29 January 2015

Gold Daily and Silver Weekly Charts - Triumphant!

Gold and silver were hit pretty hard this morning.  I am sure you know this by now.
The Fed and their Banks could not abide a negative reaction to their latest policy pronouncement.
So the Gold and Silver futures were crushed, and handily so.
And stocks, which were selling off for much of the day, caught a determined bid that seemed to come from futures buying that lifted those prices higher, and turned the day in the favour of the triumphant masters of money. 
As you may know from the calendar provided we are now getting into the active contract month of February.  Today was 'first position' day for February.
Let's see if the carney game on the Hudson gets any more actual activity in the Comex warehouses and futures pits, besides the usual game of Liar's Poker.
I understand that there is a lot of bullion activity for silver in the Comex warehouses, but I think that is more likely due to CNT, which is a registered warehouse, using the Comex to get their deliveries together since they are now a major supplier to the US mint.
A correction was due, and as I took some pains to point out last week, this FOMC meeting with the option expiry the day before was likely to provide a decent test of the recent rally.
Let's see how we go next week.


SP 500 and NDX Futures Daily Charts - Love That Shake Shack

Stocks were in the dumps most of the day, despite the 'better than expected' new unemployment claims report that was probably some kind of seasonal anomaly, but let's keep an open mind on that one.

Stocks found a footing and rallied into the afternoon, finishing in the green.

There were a lot of earnings reports in hot stocks after the bell. GOOG missed everything, AMZN hit EPS but missed the topline, but said good things about their margins, VISA is splitting. Yowza yowzers, get yer hot stocks and nekkid ladies.

Perhaps more importantly, Shake Shack is pricing its IPO tonight, and the Street has to make it look good to take it to market.

And besides, the Fed cannot have the markets selling off, even if their policy guidance was banal and largely ineffective.

Let's see how the macroeconomic issue sort themselves out, and not forgetting the geopolitical issues. This will help us to keep some sort of equilibrium in all this carney noise.


NAV Premiums of Precious Metal Trusts and Funds - Post FOMC Antics

My comment from last night remains just as applicable today:
"And you might wonder that gold did not participate in the safe haven move.  And unless you have been listening to what I have been saying here, you will not understand it.  The Western central banks are loathe to allow gold and silver to run free, because it would hamper their fiat financial engineering.

That their schemes will collapse on their own is probably a good bet.  But they are more than willing to expend their energies on hiding their mistakes in the meantime, rather than fixing the real problems.

No wonder the vast portion of the world that is not among the 'attendant nations' to the New American Century is recoiling in disgust from the antics that the Fed and its Banks have been playing with the dollar."

28 January 2015

Gold Daily and Silver Weekly Charts - Fear Trade and The Sickness Unto Death

“The greatest hazard of all, losing one’s self, can occur very quietly in the world, as if it were nothing at all.  No other loss can occur so quietly; any other loss - an arm, a leg, five dollars, a wife, etc. - is sure to be noticed...

What we call worldliness simply consists of such people who, if one may so express it, pawn themselves to the world.”

Søren Kierkegaard, The Sickness Unto Death
There seems to be a vacuum in the world economy.  And it is probably being created by the black holes of economic policy and monetary thought that are centered in Washington, New York, Berlin, Tokyo, and London.
Speaking of lukewarm, ambiguous shit, here is the 'money shot' from the Fed statement today:
"This assessment will take into account:
  1. a wide range of information, including measures of labor market conditions,
  2. indicators of inflation pressures and inflation expectations, and
  3. readings on financial and international developments."
The individual reactions to the statement depended on which one of these three measures you chose to focus.

If it was number 1, the report seemed hawkish, because earlier the Fed referred to 'labor market conditions have improved further, with strong job gains and a lower unemployment rate.'  Between that and rosy expectations for GDP, and some see the Fed moving as early as June.

If it was number 2, the statement was dovish.   Inflation is hardly an issue, with disinflation and downright deflation being more of an issue.  And certainly the dollar needs no help from interest rates.

