so it could have gone either way, but the situations are changing very quickly on the national and international level The Middle East could be a real game changer.
So Bernanke blinked with one eye.
$40 billion a month could change to $100 billion a month in a NY second if things get dicey. This is open ended; QE to Infinity seems to be assured. The Fed deficit was just a hair under $200 billion in August. If that continues and it will not get better any time soon, the USG is going to have to finance $1.5 trillion in the new fiscal year starting October 1, 2012.
That is going to be really hard to fund given that no one is going to buy ZIRP USG securities when our debt will most assuredly get downgraded at least one notch within 4-6 months.
The jackasses in DC will never deal with the debt, sequestration, fiscal cliff or a solution to the deficit. They are gridlocked in with a paradigm of mistrust, hate and political manuevering and grandstanding that will extend way past the 2012 elections. I predict that Romney will win and that is going to pitch this country into a period of tremendous uncertainty due to the fact that the Progressives just lost the last and best chance of getting Obamacare permanently embedded within the fabric of the government and health care system thus completing their total control of the economy and US sovereinty. The hate and revenge of that losing side will only make attempts for reconciliation much less likely.
The repercussions of Obama losing will result in some serious civil unrest. The markets will roil due to fiscal uncertainty.
Debt loads in the Treasury could become insurmountable and unfinanceable if you couple that with the rolling disaster that the Euro zone can kicking PIIGS debts into the Aegean Sea. These events will help cause massive declines in the profits and earnings of the S&P through hard recessions. Since 20% of S&P profits are Euro zone. those large declines in earnings will cause massive drops in our equity markets along with increases in our interest rates precipitated through the loss of our AA rating (with negative outlook). Several sequential rating drops in Europe due to their banking and debt problems that can’t be remedied by printing will continue the theme of continuing economic declines in the Euro zone, washing up to our shores.
The recessions and depressions rolling through the China zone, Japan (with its own fiscal cliff), and Europe declines coupled with the US recession that will hit hard early next year will make it nearly impossible to sell our debt to anyone but the Fed. That will create and force QE to Infinity on steroids with debt financing out of thin air. That guaranties our pocketbooks, taxes and inflationary damages will continue well into the future years. Ouch.
Very well stated, AGXIIK. IMO that is “the best” that will happen, maybe with minor improvements here and there, but I personally have a more “jaded eye” for this particular scenario, and here are the (few) differences:
1. The QE was (probably) a foregone conclusion, based _more_ on domestic factors, which are internationally influenced, yes, but domestic nonetheless. I just think this “announcement” was made publically since international factors FORCED it to be above board. That is, at the risk of losing the market’s confidence in the situation, the “already assured” actions of the Fed had to be very PUBLIC.
2. QE being “at least” $40B (and I think your $100B is a great guess) is to try and insure President Obama’s re-election, and IMO they can manufacture enough “apparent short term prosperity” to get the faithful to go, one more time, for the mantra of Hope & Change.
3. (here’s where I proceed well past your analysis’ time frame) I would further FEAR that you “got this right” above, and find us wallowing forever in the described “perpetual Depression” or an “American Lost Decade” (ala Japan) but one that DOES NOT HAVE a final “CRASH” or “CREATIVE DESTRUCTION EVENT” (big Bix Weir fan here!) that is Crucial for US Prosperity. THAT would be the quickest, easiest, best way way to start over, but a Big Reset would also spell DOOM for the Bank$ter$ for all time. That is why I think they will let us down easy, if at all possible… pretty gloomy future, if that is how it happens :(
Usdx dropped below 80 Today. Currently at 79.21. It will most likely be at 70 by this time next year maybe lower
40B per month in MBS. Hmm . And – who owns those Mortgage Backed Securities? Why – the Big Banks of course. Whose really getting bailed out, here? It sure isn’t the economy or the unemployed.
I don’t see anywhere as to the quality of MBS the fed is promising to buy. To me it looks like B.B. laid out a blank check to the banks so they can just wrap up any and all future mortgages that go bust into a MBS. The the feds (a.k.a. us) just suck it up. The banks can keep all the good ones who are still paying their bill, and dump the crap. With that in place, the banks can loan to pack rats to build a nest and not worry about the consequences.
I wonder how long till we’re talking about the possibility of QE4.
@tallen: Never. The counting game is over. It makes for bad PR and even worse market psychological warfare. QE to infinity has been going on all along. But ten years from now, people will look back to Sept. 13, 2012 as the official birth of QE to infinity program.
