Gold Daily and Silver Weekly Charts - Good Morning Fiat Nam

It is a mistake to underestimate the depths of self-serving policy error to which Wall Street and the ruling elite will sink in order to kick the can down the road and maintain their positions of privilege.  Every time I think they can go no further, I am surprised.  Shame on me.

The Fed has never seen a bubble it didn't like.  And if the trickle down isn't working, keep doing the same thing, but even more.   Tempting fate doesn't begin to cover it.

There was intraday commentary here.   Although I do not mention it, there may have been a veiled message in there for the people of Switzerland, to comply and conform their domestic policies to the monied interests.

Try to remember those who have passed away on this weekend, as has been the fourteen centuries long tradition in western Christian culture on All Saints' Day, when in 610 AD Boniface IV consecrated the Pantheon in Rome to the memory of Mary and the martyrs.  And you might have a mind for those who remain in the struggle for justice and righteousness, All Souls, on the day after.  I will remember you, as always.

Quaintly foolish notions these days, I know, among those who would be as gods, or perhaps already are, at least in their own minds.

And may the odds be ever in their favour.

Have a pleasant weekend.

 

SP 500 and NDX Futures Daily Charts - The Fed Has Crossed the Rubicon

The Fed very deliberately stopped a market correction and managed to turn the equity markets around, very consciously, in order to end their taper without any negative effects to Wall Street.

Last night the Bank of Japan announced a more aggressive quantitative easing AND pledged a portion of their national pension fund to buying not only Japanese equities but also the equities of foreign markets.

The Fed and the Bank of Japan are back doing the money printing tag team and carry trades that carried the markets higher from 2002 to 2007 and helped to create the housing bubble and the subsequent financial crisis.

And it is obvious that Wall Street and the ruling elite have learned absolutely nothing. They go from crisis to crisis, with their delusions of power growing with each successful fraud. If there is another financial crisis and bailout, prosecutions may be among the least of their problems.

Right now the BOJ is exporting deflation to the US in the form of a strong dollar. This is not going to help a recovery, but Yen based printed money may help to swell paper assets.

This is a formula for disaster.

 

Bernie Sanders: Breaking Big Money's Grip on US Elections

Not likely with both major parties swilling at the Big Money troughs, during and after office.

The first step will be to get the politicians to care what the people think and want again, and not treat them with such casual disdain and contempt.



Breaking Big Money’s Grip on Elections from BillMoyers.com on Vimeo.

NAV Premiums of Certain Precious Metal Trusts and Funds - Good Morning Fiat Nam!

Good morning, Fiat Nam!

Thanks to Dave and Denali Guide for suggesting that greeting.

In case you were wondering what happened overnight, Kuroda and the Central Bank of Japan decided to significantly increase their Quantitative Easing.

As you may recall, the Fed and the Japanese Central Bank did a tag team of money printing in the 'recovery' in the 2000's as the US pumped up a housing bubble.

The Japanese said that in addition to buying more official debt, almost as much as the government can issue which is an overt money printing machine, the government has also indicated that they will use their substantial pension funds to buy more equities and REITs, including those of other countries.

I think Japan may eventually provide a good test of the theory that a sovereign that prints its own money can never default.   Japan's problems involve significant demographics, but a great portion is some of the worst crony capitalism and opaque government by insiders in the OECD nations.  It is this kereitsu corporatism that put the FU in Fukushima.

One thing that works in the people's favor is a favorable attitude towards the group backed by peer pressure, rather than a dog eat dog economy based on serial fraud, and commensurately a decent public safety net.  Or at least there has been.

Stock futures soared in the US and the Nikkei futures were limit up.  

Overnight the Russia central bank had to raise its interest rates to 9.5% to defend the ruble which was under pressure on the forex markets.  

And in what appears to be a somewhat counterintuitive move despite Dollar strength on Yen weakness, gold and silver were slammed down hard in thinly traded markets.

The pressure from the US and its client states is now shifting heavily to Europe and especially to Germany, to permit a similar move to quantitative easing in Europe.

China remains remarkably quiet for now. Eurasia is large enough I think to break away from the threat of financial repression. One wonders how far they can be pushed before they make that choice. Or perhaps it is already being made.

Interesting times.

 

October 30, 1938 - Mercury Theater Presents The War of the Worlds

"No one can terrorize a whole nation, unless we are all his accomplices."

