Fight the Fed!

Good old Andy, purveyor of the truth, the whole truth and nothing but the truth. Andy is not like those others he sneers at; you know, those who either have an agenda or are so dull witted, they actually believe the nonsense they spew. Andy is far too pure of heart to allow for the fact that he is employed to drum up business for a company that wants to sell us precious metals, to get in the way of him telling us the TRUTH.

Good old Andy. We need more like him. Why just look at all those lovely charts he provided us with to demonstrate just what a great investment gold has been compared to stocks since Oct. ’07. Who cares that gold earns no interest and pays no dividend when it has so convincingly crushed the stock market over the last 5 ½ years.

But hold on a minute. Could not those charts be saying something quite different? Let us give Andy the benefit of the doubt here and assume that the choice to start the comparison in Oct. ‘07 was nothing more than a happy coincidence and not designed to illustrate his point. When seen through my eyes, all of those charts are quite clearly saying that stocks or gold, it would have been good to sell in the days leading up to the collapse of Lehman Bros. And those charts also very clearly show that if you put that cash back to work in Jan. ’09, one would have done better in the stock market.

The charts do not lie. And remember, I was not the one choosing the charts to go along with the narrative. Andy choose them. Andy either has an agenda or he is delusional. You can decide which better applies. History shows that you really cannot fight the Fed. If they want to goose the markets, working fist in glove with Reagan’s creation, the PPT, they will goose the markets. We have seen it in action with the Dow doubling despite an absence of real economic growth.

We cannot fight the Fed. But we need not fight it. It is doing a good enough job of killing the system and hence itself, all on its own. Until it succeeds in killing itself, we can go with the trend until it becomes too perilous to continue riding the wave.

Of course, as its death will make for great social upheaval and as the precise moment of its demise cannot be predetermined, it is certainly wise to have insurance in the form of gold and silver. My own best guess is that there are probably a few years of life left in the Fed’s kabuki show before we need really start thinking about funeral arrangements. During that time there will be scads of hot money coming to the Dow not only from the Fed, but from wealthy Japanese investors looking to have their wealth denominated in anything but the rapidly sinking yen and from euro users anxious not only over the safety of their money in banks, but the vitality of the very currency itself. That will keep the dollar strong. It will also bring the end closer, having to satisfy the almighty bondholders with “expensive” dollars.

The end will come with the death of the biggest bubble of them all, the bond market. It is the one to really watch. It is already on life support and would instantly die if removed, you know, the ZIRP and QE forever. Both are very strong poisons to a bond market, like chemo is for a cancer patient, With chemo, the doctors at least know that a little bit might cure you, but too much will kill you before the cancer can. The Fed is now in the unenviable position that it cannot end its deadly programs without instantly dying, but knowing that by continuing, they will eventually succeed in driving away the last investor.

So, if you believe that Andy really is telling you the complete truth through unjaundiced eyes, take the advice offered at the conclusion of his rant and call one of the friendly brokers at Miles Franklin. As Frank Zappa might have said: “Call it collect. Call it direct. But call it today.”