Guest Post: Delay and Pray

Move over "Extend and Pretend"; we're about to past that merry stage, says Kliguy38, fellow ex-SKFer, on his post yesterday. He says we're about to enter a new stage of....

"Delay and Pray" (3/9/2011) [Emphasis is mine]:

We have Extend and Pretend....but we are about to enter into another phase of the "Bernank Experiment"...Delay and Pray. This will be another marvel of financial engineering that will amaze you. It will occur when QE 2 ends. There are warning shots from several Fed Govenors that have indicated there will be an abrupt cessation of QE. If this occurs then the hope is the economy will have enough momentum by June to begin to carry itself. That employment by then will be growing at over 250K month over month. Of course longer term rates will nose higher slightly but this will hardly be felt by the housing industry and consumer. Now who will be buying those bonds......you know....ANYTHING over a year or two in maturity. I know I just can't wait with all of that money sloshing around that we've shoved into the system. Just waiting to wash back on top of us like a giant tsunami.

Are you starting to get the picture? We will still have a damaged and fragile economy in June and withdrawing QE is going to have very predictable consequences and Ben knows it. So the question posed is really how is he going to implement QE 3 in the face of an increasingly "tough" Republican congress led by the stalwart fiscal money manager John Boehner. How could anyone face odds like this and expect to be successful with getting a money printing scheme like QE 3 through?

Let me think....I believe I shall go to my Rolodex and look under "mass sucker play" and WALA! I found it........FEAR!....It says very clearly on my card that the sheep shall line up for anything if we bring in this little product. So there you have it. It is a self fulfilling game here. Stop QE and guess what is going to happen. Of course you will have some predict this economy will fly on its own as we draw near but it cannot and will not. If you also thing that the barometer of the economy "the market" is going to drop off a cliff then THINK AGAIN. They cannot let it. So you will see an engineered market drop just like last years pull back, but this one will need to have a little more volatility and FEAR in it so expect some better fireworks. NOT to mention they need to knock down some commodity prices with the temporary "withdrawal of liquidity". Hehehehe. Of course bonds will magically show money flowing into them as the dollar strengthens and gold and especially silver take hits. A caveate here....gold may not actually take much of a hit though so your core will survive. AGAIN...this will be managed as they let the sheep baaa for help. Ben will calmly and confidently reinstitue QE 3 and proclaim that just as QE 2 was successful so will 3. Saaaaved!!!!!

We can return to American Idol and I can find out who the next Idol is. Just remember little devil children.......nothing is for free.

So I predict you get to play in the Casino awhile longer just don't sit at the table too long. I have given you the plan. I cannot promise you they will keep the market up all the way through May....but then who knows.

This is the nastiest market you will ever trade and everything you hear on CNBS is intended to obfuscate and move you in a desired direction. Just learn how to interpret it. BTW gold will see 1650 before June and silver will see over 40.

Well, the slamming of commodities seems to have already started. Precious metals, base metals, oil are all down significantly, partly due to US dollar's sudden strength on bad economic numbers (unemployment up, trade deficit up). Commercial net long positions of US dollar futures have been increasing since February 2011 (speculators flipped to net long in October 2010, and after a jump flipped briefly to net short in November 2010 - see this chart from Breakpoint Trades guys).

I hope his gold and silver predictions are correct. (My portfolio is suffering a paper-loss today, as they are slamming gold and silver hard...) His post have a very interesting video about silver. Go there and watch.

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