01 October 2012

Gold Daily and Silver Weekly Charts - There and Back Again


Gold and silver had an early pop into tougher resistance, but then got hit hard later on in the morning almost to unchanged, and then managed to recover a little into the close. An intraday chart showing the sharp early morning rally is shown below.

I had expected a much stiffer gut check on the longs, and we may still get it. I do not expect any breakout through resistance here to be easy.

But if we get the breakout and stick it, and the bears panic, look for a swift run to the next line of defense where the big shorts will once again attempt to make a stand.

 Looking at the chart it seems pretty straightforward.  There have been three major attempts to break through it, with this being the most recent, after the big blow off top. 

I think this resistance will be broken, but I cannot say if it is this time or not.  This is why I am holding off on drawing a broader trend curve to the gold chart in particular.  Coming off the long basing we saw at support surely helps on this attempt. If it is enough, who can say except in retrospect?

Someone seems very keen on stopping out any rallies below 1800, and the markets being what they are, with little regard to position limits and the integrity of the play, it could be quite a challenge at each major step of the way higher. 

Here are a few events this week that may affect the markets.

On Wednesday we will get the US Non-Manufacturing ISM number, and the ADP employment report.

On Thursday the Banks of England and the ECB may have something to say about interest rates, and very early on Friday there will be the release of Eurozone GDP.

The event of the week may be the Non-Farm Payrolls Report on Friday before the stock market open in NY.

The action in the metals markets will probably be more of a war of attrition than a blitzkrieg.  But I have an abiding feeling that at some point the status quo will break down, and that may be, as the kids say, epic.

Have a pleasant evening.




SP 500 and NDX Futures Daily Charts - Indecisive Day


A typically phony trading day that started out gangbusters but then quickly faded away to close nearly unchanged.

The Manufacturing PMI came in 'better than expected' which provided a little sugar rush.

Bloomberg TV is in panic mode, promoting the candidacy of Mitt Romney and his economic cause in the last month before the election as well they might given his self-inflicted slump at the polls.

I am still long bullion and short stocks. I did not tinker with that position today but I can see a question of balance coming as the new quarter grows a little older perhaps.

Let's see what happens.




Empire of the Exceptional: The Age of Narcissism


As a reminder, it is not possible to reliably diagnose someone from a distance. Why?  Because our view of them is by its nature self-selective: we see and emphasize things that support our hypothetical view of them and dismiss or minimize other things that do not. This is a recurrent weakness in social sciences to be avoided. I cannot stress this enough.  Extremes are sometimes easier to see, but most individuals are a rather complex mix. 

As the psychologist in the video below points out, most people do not fit into neat categories of anything, but are rather an amalgam of various tendencies that overlap and vary greatly in intensity and influence. Most people tend to be diffused in their interests.   We can find traces of almost everything in our selves, as it is the nature of being human.  The degree of that trait is what matters, and the other traits in our mix, and how we react to them, and use them in our daily lives.

And we might also keep in mind that we go through phases, and try out different aspects of our personality in different settings and situations, especially when we are growing  What our parents or society might approve of or not helps to shape the final person which we may become as an adult. And some people may arrive at self-actualization rather late, or in some sad cases never reach that point, locked in a perpetual adolescence because of some trauma or lack of appropriate growth opportunities at key developmental junctures.

Even though it is difficult to discern in the individual, certain trends can appear on the macro level, whether it be in an historical era or even a broader culture.   They can possess distinctive personalities.  As an example, the Japanese tend to be self-effacing and socially oriented with a heavy set of personal obligations to their family and to groups.

And yet I have met some Japanese businessmen who could pass easily for Donald Trump in terms of egoism and personal preoccupation. But on the whole the trend applies, or had applied when I last looked at it carefully and at first hand.  These things on the macro level do change as well, but slowly, generationally.  And the cultural self-image may significantly lag the actual change.   Look in the mirror and see what you have become, for it may not be as you imagine.

In the past thirty years it seems that Anglo-American culture has grown increasingly narcissistic. I do not know if there are more narcissistic individuals in society now, and perhaps there are not.

But I do think that narcissism is much more widely tolerated, rewarded, and even admired now than it would have been in the period of 1930 to 1950 for example. And that is what makes all the difference. More people feel free to indulge their selfish and egotistical tendencies, and to cultivate them, in order to be fashionable and competitive.

As an aside, I think this also tends to explain the decline of literature and poetry in American culture, and the rise of reality shows and the preoccupation with extravagance. Literature calls us out of ourselves, ex stasis, in order to fill us with knowledge and the creative impulse, while spectacle merely panders, and flows in to fill the empty and undeveloped voids in our being."

This video below uses a fictional Mark Zuckerberg from a recent movie as an example of the narcissist personality. I do not know the real Mark Zuckerberg at all so I cannot say if it is valid. But I do think that the fictional Zuckerberg in the movie is an artistic representation of the modern CEO or Wall Street fund manager, based on those that I have known or read about closely.

This narcissistic tendency in modern business occurred to me last night as I read Super Rich Irony in The New Yorker. Obama is, by historical standards, a moderate Republican who has accepted the pro-Wall Street and corporate money bias created in the Democratic Party by the Clintons.   And yet he is reviled by the modern super rich as if he were a Franklin Delano Roosevelt or Andrew Jackson.

Don't get me wrong, most politicians are by the nature of their calling a bit of a narcissist, some more than others. It takes a big ego to fill a big room, and to stand up and say, I can lead. But some are more than others, given the variability of human psychology and character traits.

Some of these super rich describe Obama as arrogant and narcissistic. I think what many of them really mean is 'uppity.'  Most everyone else is their inferior, especially a mixed race man of a lower class background.   To me he seems more a careerist  and professional (aka cynical) deal maker as politicians go, rather than an active reformer.  He is the typical modern manager ruled by expediency.  

