29 July 2014

Gold Daily and Silver Weekly Charts - Holding Pattern as The Empire Strikes Back


With tomorrow's trading the emphasis will likely shift from silver to gold as we move into the August contract period where gold is 'active' and silver is not.

Tomorrow brings the advance 2Q GDP number, and the results of a two day FOMC meeting in the afternoon.

Let's see how the metals make it through this gauntlet. And Non-Farm Payrolls on Friday.

Argentina may be forced into default tomorrow because of some fairly obtuse rulings by the fund friendly NY courts.  The conversation about this on Bloomberg TV this morning was like something out of The Hunger Games.

The US has initiated even more sanctions on Russia.    This does appear to be another manifestation of the currency war, engaged on a different level.  It serves to distract and defer.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - #paper asset bubble


Twitter is tweeting after the bell on 'better than expected' adjusted earnings and revenue.

Stocks sold off today, after have been weak most of the day on lackluster housing prices.

GDP tomorrow morning and the FOMC in the afternoon.

Have a pleasant evening.






NAV Premiums of Certain Precious Metal Trust and Funds


Premiums are subdued the day after a Comex option expiration, and ahead of the big economic news this week.

Sprott Silver shows some spark.  Its cash level continues to decline suggesting a secondary offering at some point.



28 July 2014

Gold Daily and Silver Weekly Charts - Very Quiet Option Expiration


"Every dictatorship has ultimately strangled in the web of repression it wove for its people, making mistakes that could not be corrected because criticism was prohibited."

Robert F. Kennedy

You would almost forget it was a Comex options expiry if you did not look at the calendar.

Trade in the precious metals was very quiet. We *might* get a gut check tomorrow in order to test the resolve of any new contract holders, and in an advance welcome for the FOMC meeting and GDP numbers on Wednesday.

Nothing fundamental has changed. The Fed and the government are blowing monetary and fiscal policy decisions completely.  There was intraday commentary that touched on that subject here.

There was nothing happening of significance at Madame Tussaud's last Friday, so I am not bothering to show the Comex warehouse and clearing reports tonight.

One can speculate as to their motives, but I think that their errors will become increasingly painful and apparent with time.

Have a pleasant evening.







SP 500 and NDX Futures Daily Charts - Calm Before the News


Stocks opened weakly on the slightly worse than expected home sales numbers this morning.

They tended to drift higher, back to nearly unchanged, on light volume.

The markets are waiting for the more significant economic news that starts rolling out on Wednesday.

Have a pleasant evening.





What Is the Effective Limitation on the Fed's Ability to 'Print Money?'


"There is felt today very widely the inconsistency in this condition of political democracy and industrial absolutism. The people are beginning to doubt whether in the long run democracy and absolutism can coexist in the same community; beginning to doubt whether there is a justification for the great inequalities in the distribution of wealth, for the rapid creation of fortunes, more mysterious than the deeds of Aladdin’s lamp."

Louis D. Brandeis, Speech to Harvard Ethical Society, May 4, 1905

In a purely fiat monetary system the effective limitation on the Fed is the acceptance of the dollar and the bond at value in objective, non-coercive market transactions.

Since the value of a currency can be viewed as 'relative' to other currencies, if one ignores the values of other goods, there is some thought that a group devaluation of money can be accomplished if all the issuing entities devalue at the same time, so that the average person will not notice it.  As if.

When such frauds fail, then there is the result to force.  There are numerous examples of non-objective market transactions being used by failing monetary regimes, where they are guided by a central bank or directly by politicians.

Most recently in the case of satellites of the former Soviet Union,  there was an increasing divergence between an 'official exchange rate' versus a 'black market' exchange rate, even in Russia itself as the old rouble failed.  The bad money crowded out the good,  the good which became the new benchmark of value. 

The notion that a sovereign government issuing their own currency and debt cannot fail flies in the face of history, if not common sense.   The ability of the government to enforce an increasingly arbitrary valuation ultimately comes down to a measure of the oppressive power and reach of the regime.   Therefore the failures tend to begin at the edges, where arbitrary force does not reach as effectively.

