Swiss America Trading Corporation

Exactly How Dumb Is the Fed?

Gold last traded at $1,242 an ounce. Silver at $16.29 an ounce.

NEWS SUMMARY: Precious metal prices held steady Wednesday on a firmer dollar. U.S. stocks traded higher as investors digested housing data and more quarterly earnings.

Gold poised for more gains on soft U.S. rate outlook -Reuters
"Gold climbed on Monday and was likely to see further gains after the dollar slumped to multi-month lows on the back of data that pointed to weak U.S. inflation and dampened prospects for rate hikes. 'The dollar continues to be on the back foot and yields have dropped back somewhat from their relatively elevated positioning lately,' said analyst Jonathan Butler at Mitsubishi in London....'If gold remains at $1,230 or goes higher, there's an elevated risk that some of those short positions might start to be reversed and that would give some further upside to gold,' Butler added....'Investor sentiment (for gold) has improved quite dramatically over the past week, especially with the weak data out of the United States last week,' said ANZ analyst Daniel Hynes. 'Gold is now primed for another rally.' On the technical front, gold is likely to significantly break above key resistance at the 200-day moving average near $1,230 per ounce and could even rise to the $1,250 level in the shorter term, Hynes said. 'The technical bounce looks fairly solid,' he said"

debt America's Secret Plan for the Debt Ceiling -PontificationBlog
"Sometime this October, the Federal Government is going to run out of money. It will be unable to borrow more until Congress agrees to raise the debt ceiling, a vote that some Republicans want to use to shrink the government. Usually this has meant that government could 'shut down' briefly if debt ceiling legislation leads to deadlock....What may happen instead is 'a harebrained scheme that is apt to backfire,' says Congressman Tom Cole (R.-Oklahoma), who sits on the House Budget Committee. It could be U.S. debt 'default by another name,' warns former Treasury Secretary Jacob Lew. If lawmakers cannot resolve the debt ceiling issue, then the government may employ what Bloomberg News on July 14 called a 'once-secret plan written by the [President Barack] Obama administration that would lead to the first-ever default on U.S. debt.'....This. warns Jack Lew, could trigger a review of whether the U.S. still warrants a AAA rating on its debt paper....The government would have to pay much higher interest to borrow money by selling its debt." Full story

The Economic Consequences of DC Gridlock -Fox Business
Swiss America chairman Craig R. Smith on the growing sense of frustration by prominent Americans such as businessman Jamie Dimon and economist Mohamed El-Erian as well as average citizens over the lack of progress in draining the swamp in Washington DC and making progress in boosting economic growth. Mr. Smith offers an optimistic strategy to help get America growing again - before American citizens (and the rest of the world) lose all confidence in U.S. political and economic leadership. Watch now.

How Dumb Is the Fed? -BonnerandPartners
"This morning, we are wondering: How dumb is the Fed? The question was prompted by this comment by former Fed insider Chris Whalen at The Institutional Risk Analyst blog: '[O]ur message to the folks in Jackson Hole this week [at the annual central banker meeting there] is that the end of the Fed's reckless experiment in social engineering via QE and near-zero interest rates will end in tears.'....If you believe the newspapers, the Fed has begun a 'tightening cycle.' It is on course to raise its key interest rate, little by little, in quarter-point increments. It must know that this is a perilous thing to do. After so much market manipulation over such a long period, prices all up and down the capital structure - from junk bonds to quality stocks and solid real estate - have been bent and distorted....But the feds could only work this miracle by buying bonds. And the feds didn't have any money. What could they do? No problem! They used their fake money, the post-1971 credit dollars - trillions of them... money they could create at will....Which brings us back to our question: How dumb is the Fed?....Nothing comes from nothing. Fake money produces fake prosperity. Take away the fake money... and the fake prosperity goes 'poof,' too. Which is why the Fed will never, voluntarily, stop manipulating prices. It can't let the markets return to 'normal' price discovery....The Fed says it is going to return its interest rate policy back to normal...No chance. It's not that dumb."

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