Edward R. Murrow, talk to his staff at CBS before See It Now, 7 March 1954 on Senator Joseph McCarthy

And 'The Night America Trembled' 1957

Gold Daily and Silver Weekly Charts - Currency Wars

 

"The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create.

What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world."

Martin Wolf, Financial Times, 12 Oct 2010

I think this time it is Putin and the rest of the world who have said, 'nuts' to the demand for surrender.   And more dramatically, China and a few others are playing 'Go' and skipping the trash talk, while stacking their pieces where they will on the table. 

I spent part of the day musing on the philosophical dimensions of money and debt.  Perhaps that will bear fruit in a posting some day. 

But this whole notion of the 'limit to the dollars the Federal Reserve can create' is intimately tied to the disagreement among nations I among others have chosen to call 'the currency wars.'   The more theoretical that discussion becomes, the existential, the more Thomistic of a character it takes on with essence and accidents and all those things we sat through at university. 

At some point in time, an Alexander will come forth and slice through that Gordian knot; and in that most real of acts make all Platonic tolerance vain, and vain all Doric discipline, with my apologies to Yeats and the sangre de Cristo.

This is no academic exercise however.   The wise and unwise use, and the limits, of power are the lines on the pages of history's copybook.  Those who do not understand them are lost in the leaves, no matter how hard they may plough on against the turn of events.

So today could be viewed as an extensive bit of PR, and the management of perceptions.  And they did a job of it.  Shorter term the Fed has an impressive array of tools at its disposal.  Mostly they are good at destruction and illusion and not very good at justice and sustainability.  But they are very afraid of losing control, because when you rule something by fiat, control and perception of power is paramount.

Today was a rough day for the precious metals, with the financial powers-that-be trying to prove that the end of QE III need have no negative effects on their financial engineering of The Recovery™.

The greater the leverage or beta with regard to precious metals today the worse the decline.  That seems obvious, but some disregard that when structuring their portfolios.

For example, gold bullion is performing better than silver, which is more variable, or lively, to the up and downside.  And the miners and other leveraged means of owning precious metals have been taken out and beaten today.

PHYS has lost about .75%  and PSLV about 2.8% since yesterday.   But if one holds the miners, it could be much more. 

I am not in silver in the short term here and now,  but I did make one injudicious mining purchase yesterday, alas.

Let's see what happens.

SP 500 and NDX Futures Daily Charts - Let It Be Written, and Let It Be So

"A society becomes totalitarian when its structure becomes flagrantly artificial: that is, when its ruling class has lost its function but succeeds in clinging to power by force or fraud. Such a society, no matter how long it persists, can never afford to become either tolerant or intellectually stable..."

George Orwell

This is the underlying message in the  young adult three book series The Hunger Games.

Stocks were able to rally higher today, back almost to levels of a few weeks ago,  on the better than expected estimate of GDP for the 3Q.     That GDP number was dependent on a few one offs like government spending, largely of the military kind, and on a more favorable trade balance.

Excelsior.

The exercise today was very much about proving that the Fed did the right thing in ending QE III, and that there need be no large decline in equities.  There is no coincidence in any of this.

There is a natural tendency to be optimistic and to wish for good things to happen.  The difficulty is when those steering the ship keep making poor decisions and following policies that are not productive.  And this unfortunately is the case today.

What will it take to change my mind?  A real media wage that is growing commensurate with GDP, so that domestic consumption can also grow and fuel the real economy without artificial stimulant and welfare spending on corporations and the military-industrial complex.

Fair enough?  Until then in my personal judgement the economy is neither self-sustaining nor stable. Yes I understand about lags.  And six years is one hell of a lag for those not receiving the beneficence of a trickle down corporatist welfare state.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds

I did not have the opportunity yet to update the metals holdings or cash levels in the below.

Gold Daily and Silver Weekly Charts - FOMC and the Usual Shenanigans

The Fed announced the end of QE III today as had been expected by almost everyone. And after a pause on the news, the dollar soared, precious metals and oil dumped, and stocks slumped, although stocks came back to nearly unchanged by the end of day.

See the commentary on stocks below for more about what the Fed said today.

Nothing has changed. Not one thing. And that is about nine-tenths of the problem that is causing this six year non-recovery for Main Street.  

We still have a rotten financial system acting like an unproductive tax and a drag on the real global economy, sowing malinvestment and distortions in whatever it touches and then some. 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The Downward Spiral of Dumbness

"The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated.

Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated."

FOMC Statement, Oct 29, 2014

I think Bob Pisani literally squeaked when he read 'sooner' in the underlined portion of that FOMC statement, asserting that this was a 'hawkish' statement indeed.  He did not bother to reference the next sentences that begins, 'conversely.'

And I think the wiseguys knew that the Fed was basically saying nothing new, but throwing a farewell bone to the hawk Plosser on the committee, who won't be around after the first of the year, and the complexion of the FOMC turns decidedly more dovish in nature.

The US dollar spiked, but forex has a notorious carney game intraday, but that moved key commodities like gold and oil in the 'right direction' which is down. 

And the hosts and guests on bubblevision continued to burble on about 'rate increases' and 'amazing corporate profits' for the rest of the afternoon.

I am sure we will have loads of fun speculating about what the Fed will do next for quite some time.

Let's see how the rest of the world takes the news that the Fed has its hand on the tiller of the world's economy, to take it where they will.

I think the Fed will move when something forces their hand, and not one minute before.  And I will be glad but surprised if it is a booming economy fueled by organic growth and domestic consumption  next year.

Have a pleasant evening.

FOMC On QE III: Mission Accomplished

It is mission accomplished for the Fed's third stimulus program, if one keeps in mind that Quantitative Easing is a subsidy program for the one percent and Wall Street, not the general public and Main Street.

It is the fallacy of trickle down economics at its most blind and pernicious.

At the end of the day, the Fed's objective has been to bail out and preserve their owners in the Banking System, largely intact, down to their thoroughly rotten core.   The Fed is not the government.  The Fed works with its friends in the government.  The Fed is a creature of the Banks.

And the public is being forced to pick up the tab through financial repression and a stealth austerity through market manipulation, money printing, and price rigging.

Board of Governors of the Federal Reserve System

Release Date: October 29, 2014

For immediate release

Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee's longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month....

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Related: US Child Poverty Highest In Twenty Years

Nomi Prins: Why the Financial and Political Systems Failed

Nomi Prins calls out the policy error deluxe that has been the topic of so much commentary at Le Café over the past few years.

What is perhaps most striking is that this failure is so bipartisan in a time of contentiousness.   It crosses not only parties but professions, from academics to politicians.

As you know I have featured several articles and videos of hers as she introduces her latest book, All the President's Bankers which is insightful, well-founded and researched, and essential to any understand of what is happening today.

 

As you know I have ascribed this to the credibility trap.   Insiders never speak ill of insiders, if they which to remain a part of the power elite. This is reinforced in the Ivy League and the halls of power.   And so leaders and potential leaders are hopelessly compromised and entangled in a self-serving system of abuse of power and corruption.

It is part of a general failure of moral conscience and leadership in the country.   It has been or is being repeated in England and other countries in Europe.  It is the reason for the long stagnation of the Japanese economy.

 

This is a very brief excerpt.  You may read this insightful commentary in its entirety here.

 

"The recent spike in global political-financial volatility that was temporarily soothed by ECB covered bond buying reveals another crack in the six-year-old throw-money-at-the-banks strategies of politicians and central bankers.

The premise of using banks as credit portals to transport public funds from the government to citizens is as inefficient as it is not happening. The power elite may exude belabored moans about slow growth and rising inequality in speeches and press releases, but they continue to find ways to provide liquidity, sustenance and comfort to financial institutions, not to populations.

The very fact - that without excessive artificial stimulation or the promise of it - more hell breaks loose - is one that government heads neither admit, nor appear to discuss. But the truth is that the global financial system has already failed. Big banks have been propped up, and their capital bases rejuvenated, by various means of external intervention, not their own business models..."

Nomi Prins, Why the Financial and Political Systems Failed, and Why Stability Matters

Related: All The President's Bankers

Gold Daily and Silver Weekly Charts - Quiet Option Expiration, Markets In Lockdown

One of the savvier traders and commentators I know told me this morning that 'the markets are in lockdown,' and I think he had it exactly right.

The Fed is very sensitive to provoking a market sell off in anything except precious metals perhaps when they formally announce the end to QE III tomorrow.

I would expect an extra effort to placate stocks and bonds. Moderate growth, low inflation, all is well, but we'll act quickly in case anything upsets our clientele on Wall Street. As for Main Street, we'll send a 'get well card.'

