Another Fed day, another episode of serial money printing, another banner day and a new high for gold.

It really feels like gold has entered the final and most exciting stage of the bull market. As Jim Sinclair, long-term gold trader, Chairman of Tanzanian Royalty Exploration, and Publisher of JSMineset.com says, gold is ready to go ballistic.

It's another breakout in a series of powerful breakouts. We've been alerting you to these breakouts ever since this site was launched. Remember this one? Or what about this one?  And this one.

It seems to happen at least twice a year now, gold consolidates for about six months and then breaks out into a powerful $200 move. But silver is now the star, having doubled in less than a year!

Here's some good reading on the topic:

• Investor Uprising has a great technical look at gold by Fred Goodman.
• My new site, Investor Uprising, has published an new exhaustive, 28-page report on gold, written by yours truly.
• Jim Sinclair says we're headed for $1650 next on the way to $2000.

 

Obviously, this strange beast called "QE2" is in the news a lot, and lots of folks are having their say. I'll have mine: It's wrong.

I'm with Mark Cuban. Unlike him, I'm not a billionaire. Like him, I am not an economist (thank god), and I agree with common sense. Common sense tells me that QE2 is wrong. Government solutions to market problems have failed in the past, and they will fail again.

Here are some of the reasons why QE2 is wrong:

Well it's time for Markets Gone Wild, but you may not have the DVD, so let's recap: The Fed has been heavily telegraphing an accelerated money-printing schedule, driving bankers, traders, and speculators into all matter of commodities, stocks, and various exotic financial instruments.

Here's a summary:

* Silver reached a new 30-year high this morning. Incredibly bullish action. I think you should stay long silver here, a way to do that is SLV, or a mining company like Pan American Silver (PAAS), or silver futures. (Disclosure: I'm long all of the above). I've been bullish on silver for what seems like forever, and I remain so.

* Gold made a new high, and pulled back. With more money-printing on the way, it looks poised to break out, again.

* Our Riverbed/FFIV pairs trade worked out okay, in a strange way. F5 Networks (FFIV) has climbed 14% since we spotlighted the idea (we were short), but Riverbed (RVBD) is up 30% (we were long), so if you did the pairs long/short trade the difference has netted about 15%. Not bad for a month's work. The philosophy of this trade worked out okay -- the cloud "bubble" had pushed FFIV to a more unreasonalbe valuation, and it was time for Riverbed to catch up. (Disclosure: I am out of the trade, I think "cloud networking stocks" are getting overextended, though I still like Riverbed long term).

* New highs in stocks we like: EBIX, RVBD, PAAS

* Remember Right Now (RNOW)? Incredibly strong stock. Methinks something is up.

 

Wow. Things have really taken off here. Stocks, commodities, and most notably -- the precious metals. Gold is at an all-time nominal high of 1372 and silver at 20-year highs. Copper is pushing aggressively higher.

The trigger for the greedfest was yesterday's release of the Fed minutes, in which the fed governors indicated they are *this close* to unleashing the hounds of quantitative easing.

For those not into the Fed inside baseball or with only a passing knowledge of economics, "Quantitive Easing" is a central banker euphemism for "printing money." There is a reason why they call him Helicopter Ben. The phrase is interesting in that it makes money printing sound exotic and alluring, though it is not that at all: It's printing money.

Quantitative easing may sound sexy if you are an academic economist from Princeton, but in reality it is the siren song for central bankers. They can be dragged into the rocks very quickly. What can go wrong? Well, just take a look at the 1970s. Money-printing seemed great until inflation and the price of oil got out of control and pretty soon you were looking at 18% mortgage rates.

As I've been writing on this site for some time, the only way to prepare for this is to participate in the rally -- of everything -- but to keep tight stops on your trades and hedge with a healthy precious metals position. Metals are still outperforming everthing else, which is a symptom of central banker money printing gone wild. Think about the fact that the precious metals have been appreciating 10-15% per year for 10 years, while stocks are basically flat. That is the byproduct of money-printing: It has an unintended consequence on hard assets which are reflecting the devaluation of a currency.

Well, Ben Bernanke appears to be winning over the gloom-and-doom crowd, at least today.  What an impressive rally. I was surfing some data trying to rationalize it, and I have noticed some interesting changes going on in the market. The clue may be in the money supply.

If you look at recent charts of the money supply as put together by the dark, yet excellent analysis of government statistics over on Shadowstats.com, John Williams's site, you can see something that is truly intriguing: an uptick in the money supply growth rates.

Source: Shadowstats.com

Stocks are showing some early symptoms of rolling over. Yesterday, the Federal Reserve annnounced it was ready to print money ad infinitum to make sure the world does not run out of money. I do not know what Ben Bernanke's academic friends at Princeton call this, but I call it the "Banana Republic" strategy. Stocks are reacting poorly to the news today.

Perhaps it is the fact that the Federal Reserve statement read more like jawboning than an actual decision. They said in the statement that they will do what they can, but the fact remains that there isn't much left to do but print more money and monetize the debt -- an approach more familiar to countries such as Argentina than the United States of America. And we know how well that worked out in Argentina.