^^^^What HE Said!!!^^^^
Unless they Stop QE3, there is NO NEED for QE4! They just have to keep it going, it is open ended…
Plus, even if they do not do any for a month or longer, without an announcement of cessation, QE3
is still in force AS LONG AS IT IS DEEMED NECESSARY…
Or, in their own words:
… and employ its other policy tools as appropriate _until such improvement is achieved_ in a context of price stability …
(or lack of inflation) This last part (price stability) is where they “step on their d*ck” because it is ENTIRELY INFLATIONAL to embark on a course of endless Quantitative Easing!
Even “Lord Keynes” <sic> knew his policies limitations, in their own context!
UNLESS this means that “da Fed” will abandon the ZIRP and raise interest rates
to quell Inflation, that SURELY will result. But the statement contained a continuation
of the current ZIRP, did it not?
How do people here see this affecting the owners of the properties ‘backing’ this? How much of this debt purchase is related to people’s homes? Are these mortgage backed securities on fixed or floating interest rates? Could interest rates be pushed higher forcing people to sell their homes?
EXCELLENT POINT! It may be beyond the Fed’s “direct control” but I am sure it could be arranged. They can directly affect ARM’s through their prime rate increases, but fixed rate mortgages are a different story, unless there is a rider for a toxic or troubled loan in this MBS buy-back plan, where it becomes an ARM when the Fed owns your mortgage.
BUT, and this is where Murphy’s Law comes in, the Fed would strive to maximize income through this arrangement, while producing the FEWEST FORECLOSURES, because foreclosures drive DOWN the overall market values, and make more assets & mortgages TOXIC, or “underwater”, so the plan at that point becomes self-defeating in the overall scheme of “DESIRED EFFECT”. This is also the ULTIMATE END that I Predict, and common sense dictates!!!
Just my 2oz worth…
As long as the ‘Crooks’ are in control who really knows what will happen in the US ,but it’s the non-aligned Countries that will cause the collaspe of the USD ..IMO
If the sellers of MBS, peddling junky loans at best and sold to the Fed by the big banks ridding themselves of this paper, the Fed made or will make it clear that this $40 billion a month must be used to reinvest in or buy treasury bonds since no one in their right mind would buy these unless they were under some sort of serious persuasion, whateven compulsion that would be.
@AGXIIK, @undeRGRound, and others…
It came after the German constitutional court declared the ESM a go. It’s the same idea. In essence both the ECB/ESM and the FED have set them up to be not only the lender of last resort but also (and logically!) the buyer of last resort. The ESM needed lots of (awfully fascist) legalese the FED of course already had it. The end of souvereignty has passed.
Now I don’t think talking about QE ad-infinim is the same as doing it, but obviously that’s where it will end. Same in Eurodisneyland, with their ESM. Interestingly, they just opened a branch of the ICC in The Hague. Now ppl can be prosecuted for financial crimes against humanity. Say Assad. Not the ESM prople. All of them are exempt to any legal trial.
Guess we’ll just have to burn them at the stake then.
Anyway, PMs up, great. But don’t forget talk is just talk and QE was already happening. It’s the numbers and the timelines and the credit crunches that make the actual defining moments. You know, like rubber meats road. Those sort of moments.
Best all,
R3K
Anyway, PMs up, great. But don’t forget talk is just talk and QE was already happening. It’s the numbers and the timelines and the credit crunches that make the actual defining moments.
I think you will see I said something to that effect already, and I believe operation TWIST never actually stopped, plus the $12T (if it happened) is an ongoing thing. (you know, the unannounced Euro-Bailout) Totally a function of CYA, or as it’s called FIA, the legal name is Freedom of Information Act. Then they say “we told you all about it” (True!) but in such a way as to simply “cover their a$$e$” and keep it shrouded in mystery…
Gosh, I hope no one of any real power & importance sees these post we all throw on here… We would ALL be on a hit list!
Here comes hyperinflation, nothing will stop it now.
so I assume the TBTF banks are the ones that are holding these MBS’s, and this QE3 is bailing them out.
Banks get dollars
Fed gets toxic mortgages
I know I’m missing something……any light shed on this would be welcome
Darn it! I wanted to stack some silver before the announcement, but my local coin shops ran out of silver. But, I still haven’t completely lost my chance to stack some silver since I had the chance to buy some junk silver.