If there are any fireworks coming in the metals it would be an FOMC related 'gut check' over the next couple of days.

You would have to be almost blind, deaf, and dumb, or maybe just a willfully whole lot of the last of these, to not yet realize that something very big is going on in the world of global economics.

Have you noticed that the US and a few of its client states seem to be at odds with just about everyone else in the world? That is the currency war. It is the struggle to maintain and increase political dominance through the use of the dollar and financial institutions, essentially to control the world's money supply and extend the Pax Anglo-Americana forever.

It is good to remember that just are there are military neo-cons pursuing the New American Century, so there are financial counterparts, who while a minority have enormous financial power and thereby political influence.

Change is coming. It will take longer than we expect, but when it starts to show, it will come much faster than expected.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - FOMC Tomorrow and the End of QE III

The Street hit the stock market with tranquilizers and vitamins ahead of the end of QE III which will most likely come tomorrow with the Fed's afternoon FOMC announcement.

I expect the market to be supported, and perhaps find support as well.

This is a technically traded, highly dangerous market beneath the surface calm.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Spooky Janet and the Zombies of the American MIddle Class

Unlike the fiends of folklore fright;

No coffin holds them safe for night.

Our Vampires live amongst our ranks;

And haunt us from their central banks.

A. S.

As a reminder tomorrow is a precious metal options expiration on the Comex.

Wednesday is an FOMC announcement.

Let's see if the hinted extension of QE transpires.   As if.

The Tories are trying to offset the subsidies for their wealthy by declaring their disabled 'fit to work' and slashing their benefits.  And here I thought they could sink no lower.  Oh, well done. 

This afternoon Dennis Gartman forecast that crude oil would literally drop to 'ten dollars' and would, over the next twenty or so years, go the way of whale oil as it is completely replaced by fusion energy (supplied by Lockheed for example).  He also urged the US government to start selling oil from the Strategic Petroleum Reserve.   Looks like it might be time for Russia to throw in the towel, right?

I wonder what Dennis' book might look like?  Or whose it might be? 

A technology is only as good and effective as its implementation and 'roll out' into general availability.   And effectively eliminating the need for oil in about twenty years would be an ambitious infrastructure project for even the best organized of societies.

 

This from a country that cannot even repair its bridges now, or provide high quality rail transportation, or find the will to modernize its power grid, or a real estate title system that is not based on massive neglect and fraud, or a truly high speed internet system, or a capital allocation equity market with a level of integrity than would not be deemed criminal in a Las Vegas casino, or manage a single high level prosecution in one of the greatest financial frauds in history, or hold an election where people are not purposefully denied the right to vote by artificially complicated last minute ID rules and ridiculously long waiting lines.

 

Or manage a healthcare system that doesn't look as though it is price managed by Scrooge & Marley, or perhaps Sweeney Todd.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Twitter Spanked After Hours

Stocks were trading weakly most of the day, with a late day push for the green into the close.

After hours Twitter was down about 8% on a lackluster earnings report.

The US equity market is thinly traded and highly driven by technical (up) and any exogenous events which, if negative, could precipitate a violent sell off.

Let's see how they manage the formation of this current bubble, and how soon it will be before it meets El Cliffo. 

Have a pleasant evening.

Chris Hedges: The Myth of a Free Press

The bias in the US media towards corporate and special interests is apparent in some sources more easily and readily than in others, especially if one has access and bothers to look at a broad base of international news sources. 

The great change was institutionalized with the overturn of the Fairness Doctrine under Reagan in 1985 and the revoking of media ownership restrictions from 1934 and 1975 under the Clinton administration's Telecommunications Act of 1996.

What has changed perhaps is the extreme marginalization of independent sources.  For the most part media outlets declare themselves for one group or another.  The bias of the financial media in policy issues has become so obvious and servile to its corporate interests that it is almost embarrassing.  What is even more surprising is the reach of this sort of continuous advocacy journalism into 'mainstream' channels such as Fox and MSNBC that actively re-interpret reality to suit a class of viewers. 

This balkanization of the issues attracts large classes of listeners into group think, and precludes any meaningful debate of the issues, even to the very framing of the questions and the issues, and ultimately their very perception of reality.

This is a brief excerpt.   Read the entire article for free here.