This is not to say that the US is at that point. But to say we are not yet at that point is like the drunk who says he has not crashed his car into a brick wall yet.  It is to say that the idea that money can be created endlessly without engaging powerful forces of political and financial hazard is nonsense. It requires increasing amounts of official fraud, fear, and force to maintain, until the system ultimately collapses. I have seen this first hand, and have listed numerous examples of it on this site in prior posts.

One of the reasons that this current scheme of the Fed seems to be succeeding is that instead of increasing the overall money supply by distributing it freely 'out of helicopters' and stimulating aggregate demand to the objective of stimulating a recovery,  they are printing loads of money and then carefully handing it to their cronies in the Banks and other private multinational corporations.

And since they are dealing with the world's reserve currency, the base of their Ponzi scheme is very broad in its number of potential contributors.

The notion is that they will be forced to do productive and constructive things with it, and prosperity will 'trickle down.'  Rather, they prefer to use that money to further enrich themselves, to acquire productive assets, rentals, establish new frauds and rig more markets, and buy other companies to establish monopolies, and to put themselves increasingly above the law.

The resulting distortion does not yet result in a general inflation, but certainly facilitates and promotes a bubble in certain financial paper, and a massive wealth transfer from the public to the privileged in a corrupt and systematized plunder.

This system will not cohere.  But it has become very profitable for the status quo, if one ignores the consequences.  It results in a society turned upside down, a bizarro world where nothing makes sense.

Wars have been fought to sustain such looting, and to distract the people from their misery.  It always ends badly, in social disruption and worse.







27 July 2014

C. S. Lews On Kindness and Civility at the Table (And Online)


"We hear a great deal about the rudeness of the rising generation. I am an oldster myself and might be expected to take the oldsters' side, but in fact I have been far more impressed by the bad manners of parents to children than by those of children to parents.

Who has not been the embarrassed guest at family meals where the father or mother treated their grown-up offspring with an incivility which, offered to any other young people, would simply have terminated the acquaintance? Dogmatic assertions on matters which the children understand and their elders don't, ruthless interruptions, flat contradictions, ridicule of things the young take seriously - sometimes of their religion - insulting references to their friends, all provide an easy answer to the question "Why are they always out? Why do they like every house better than their home?"

Who does not prefer civility to barbarism?

If you asked any of these insufferable people - they are not all parents of course - why they behaved that way at home, they would reply, "Oh, hang it all, one comes home to relax. A chap can't be always on his best behaviour. If a man can't be himself in his own house, where can he? Of course we don't want Company Manners at home. We're a happy family. We can say anything to one another here. No one minds. We all understand."

Once again it is so nearly true yet so fatally wrong.

Affection is an affair of old clothes, and ease, of the unguarded moment, of liberties which would be ill-bred if we took them with strangers. But old clothes are one thing; to wear the same shirt till it stank would be another. There are proper clothes for a garden party; but the clothes for home must be proper too, in their own different way. Similarly there is a distinction between public and domestic courtesy. The root principle of both is the same: "that no one give any kind of preference to himself."

C. S. Lewis, The Four Loves

I suspect Mr. Lewis would be inclined to make similar observations about online manners as compared to public manners, where electronic anonymity tempts the worst part of a person to be belittling, dismissive, condescending, and in short, a bully.

Sometimes people come to confuse rudeness with strength and position, and choose to exercise it when they feel that they have some power, even if it is just the power to say what you will with relative impunity given the distance of electronics. The culture of the internet is nascent; and intelligence without education and cultural broadening can quickly degenerate into barbarism, even amongst people, not only commenters but bloggers, who might be otherwise appalled by how they act online.

Understanding, compassion, and kindness are the signs of real power and strength. Rudeness, incivility, and bad manners are the signs of ill-breeding and ignorance, of the disordered mind of the narcissist, who proceeds through life unaware and uncaring of those around them.

I am certainly no stuffed shirt. Manners does not mean that famous English reserve which is mannerism. Rather, manners are no ritual. Ritual manners, like accents, are too often an artificial construct with the purpose of promoting a type of class system.

Civility is a certain ease of behavior, a tolerant awareness and acceptance of the commonalities of the human condition, supported by kindness.

Barbarism can become fashionable, almost contagious. One may even have learned such dismissive and condescending behaviour from a parent, who learned it from one of theirs, or in some deep disappointment in their lives.

Don't tell yourself that this is just the way it is. Rather, tell yourself that this is just wrong, and let such incivility stop with me.