And if it was number 3, you joined the mad rush into Treasuries, taking the 30 Year down to a record low.  It holds out the fear/hope of international troubles with the dollar being waved as a safe haven. 
By the end of the day it was the fear trade that prevailed in stocks and bonds.
And you might wonder that gold did not participate in the safe haven move.  And unless you have been listening to what I have been saying here, you will not understand it.  The Western central banks are loathe to allow gold and silver to run free, because it would hamper their fiat financial engineering.

That their schemes will collapse on their own is probably a good bet.  But they are more than willing to expend their energies on hiding their mistakes in the meantime, rather than fixing the real problems.
No wonder the vast portion of the world that is not among the 'attendant nations' to the New American Century is recoiling in disgust from the antics that the Fed and its Banks have been playing with the dollar.

In summary, to paraphrase Samuel Johnson, 'The Fed is an ass.' 

But like most of their financial sector, I do not think it to be a benign influence on the real economy.  The Fed, and the banking corporations that have risen up around it, are like a cankerous sore, an abscess that needs to be lanced.

Like the privileged class has learned from their earliest days, when you have screwed a good thing up royally through your own greed, pride, and serial stupidity, the thing to do is lie, cheat, and steal and above all, lawyer up, sow confusion, and then deny knowing anything about everything.  As a matter of fact, you are not sure that you were even there, or what words mean anymore.

Have a pleasant evening.



SP 500 and NDX Futures Daily Charts - Policy Errors by Hacks, Par Excellence

Please see the gold/silver commentary above for my take on the FOMC statement.

Some called it a 'balanced statement.'

I considered it a muddied statement, with a little something for everyone.  This is not due to some serene objective wisdom on the part of the Fed.  Rather, they were purposely vague and misdirecting, in order to keep their options open, because they have no idea what they hell is going one or what they are doing.   As a default they are serving their masters in the Banks, that's all. 

They are, in the vernacular, 'scared shitless.'    And well they should be, since they are standing on a wreckage of their own devices.  And I doubt that there will be rooms for them at the compound in Paraguay.

By the end of the day, the fear trade dominated bonds and equities.  Stocks went out on their lows.
Perhaps some of the financial results from puffballs like Facebook will help to distract Wall Street from the gathering storm.

Changing the subject from vacuous statements by hacks about economic realities and policy that miss the mark, here is a link to an open letter that I posted today from the new Greek PM Alex Tsipras. It says much about modern economics and public policy that is worth noting well. You may read it here.

The Fed, and the fiscal authorities commonly known as policy making politicians in consultation with the corporate paymasters, are not only proving to be ineffective in nurturing The Recovery.

They are almost sociopathic in their pursuit of further misery and oppression of the public by propping up a financial system that is the cause of many of our current woes, because it is shamefully corrupt. And they wrap it all in bunkum, secrecy, and lies.

This will not end well. I just hope that out of all of this comes a renewal of the freedom, and a change in our priorities. But in the short term, as Yeats put it so well, 'the best lack all conviction, while the worst are filled with passionate intensity.'

Have a pleasant evening.

The Fed's Forecasting Methodology: Making Astrology and Weathermen Look Good


An Open Letter About Austerity, Debt, and Public Policy from Alex Tsipras

As we read this, let us keep in mind that the Banks were mired in bad debts that were created by their fraudulent activities and speculation, and that they were massively bailed out by the people, in the most gentle and accommodating of terms if not outright subsidies.

And now they would prey on those who have saved them, seeking to extend more debts, and harsher terms, not only to Greece but to the poor and middle class of their own countries, in order to make them like slaves to unresolvable burdens, stripped of freedom and assets by a corrupt judiciary and politicians.

Even now, QE is being extended to buy unpayable and overvalued debts from the Banks, to free their balance sheets, and to give them more power to financially oppress the public.

"Most of you, dear Handesblatt readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds bigotry, nationalism, even violence.

In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.

