The government announces it's over-spending appetite for the month of June
On Thursday the government will release it's monthly budget surplus/deficit for the prior month, June. Apparently there is no forecast or "market expectation" for what that figure might be. The U.S. is currently spending money above the Congressional self imposed debt ceiling so the treasury secretary is robbing different federal accounts to meet daily spending requirements. So June's deficit is simply adding to America's "deferred debt ceiling" and accounts will eventually be rejuggled and the official debt ceiling will skyrocket higher.
So why isn't the monthly deficit figure important to the markets? If the deficit "surprises" to the upside....say in excess of $100 billion...will anyone really care? Maybe not on Thursday. But the day is fast approaching when all eyes will start to focus on the debt financing needs of America to run all it's programs. The days of free money from the Federal Reserve to finance government programs (the Fed's balance sheet will never be paid back) is soon going to end. There is no such thing as a "free lunch"! And the day when the free lunch money stops, will be a great day for precious metals....IMO.
Hang onto SLW. Is it just me or does anyone else feel like a bottom is in place?
I think the big boys are gathering as much physical gold as they can without exploding the price because the US dollar is about to sink into the abyss with high inflation to make this $17 trillion debt mostly dissappear while they are richer than ever sitting on most of the Worlds supply.. Sunday nite at 9:00 pm the History Channel #2 has a special on gold..Advance advertizing has a guy saying Fort Knox is empty and I dont doubt it.
Moses! When the Federal Reserve earns interest on it's treasury bond holdings, it turns over the profit...to the treasury. No. Methinks the Federal Reserve thinks it float lots of "free money" into the economy with absolutely no consequences.
"For the moment, holders of weakening currencies are seeking refuge in seemingly “stronger” dollars in bubbling equity markets. Many more dollars have been stashed on the balance sheets of the Federal Reserve in the form of bonds purchased in galumphing bales since 2009 - only the catch is that many of these bonds are worthless, especially the mortgage-backed securities. The collateral exists in the form of mold-infused sheetrock, swimming pools with algae blooms, and strip malls left with a single tenant: the wig shop. The Fed will never be able to unload this hoard of garbage, even if it “tapers” its buying of new garbage. The dollars that the Fed creates out of nothing are trapped in this fetid backwater of rotting capital, destined to go nowhere - surely not into activity that produces real wealth, or the means to continue being civilized.
Something’s in the air this hot, soggy summer and it smells like the loss of faith. In another month, as the nights grow cool we’ll approach the sober season of fall, when the air seems to possess powers of magnification and suddenly things can be seen clearly. The high frequency robo trading bots are good at detecting microscopic differences in digital quant pools, but they don’t have the finer sensory antennae of human brains for forces outside the rather narrow math narrative."
"Loss of faith" in a currency typically leads to hyper-inflation. Who knows. Perhaps Kunstler is right. Maybe we'll have a currency "black swan" event this fall. It would be wise to be holding some PM investments.