Short covering wave in gold and silver - Cartel losing its ability to control PMs and if one thinks about it , how can HSBC and JP Morgan survive their short positions in the light of QE 3 ?

Norcini – A Violent Wave Of Short Covering In Gold & Silver

kingworldnews.com / September 14, 2012

Today acclaimed trader Dan Norcini told King World News that in both the gold and silver markets, “… we were seeing a violent wave of short covering.”  This started taking place immediately after the Fed signaled the additional QE.

Just six days ago Norcini correctly predicted that gold and silver would continue this surge.  The acclaimed commodity trader had this to say about what is now taking place:  “Once the QE announcement came from the Fed, gold and silver immediately soared, but so did the rest of the commodity complex.  Anything that was a hard asset was moving higher, along with the stocks that produce those hard assets.”

Dan Norcini continues:

“The stock market hit four and a half year highs, gold is knocking on the door of $1,800, and silver is pushing up toward $35.50.  There was a flood of hot money that had been on the sidelines which came roaring back into the market.  While hard assets were flying high, the US dollar continued to break down.

Of course anybody that was positioned on the short side of the metals was simply run over when the news hit the wire.  Those shorts were panicking out of their positions and more buying poured in the throughout the day….

“The shorts could not exit positions without paying up.  So we were seeing a violent wave of short covering along with fresh buying from new sources.  There was a relentless flow of new money coming into both the gold and silver markets.

and......

Bill Murphy- Bullion Bank Run Imminent?? MUST WATCH.

In this podcast:

(1) Bill discusses today’s fantastic day for gold/silver

(2) He states how silver can quickly go to 80-100/oz.

(3) He believes that runs may happen in the gold/silver market

and......

The Fed’s Balance At The End Of 2013: $4 Trillion

zerohedge.com / By Tyler Durden / September 13, 2012

What happens next:

• Imminently, the Fed’s Open Markets Operations desk will commence buying $40 billion in MBS per month, or about $10 billion each week. Concurrently, the Fed which is continuing Operation Twist, will still purchase $45 billion in “longer-term” Treasurys, sterilized by the $45 billion or so in 1-3 years Bonds it will sell until the end of the year at which point it runs out of short-term paper to sell.

End result: every month through the end of 2012, the Fed’s balance sheet expands by $40 billion in MBS.

• Beginning January 1, 2013 the Fed will continue monetizing $40 billion in MBS each month, and will continue Operation Twist, however it will adjust the program so that it continues to increase its long-term holdings at $85 billion per month, without sterilization as it will no longer have short-term bonds to sell. It will also need to extend its ZIRP language “through the end of 2016″ so all bonds 1-3 years are essentially risk free, as they are now, in effect eliminating the need to sell them.

End result: every month in 2013 the Fed will increase its balance sheet by $85 billion, consisting of $40 billion in MBS, and $45 billion in 10-30 year Treasurys, or the natural monthly supply of longer-dated issuance. The Fed will therefore monetize roughly half of the US budget deficit in 2013.

Putting it all together, the Fed’s balance sheet will increase from just over $2.8 trillion currently, to $4 trillion on December 25, 2013. A total increase of $1.17 trillion.

This is what the Fed’s balance sheet will looks like:

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QE3: Helicopter Ben Bernanke Makes It Rain Money

theeconomiccollapseblog.com / September 13, 2012

You can’t accuse Federal Reserve Chairman Ben Bernanke of not living up to his nickname.  Back in 2002, Bernanke delivered a speech entitled “Deflation: Making Sure ‘It’ Doesn’t Happen Here” in which he referenced a statement by economist Milton Friedman about fighting deflation by dropping money from a helicopter.  Well, it might be time for a new nickname for Bernanke because what he did today was a lot more than drop money from a helicopter.  Today the Federal Reserve announced that QE3 will begin on Friday, but it is going to be much different from QE1 and QE2.  Both of those rounds of quantitative easing were of limited duration.  This time, the quantitative easing is going to be open-ended.  The Fed is going to buy 40 billion dollars worth of mortgage-backed securities per month until they have decided that the economy is in good enough shape to stop.  For those that get confused by terms like “quantitative easing” and “mortgage-backed securities”, what the Federal Reserve is essentially saying is this: “We’re going to print a bunch of money and buy stuff for as long as we feel it is necessary.”  In addition, the Federal Reserve has promised to keep interest rates at ultra-low levels all the way through mid-2015.  The course that the Federal Reserve has set us on is utter insanity.  Ben Bernanke can rain money down on us all he wants, but it is not going to do much at all to help the real economy.  However, it will definitely hasten the destruction of the U.S. dollar.

And the Federal Reserve is apparently very eager to get QE3 going.  Purchases of mortgage-backed securities are going to start on Friday.

In the coming months, hundreds of billions of dollars that the Federal Reserve has zapped into existence out of nothing will be injected into our financial system.

So what will happen to all of this new money?

If banks and financial institutions use that money to make loans then it could have somewhat of a positive impact on the economy in the short-term.

However, the truth is that it isn’t as if banks are hurting for cash to loan out.  In fact, right now banks are already sitting on $1.6 trillion in excess reserves.  Just like with the first two rounds of quantitative easing, a lot of the money from QE3 will likely end up being put on the shelf.