In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

My party, and I personally, disagreed fiercely with the May 2010 loan agreement not because you, the citizens of Germany, did not give us enough money but because you gave us much, much more than you should have and our government accepted far, far more than it had a right to. Money that would, in any case, neither help the people of Greece (as it was being thrown into the black hole of an unsustainable debt) nor prevent the ballooning of Greek government debt, at great expense to the Greek and German taxpayer.

Indeed, even before a full year had gone by, from 2011 onwards, our predictions were confirmed. The combination of gigantic new loans and stringent government spending cuts that depressed incomes not only failed to rein the debt in but, also, punished the weakest of citizens turning people who had hitherto been living a measured, modest life into paupers and beggars, denying them above all else their dignity. The collapse of incomes pushed thousands of firms into bankruptcy boosting the oligopolistic power of surviving large firms. Thus, prices have been falling but more slowly than wages and salaries, pushing down overall demand for goods and services and crushing nominal incomes while debts continue their inexorable rise. In this setting, the deficit of hope accelerated uncontrollably and, before we knew it, the 'serpent's egg' hatched – the result being neo-Nazis patrolling our neighbourhoods, spreading their message of hatred.

Despite the evident failure of the 'extend and pretend' logic, it is still being implemented to this day. The second Greek 'bailout', enacted in the Spring of 2012, added another huge loan on the weakened shoulders of the Greek taxpayers, "haircut" our social security funds, and financed a ruthless new kleptocracy.

Respected commentators have been referring of recent to Greece's stabilization, even of signs of growth. Alas, 'Greek-covery' is but a mirage which we must put to rest as soon as possible. The recent modest rise of real GDP, to the tune of 0.7%, signals not the end of recession (as has been proclaimed) but, rather, its continuation. Think about it: The same official sources report, for the same quarter, an inflation rate of -1.80%, i.e. deflation. Which means that the 0.7% rise in real GDP was due to a negative growth rate of nominal GDP! In other words, all that happened is that prices declined faster than nominal national income. Not exactly a cause for proclaiming the end of six years of recession!

Allow me to submit to you that this sorry attempt to recruit a new version of 'Greek statistics', in order to declare the ongoing Greek crisis over, is an insult to all Europeans who, at long last, deserve the truth about Greece and about Europe. So, let me be frank: Greece's debt is currently unsustainable and will never be serviced, especially while Greece is being subjected to continuous fiscal waterboarding. The insistence in these dead-end policies, and in the denial of simple arithmetic, costs the German taxpayer dearly while, at once, condemning to a proud European nation to permanent indignity. What is even worse: In this manner, before long the Germans turn against the Greeks, the Greeks against the Germans and, unsurprisingly, the European Ideal suffers catastrophic losses.

Germany, and in particular the hard-working German workers, have nothing to fear from a SYRIZA victory. The opposite holds. Our task is not to confront our partners. It is not to secure larger loans or, equivalently, the right to higher deficits. Our target is, rather, the country's stabilization, balanced budgets and, of course, the end of the grand squeeze of the weaker Greek taxpayers in the context of a loan agreement that is simply unenforceable. We are committed to end 'extend and pretend' logic not against German citizens but with a view to the mutual advantages for all Europeans.

Dear readers, I understand that, behind your 'demand' that our government fulfills all of its 'contractual obligations' hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for 'reforms', as long as these 'reforms' do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners.

Our task is to bring about a European New Deal within which our people can breathe, create and live in dignity.

A great opportunity for Europe is about to be born in Greece on 25th January. An opportunity Europe can ill afford to miss.

Anti-Austerity Party Gathers Support in Spain

Two Pictures From Greece

"Greece leaves behind catastrophic austerity, it leaves behind fear and authoritarianism, it leaves behind five years of humiliation and anguish."

Alexis Tsipras

"I have nothing to ask except that you move aside, so that you may not, by blocking the sunlight, steal from me what you cannot give."


Therese Duncan, Reaching Arms, The Parthenon, 1921 

"Until now we used to say that the Greeks fight like heroes.
Now we shall say: That heroes fight like Greeks."  Winston Churchill