"The mass media blindly support the ideology of corporate capitalism. They laud and promote the myth of American democracy—even as we are stripped of civil liberties and money replaces the vote. They pay deference to the leaders on Wall Street and in Washington, no matter how perfidious their crimes. They slavishly venerate the military and law enforcement in the name of patriotism.

They select the specialists and experts, almost always drawn from the centers of power, to interpret reality and explain policy. They usually rely on press releases, written by corporations, for their news. And they fill most of their news holes with celebrity gossip, lifestyle stories, sports and trivia. The role of the mass media is to entertain or to parrot official propaganda to the masses.

The corporations, which own the press, hire journalists willing to be courtiers to the elites, and they promote them as celebrities. These journalistic courtiers, who can earn millions of dollars, are invited into the inner circles of power. They are, as John Ralston Saul writes, hedonists of power...

The mass media are plagued by the same mediocrity, corporatism and careerism as the academy, labor unions, the arts, the Democratic Party and religious institutions. They cling to the self-serving mantra of impartiality and objectivity to justify their subservience to power.

The press writes and speaks—unlike academics that chatter among themselves in arcane jargon like medieval theologians—to be heard and understood by the public. And for this reason the press is more powerful and more closely controlled by the state.

It plays an essential role in the dissemination of official propaganda. But to effectively disseminate state propaganda the press must maintain the fiction of independence and integrity. It must hide its true intentions."

Chris Hedges, The Myth of a Free Press

Naomi Klein on Global Neoliberalism

Yellen's Trickle Down Dilemma

Why is the economy so sluggish?

Even if real wages are stagnant, and consumers are tapped, the Banks have been saved and stand ready to loan from an abundance of freshly created money (that they can obtain for almost nothing).

Why won't consumers make a leap of faith and borrow more, betting their last assets on an indifferent Congress and an elusive recovery?  

 

It's heads we win and tails you lose for the bailout Banks. 

 

And from a Banker's perspective it probably makes sense.

 

The Reason There Has Been No Sustainable Recovery

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”

John Maynard Keynes  

How can an economy based on printing money and financial repression for a broken financial system achieve self-sustaining organic growth?

Where is the growth in aggregate demand fueled by a growth in employment and an increase in median wages?

Is the great mass of the public thriving, or barely surviving?

Why do we insist on blaming and denigrating the victims of a massive and ongoing financial fraud that after six years is still largely intact?

 

There is only one thesis that needs to be nailed to this door...

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Shanghai Posts 51.5 Tonnes of Gold For the Week: How Long Can the Gold Pool Be Sustained

"For 'tis the sport to have the engineer

Hoist with his own petard: and it shall go hard

But I will delve one yard below their mines,

And blow them at the moon."

William Shakespeare, Hamlet

The Shanghai Gold Exchange, where investors actually take their bullion rather than just play liar's poker with multiple paper claims for the same ounces, saw 51.5 tonnes of gold bullion taken in the latest week.

The trend of physical deliveries has been rising the last 12 weeks.

 

To put this in perspective, if there are 32,150.75 troy ounces of gold in a metric tonne, then the Comex has a total of just under 28 tonnes of registered (deliverable) gold in all of its warehouses.  

What is that, about three days supply in Shanghai?  Not to mention the other gold bullion markets around the world.

 

Sounds more symbolic, than practical.  Well, there can be great power in symbols— until long abused belief begins to falter, and confidence frays.  And then one risks the danger of using too much force one too many times, and losing the faithful obedience of the public.  And with it everything that allows a minority to govern.

 

There are another 239 tonnes in storage in all the Comex vaults, in the proper bullion eligible format, but not listed as deliverable at these prices.  Sometimes owners feel comfortable keeping the bullion there for storage, eliminating the need to have the bullion assayed if they ever wish to sell it.

So what does this all mean?    It means that the unsustainable will not be sustained. 

 

Some day the price of gold will likely be whatever China, Russia and like minded bullion markets say it is, the paper pushers in New York and London notwithstanding.   The tangled web of free trade and globalization, ain't it a bitch? 

  

It would already be so, except for the tired efforts of Wall Street's central banking friends and their access to leasing other people's bullion in a misguided effort to influence markets and rig their prices.

 

China and the rest of the world are apparently not yet tired of buying gold on the cheap. 

 

But make no mistake: Shanghai talks, and Wall Street walks.

 

This chart from the data wrangler Nick Laird at Sharelynx.com.

 

 

Related:  How Long Can Phase II of the Gold Pool Be Sustained