Dear Friends,

The minus $42 in Gold so far this morning is a gift from the Comex and will be proven in time. Aren’t you tired of being had on a constant basis? If so, then do something rather than simply complain. Click here for information on taking delivery from the Comex.

I disagree that the Fed has sterilized, in a practical sense versus an academic sense, much of its recent explosion in monetary policy.

The buyer of the T-bills has been primarily China while 90% the liquidity has been injected into US entities.

Be that as it may, failure to stimulate business is the theme of markets this morning.

There is little left for the Fed to do but what is said below.

The Master of Depression, Mr. Bernanke, knows this well and will embrace the strategy whole heartedly quite soon.

This will probably start between December 15 and the New Year while world markets tend to be secondary to the season.

Remember the FACT that gold is a CURRENCY that move inverse to the US dollar.

Our friends at the Comex magnified today’s gold price action before the US market was fully there.

This article is highly technical except for the clearly understandable statement, which is the headline, and quote below that:

If all else fails, devalue the dollar

“Bernanke then wonders why – if the policy options for fighting deflation are so varied – did Japan fail, through its quantitative easing programme? Tellingly, he concludes that the problem there was as much political as economic.

The question then, is whether the US quantitative easing program will succeed.

In the event it does not, one final deflation-fighting measure to consider, from Ben:

Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it’s worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt’s 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation.”

The Fed is mothballing its $559bn supplementary financing program. Or, to put it even more obliquely:

Washington – The balance in the Treasury’s Supplementary Financing Account will decrease in the coming weeks as outstanding supplementary financing program bills mature. This action is being taken to preserve flexibility in the conduct of debt management policy in meeting the government’s financing needs.

The SFP is the principle means by which the Federal Reserve has been offsetting – since September – its massively expanded liquidity operations.”

More…