Eric King:  “Bill, you did a fantastic job two days ago of noting that physical gold was being looted once again from the ETF GLD.  You also repeatedly warned that you were very concerned this had taken place directly in front of the upcoming Fed decision.  You were suspicious of the raid because you believed that metal was going to be used to smash the price of gold directly after the Fed decision and that’s exactly what we have seen.  What are your thoughts now?”

Kaye:  “Thank you, Eric, but the bad news is the bad guys are still in charge.  That was reflected with yesterday’s decline after the Fed decision, and once again today.  We have the biggest POMO of the year today....

Continue reading the William Kaye interview below...


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“So part of yesterday’s stock market move, which was in the opposite direction of the electronic algorithms that pushed the paper price of gold lower, was probably just front-running what is the biggest purchase of Treasuries and mortgage-backed securities all year.   Of course you have to ask yourself, was it programmed that way, or is this yet another coincidence?  I’ll allow your readers to figure that one out, but I think you can guess where I come down on this. 

As it relates to the direction of the price of gold, yes, I did get that direction right.  The interesting thing here is the statement itself does not really justify the movement in the price of the metal because, actually, this was a dovish statement.  Let’s take it apart:   You are removing a pretty meaningless $10 billion in additional stimulus, which really wasn’t stimulating anything other than the capital markets -- equity and to a lesser extent fixed income.

It wasn’t leaving what is a closed-loop of Wall Street and the banks.  So at the end of the day, Wall Street wins by buying targeted securities in advance, that are well advertised, and then selling them to the Fed at a profit or a markup.  They then reinvest those proceeds in a narrow range of securities, including equities.  Then they rinse-and-repeat, with the excess liquidity being stored as excess reserves.

So at the end of the day, it’s just one big closed-loop that serves Wall Street and helps indirectly drive property values in Greenwich, Connecticut higher.  But it doesn’t do anything for Main Street.  This is why there has been so little movement in the Labor Force Participation Rate, and other metrics that are actually important to the real economy since the lows in 2008.  So this whole scheme has been a huge failure.  And shaving $10 billion off of the $85 billion each month is not going to do anything.  To be honest, I think everyone knows this. 

More importantly, and this is the dovish part of the statement, is, ‘Forget about what we told you about 6.5% unemployment that we targeted for the Fed to begin to engage in a policy of getting off of zero bound interest rates,’ which they are theoretically getting close to because so many people have permanently left the workforce, ‘because we are now telling you new guidance:  We (the Fed) intend to extend this program, in all probability, well past that point.’

Now there is no benchmark.  It’s not 6.5%, 6%, 5.5%.  So what they’ve replaced ‘QE-to-infinity’ with is a ‘zero-bound-rate-to-infinity.’  ‘It’s zero-bound until we tell you otherwise,’ and they are really not giving the market much in the way of criteria to make a judgement on that.

What’s interesting is we now have this paradox where the US dollar is a pretty dodgy fiat currency, yielding nothing for the indefinite future.  And gold, which is nobody’s counterparty, that is not dodgy and has been a store money and wealth for thousands of years, continues to get hammered.  So it’s a great paradox.

I know how this will be reconciled:  At the end of the day, people who own physical gold stored outside of the banking system like we do are going to win this.  But right now the sociopaths who control the paper and electronic trading markets are still in charge.  I think we are very close to the end of this -- the evidence strongly supports this.  At this point, most likely in Q1 of 2014 gold bottoms, but when gold turns, the turn will be so violent it will be hard for people to enter who have been waiting to board the train.”

IMPORTANT - The blockbuster KWN audio interview with Michael Pento where he discusses the Fed’s decision, how this will impact major markets, and why this is setting up the gold market for a historic move is available now and you can listen to it by CLICKING HERE. 

UPDATE - Due to the increased market volatility KWN will be releasing interviews all day today.

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The audio interviews with Michael Pento, Rick Rule, Gerald Celente, Dr. Marc Faber, Bill Fleckenstein, Eric Sprott, Grant Williams, Egon von Greyerz, Dr. Paul Craig Roberts, Andrew Maguire, David Stockman and Art Cashin are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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