But one of the common traits of the narcissist is projecting their faults on to others.  Since this person does not serve and love me, and I am without fault, perfect, they must have something wrong with them, or be out to get me.

Everyone has an ego.  It certainly takes an ego to write a blog for that matter, although again, some are more obviously so than others. How can one stand up and say, 'this is what I think?' Well, at least blogs are self-selecting; people have to come an read them, as opposed to people who endlessly spam other people with emails of dubious origin.  Do you get that too?  Where do these things come from?  Thank God for Snopes and Google search. 

But I point this out to emphasize that this narcissistic tendency is not something particular to the wealthy, but is a cultural trait, expressed in many ways including an increase in self-absorption and incivility.  Power expresses itself in the assertion of the will over others, and the cultivation of unrestrained personal power, the triumph of their will,  is the lifeblood of the narcissist.  And this is also why they tend to be rather antithetical to democracy.

But it does seem that what marks today's super rich more than anything is their preoccupation with their own natural superiority or chosenness as more than justifying if not dictating their good fortune, and almost demanding displays of their grandiose wealth and power, even if that wealth has been gained by cheating, stealing, and depriving others of their own deserved rights and property.  Certainly Hitler saw himself chosen by history, and he  often sought confirmation of it.  

For those with money, the growth process might be subject to the same warping so often experienced by an exceptionally beautiful woman or an enormously talented athlete.  How can one learn to form genuine friendships and loving relationships when they are constantly viewed through the prism of wealth or good looks or success on the field,  when there are so many willing to indulge your worst impulses?   There is some obvious merit to suffering and adversity, as it is the salt that can preserve the best in us if properly applied, destroying the worst.

It is the excess of the age, probably due to the circumstances of fortunate birth and an early childhood in which the young learned that greed is good, screwing everyone is acceptable business practice, that there is no law but their desires, and that most people are inferiors intended to be used by them.  Often parental approval, acceptance, the most basic love, is made contingent on the buy-in. 

I know people like this. I am sure we all do. A very successful acquaintance from school shared with me the lessons taught to him by his father, which he innocently repeated. He learned them both verbally and contextually.  And most of them were exactly as I described them in the above paragraph.  And so that is what he believed.  Can this explain why some sons of wealth turn out badly?   Life lacks real adversity and the normalizing experiences that make us whole?

I have a sense that the super wealthy as a class are reaching their self-destructive apogee, which as you may recall I suggested would happen in my longer term economic forecast of 2005.  It has quite a bit of historical precedent.  When their hatred of FDR was unsatisfied, they attempted to foment a coup d'etat, which was subsequently covered up.  That was a mistake made in the name of preserving the system, as so many similar errors incurring moral hazard have been made more recently.

Each success emboldens them to do more, ask for more, expect more as their due.  And eventually they go too far, and fall.  That in itself might not be so bad on the individual level, as in the case of Bernie Madoff who certainly deserves his time in jail, but they invariably inflict collateral damage on many good and innocent people in the process.

And that is when their own failing, and if you will, sin, can become ours if we do nothing to stop it and to repair it. Especially in an age in which narcissists and sociopaths,including their enablers, are actively assaulting the public interest and public trust in order to serve their own short term, selfish ends, no matter what the longer term consequences to society as a whole might be.

Enjoy the read and the video as something to think about.

Narcissistic Personality Disorder
By Mayo Clinic staff

Narcissistic personality disorder is a mental disorder in which people have an inflated sense of their own importance and a deep need for admiration. Those with narcissistic personality disorder believe that they're superior to others and have little regard for other people's feelings. But behind this mask of ultra-confidence lies a fragile self-esteem, vulnerable to the slightest criticism.

Narcissistic personality disorder is one of several types of personality disorders. Personality disorders are conditions in which people have traits that cause them to feel and behave in socially distressing ways, limiting their ability to function in relationships and in other areas of their life, such as work or school.

Narcissistic personality disorder is characterized by dramatic, emotional behavior, which is in the same category as antisocial and borderline personality disorders.

Narcissistic personality disorder symptoms may include:
Believing that you're better than others
Fantasizing about power, success and attractiveness
Exaggerating your achievements or talents
Expecting constant praise and admiration
Believing that you're special and acting accordingly
Failing to recognize other people's emotions and feelings
Expecting others to go along with your ideas and plans
Taking advantage of others
Expressing disdain for those you feel are inferior
Being jealous of others
Believing that others are jealous of you
Trouble keeping healthy relationships
Setting unrealistic goals
Being easily hurt and rejected
Having a fragile self-esteem
Appearing as tough-minded or unemotional
Although some features of narcissistic personality disorder may seem like having confidence or strong self-esteem, it's not the same. Narcissistic personality disorder crosses the border of healthy confidence and self-esteem into thinking so highly of yourself that you put yourself on a pedestal. In contrast, people who have healthy confidence and self-esteem don't value themselves more than they value others.

When you have narcissistic personality disorder, you may come across as conceited, boastful or pretentious. You often monopolize conversations. You may belittle or look down on people you perceive as inferior. You may have a sense of entitlement. And when you don't receive the special treatment to which you feel entitled, you may become very impatient or angry. You may insist on having "the best" of everything — the best car, athletic club, medical care or social circles, for instance.

But underneath all this behavior often lies a fragile self-esteem. You have trouble handling anything that may be perceived as criticism. You may have a sense of secret shame and humiliation. And in order to make yourself feel better, you may react with rage or contempt and efforts to belittle the other person to make yourself appear better.

The Mayo Clinic 




Net Asset Value Premiums of Precious Metal Funds


Gold popped up this morning and pushed up to 1790, nearer to the top of the resistance band, but was then smacked down hard back to 1770.

Let's see what happens.