Qe 2.5?

[ADK]

http://finance.yahoo.com/news/fed-pulls-trigger-buy-mortgages-163638925.html

Feds split the difference...? I think that it's a little bit of one in the same.

Sounds good to me, though. I'm looking to buy a house in the next few months, and I'm sitting on physical

I'm also building a new boat.

ADK

 

[swissaustrian]

I think we can stop giving numbers to QE because it's open ended.
It's more like QE ∞

 

[Jay]

silver and gold did jump a little.

 

[ancona]

ADK,
Keep your silver AWAY from that boat!!

QE has already caused folks to dive in to PM's today, with much more in potential. 40 billion a month, and even more if Berspanky deems it to be needed, is a lot of jack. This will have to be printed of course, further debasing our currency into oblivion. When folks have time to digest what he really said, I think they will begin their permanent exodous out of the dollar. Remember, he placed no timeline on buying these MBS, to me anyway, that means it oculd go on for years. Same with ZIRP 4evr, which is the only way to hold down the cost of repaying those trillions of dollars worth of promises we made to China, Japan, Europe, Russia, et. al.

No, this ain't QE lite folks, this is the real McCoy.

 

[DCFusor]

Sure has been a good day to own things like PM's, AGNC, MTGE, JNK, FCX, BTE.
Winning! Record daily paper profits. I may pull some off the table...

 

[benjamen]

Sure has been a good day to own things like PM's, AGNC, MTGE, JNK, FCX, BTE.
Winning! Record daily paper profits. I may pull some off the table...

I was just discussing this idea with a friend. Basically, the conversation lead to the idea of "if you take profits now, what do you do with your profits?"

Under that line of thought, what would you buy now that prices for everything just jumped up? Stocks? Bonds? More Metals?

 

[ADK]

Ancona --- I figured that since PMs were easily melted, that I would use my silver as ballast. Sounds like a good idea, right?

I'm very concerned with the open ended idea of $40 billion per month. It's incredible that this plan is the best they can come up with. Oy. I'll think about it even more when I go to the store to buy my USD$10 loaf of bread.

benjamen --- I would cash out some profits and either hold to re-invest in PMs, or buy other "investments" --- Any SHTF object would be good.

 

[DCFusor]

Benjamin - whenever you get a huge jump - it's always an overshoot (or almost always) - things then return to trend, or whatever the new normal is, the former being a heck of a lot more likely.

It depends on how much of a cowboy you are, how much you want to pay attention and so forth. If you're trading large sizes, even that little wiggle off the top would have been buyable if you'd sold the top right after it turned. That's too cowboy even for me (and this does not affect my stack, this is paper stuff). but you don't have to buy right back in - the ability to NOT trade is just as important as trading ability.

Sometimes a wait and see approach is best. You might miss a little of a move, but that's no disaster. When I catch the middle 80% of moves - which gives me some time to confirm at the front end of a trade - I am very happy. If I'm long and something suddenly goes up "too good to be true" - that's when I get out, since that's never sustainable - you will always see a drop after a concave-up rise. Just a matter of when, but it will happen. Wash, rinse, repeat.

Just an example. GLD made 171.91 at around 13:20, then made a low of 170.76 at 14:40. Now, having sold some at more than a buck more per share, and buying back a buck cheaper - that's a pretty nice day-trade if you can work in large lots.

I sold some of my paper gold right at that top. Cash will be fine for that money for a day or a few till I watch how long the overshoot (and resulting overshoot in the other direction) takes. I might have a little opportunity cost, but so what? That's how this game is played.

 

[benjamen]

Nice write up DC!

Personally, I am accumulating FRN and waiting for the next price smash until I make my next physical purchase. I don't play in the paper market. I like the larger, less frequent physical purchases to take advantage of quantity discounts and taking advantage of price drops.

$.02

 

[DCFusor]

Yeah. Well you might have to wait awhile for a *major* smashdown, but who knows.

Since I'm in the paper market for all those other things and reasons, paper gold is just one of those things I trade - it's actually one of the easier and more predictable ones. Fast, very tiny "vig", in and out as quick as a click.

Stacking is an utterly different story, of course. My "core holdings" don't get moved around like that.

But go look at a 2 yr chart of GLD - you'll note the last time it was concave up (exponential) in an unmistakeable way was just before that big peak we haven't reached again since, and that this looks like the beginning of that curve again...we'll just have to see how far it runs this time. After all, this was only the fed - now we have ECB and PBOC in the wings thinking about similar moves.

What happens is when everybody is all in, there's no buyers left, and the first big seller creates a smashdown - no buyers. Price dropping makes the traders take profits, more smashdown. Cycle then repeats. This is also why during a drop you always see these little rises inbetween the larger drops - at those points someone said, surely this must be the best price I can get. As soon as those someones run out of dough, the drop resumes. After enough years watching this, it's becoming "oh, that again, I'll wait for the real spot". Predictable dynamics, like hitting a resonant circuit with an impulse and watching it ring for awhile.

Edit - since the talking heads know no math, they call what I'm calling exponential, parabolic. They are just wrong, sorry, even though they look a bit similar on paper.