Stocks have rallied powerfully in the last month but they are running up against some heavy resistance levels and technical signals show some of the same patterns we saw before previous corrections -- see the chart below.

The precious metals breakout still has legs, you want to accumulate on pullbacks because precious metals will be the place to be through 2011. I believe in an "Innovation-Devaluation" barbell strategy, but tech stocks are more difficult because they have run far and fast. I believe it can be legged into on the next significant correction before the November election. Don't worry, it's coming -- it always does.

Let's see, the stock market rallied while economic data was weakening. Yet bonds were rallying at the same time, and yields have been plunging -- to near record-lows of 2.75% in the 10-year! This was a great dichotomy that had many people scratching their heads. Why would stocks rally and bond yields plunge while we got weakening economic data?

Well, if they were fueling up the helicopters, that would make sense.

Remember the bond market is often "smarter" than the stock market. The plunge in yields has been telling you something. Is it not interesting that the stock market and bond rally continued until the Fed announcement and then failed on yesterday's news? Sell the news, baby.

Amazing to me, having followed, traded, and invested in gold over the last 8 years, that there are still so many gold skeptics out there. Like being wrong for a decade isn't enough?

Gold bears have trouble with basic comprehension of the bull market. Primary example is Ben Bernanke, who naively stated before Congress that he "didn't understand" why gold was going up. Why Ben, it's easy: It's because you are creating mountains of debt and paper money. You want some gold coins or burning paper money? What's not to understand?

This morning, Gold is breaking out again into bull territory, the beginning of a new phase that will likely carry it back above $1,300 by year-end. The correction is over.

There has been a massive amount of attention focused on Fed Chairman Ben Bernanke's testimony before Congress today. The testimony lacked any new large developments. However, we did glean more insight into his thinking and what it means for the American -- and global -- economy.

My macro opinion of "the economy" is that it is being held hostage by debt and uncertainty. For too long, our financial markets have focused on government largesse, policy moves, and debt funding to drive growth on Wall Street. Unfortunately, this is not what the real economy -- "Main Street" -- is all about.

The economy cannot be controlled by Ben Bernanke and the federal government. You see that now when 0% interest rates are doing nothing. That is because for too long, the economy has been fueled by financing and easy money that drove Wall Street bonuses and the debt bubble. As we saw, the more debt we create, the more we borrow from the future.

Greetings, it's Tablet Wednesday! It would be so much better if it were a Tuesday so that we could call it Tablet Tuesday. I find it funny that people are still trying to print sketchy "scoops" in the hours up to the Apple tablet computer launch. Like this grainy puzzle-pieced photo from Engaget. Holy cow, is that some kind of map... on an LCD screen! Well, that's the news business in 2010. Any piece of incremental information, no matter how shady or inconclusive, needs to be published. With that, we travel onto the world of shady Internet journos, toiling overtime to bring you the n0t-so-much-news: McGraw-Hill CEO Terry McGraw, who I once worked for, tells you all about the tablet. No word on whether the tablet will have an  feature to buy your own S&P ratings.

• The Business Insider rounds up all the rumors. No word on whether Henry Blodget thinks the stock is going to $800.
• Can we link to ourselves? Here's what I think about the notion that the tablet will save the content industry (Rayno Report).
• Apple gets a slew of new patents related to the tablet (Patently Apple).
• Apple Tablet Portends Rewrite for Publishers (Wall Street Journal).

Oh, and in case you thought anything else was going on in the world:

• Treasury Secretary Geithner is getting grilled on AIG (BusinessWeek). He's crispy. Fried. Done.
• Geithner denies role in AIG payment disclosures (Reuters).
• Bernanke says he didn't negotiate with the AIG lenders. (Reuters) Also, rumor has it he's not really sure what "money" is.
• Superbowl ad stokes abortion controversy (Reuters). Not going to touch this one!
• Toyota halts sales on millions of vehicles, stock slammed (Associated Press).
• Roku wants to create a 100-channel Internet TV box (Bloomberg). Memo to Roku: The Internet has infinite channels.
• AT&T to launch Yelp competitor (Forbes). Isn't this kind of like your grandma launching an Internet startup?
• Oracle plans to hire people (InfoWorld). Yes, you too can wash Larry Ellison's car.
• Send inmates to Mexico, says Shcwarzenegger (Agence France Press).
• Five things Obama could learn from Reagan (Time). Somehow, I just don't see Obama reading this article. Or behaving like the Gipper. Or looking like him. Or moving to Santa Barbara. Yep, it's completely confirmed: They're totally different people.
• My vote for the best headline of the day, even though I'm not sure what it means: "Facebook and Twitter? Why not just put a gun to your head?" (Network World).
• The FCC is probing mobile phone termination fees (Digital Trends).
• The Mars rover is dead (National Geographic). Long live the Mars rover!
• Leading space scientist claims Earth becoming invisible to aliens (Telegraph).