To what the FED has been doing and now what they are saying.The Feds balance sheet hasnt grown for well over a year despite all of this supposed money printing (If you are going to refute this fact with me you better do your research because this is a fact).As a matter of fact their balance sheet has been declining over the last 6 months and for good reason. They are positioning an exit from this massive build up over the last 5 years with markets at almost all time highs the training wheels are going to come off. Now, if your paying attention, you can understand why gold/silver has not been exploding higher.The miners always lead the metals. A death cross of the 50 WEEK/200 WEEK MOVING AVERAGE has appeared on almost every chart.The one exception would be SLW due to their streaming model however this model has one very important concept and that would be higher underlying prices for silver/gold.This model works both ways.Its great when prices are higher due to their lack of exposure to the actual expenses of exploiting a mine but when prices start the decline the stock will act accordingly. Get ready cause there are serious players looking to allocate away from this hedge fund hotel.The door gets very tite when this happens!
You picked last year, when all the Fed was doing to hold down interest rates was TWIST, selling short term bonds and buying long termers to keep interest rates down. Now they are buying long term bonds outright, without anything to trade them for except printed dollars.
Hedge funds have been pushing SLW hard for the last several months predicated on the FEDS QE infinity. Well, that hasnt played out and now appears that fundemental thesis is temporarily broken. People in the commodity markets have been riding cheap money for over 5 years.The hardest part is to understand when that change is taking place.Austerity is NOT inflationary. Higher taxes are NOT inflationary.Government decreasing spending is NOT inflationary.Low wage jobs are NOT inflationary.Rentals are NOT inflationary.Short interest in SLW is 1% of total shares outstanding.That is extremely complacent for a company trading at 16 times sales and a PEG over 4. The valuation in this stock is way over extended for reasons that simply dont make any sense when the price of the commodity in the model is NOT inflating and actually has stagnated for over 18 months.
The street knows all about this 80 Billion a month and has seen the writing on the wall.That writing is telling people the FED needs to "normalize" policy ASAP. The best way to do that is allow interest rates to rise and the dollar to appreciate hence the reason all commodities are falling.....Look at corn soybeans cotton wheat....Those softs are dropping in the face of one of the worst droughts in history. China cancelled a huge soybean shipment on Wednesday.This is NOT inflationary actions.
Let us not forget that there is stark examples of the repatriation of huge volumes of American dollars occurring. That will serve to compound the symptoms of the out-of-control check kiting being facilitated by the FED. Zimbabwe, the Weimar Republic, and others will be seen as merely pikers when this baby implodes.
BTW, Paul Broun, Congressman from Georgia, has submitted HR24, Ron Paul's bill to Audit the FED. Public pressure is desirable to enhance this initiative.