Stocks and Precious Metals Charts - Power and Privilege Without Conscience

 

"When we read of organisations in trouble, we often hear the sad confessions of executives who tell of moving away from natural laws and principles for a period of time and begin overbuilding, over borrowing, and over speculating, not really reading the stream or getting objective feedback, just hearing a lot of self-talk internally.

Mahatma Gandhi said that seven things will destroy us.  Notice that all of them have to do with social and political conditions.  Note also that the antidote of each of these deadly sins is an explicit external standard or something that is based on natural principles and laws, not on social values. 

1. Wealth Without Work
2. Pleasure Without Conscience
3. Knowledge Without Character
4. Business Without Morality
5. Science Without Humanity
6. Religion Without Sacrifice
7. Politics Without Principle

The more people rationalize cheating, the more it becomes a culture of dishonesty. And that can become a vicious, downward cycle.  Because suddenly, if everyone else is cheating, you feel a need to cheat, too.

As dangerous as a little knowledge is, even more dangerous is much knowledge without a strong, principled character.  Purely intellectual development without commensurate internal character development makes as much sense as putting a high-powered sports car in the hands of a teenager who is high on drugs. Yet all too often in the academic world, that's exactly what we do.”

Stephen R. Covey, Principle Centered Leadership, 1990

"It is no exaggeration to say that since the 1980s, much of the global financial sector has become criminalised, creating an industry culture that tolerates or even encourages systematic fraud.  The behaviour that caused the mortgage bubble and financial crisis of 2008 was a natural outcome and continuation of this pattern, rather than some kind of economic accident.

This behaviour is criminal. We are talking about deliberate concealment of financial transactions that aided terrorism, nuclear weapons proliferation and large-scale tax evasion; assisting in major financial frauds and in concealment of criminal assets; and committing frauds that substantially worsened the worst financial bubbles and crises since the Depression.

And yet none of this conduct has been punished in any significant way.

Total fines on the banks for their role in the Enron fraud, the internet bubble, violation of sanctions against countries including Iran and money-laundering activities appear to be far less than 1% of financial sector profits and bonuses during the same period.

There have been very few prosecutions and no criminal convictions of large US financial institutions or their senior executives.  Where individuals not linked to major banks have committed similar offences, they have been treated far more harshly.

Almost all the prospectuses and sales material on mortgage-backed bonds sold from 2005 until 2007 were a compound of falsehoods.  And as the bubble peaked and started to collapse, executives repeatedly lied about their companies' financial condition.  In some cases, they also concealed other material information, such as the extent to which executives were selling or hedging their own stock holdings because they knew their firms were about to collapse."

Charles Ferguson, Heist of the Century, The Guardian, 20 May 2012


Future historians may well characterize this period of decline in Western democracy as a general failure of character, and the pursuit of power and pleasure without virtue or conscience that became epidemic among the power elite. 

From time to time men go mad.   And sometimes they go mad in herds.  But the madness serves none but itself.

Stock rallied today, despite or because of the fresh outbreak of conflict in the Middle East.

One can easily picture our oligarchs joining together in greedy defiance and price discovery and consequence.  Because they have done it before, repeatedly.

This is how they can show they are truly masters of the universe, exceptional. 

It is said that Israel has now joined the US in direct attacks on Iran.   

This is the overreach of madness. 

Gold and silver rallied back a bit. 

VIX of course fell.

Bitcoin is bouncing along the bottom of the intermediate trend channel.

Crypto and its various manifestations are the child of excessive liquidity, and the suspension of judgement in a fascination with new technology.   

If liquidity dramatically recedes from the markets, these curiosités captivantes may be left stranded, like sun-bleached bones on a beach, along with a wreckage of many similar devices of technological hubris.  

This has already happened to the mania of non-fungible tokens (NFT). 

Bubbles promote excessive build-outs of malinvestment.  These are the cumulative effect of moral hazard, cultivated by the astonishing lack of market discipline, and effective and equal justice.

"Moral hazard is the probability that a party insulated from risk will behave differently from the way they would behave if fully exposed to the risk.  Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act with increasing recklessness, literally 'without reckoning.'  It also encourages the rise to power of sociopaths in society as a whole.

The wristslaps and bailouts will continue until these modern maestros create damage too great to be bought off in the backrooms.  Their descent from the heights will be impressive, if you can avoid the impact crater."

Jesse, Moral Hazard, 22 March 2008

The powerful princes of privilege have become addicted to the notion that others must bear the weight of their lawlessness.  

Sow the wind, reap the whirlwind. 

Have a pleasant evening. 

 

Stocks and Precious Metals Charts - Sans Souci

 

"To this war of every man against every man, this also is consequence; that nothing can be unjust.  The notions of right and wrong, justice and injustice, have there no place. Where there is no common power, there is no law; where no law, no injustice.  Force and fraud are in war the two cardinal virtues."

Thomas Hobbes, Leviathan, 1651

“When Fascism came into power, most people were unprepared, both theoretically and practically.  They were unable to believe that man could exhibit such propensities for evil, such lust for power, such disregard for the rights of the weak, or such yearning for submission.  Only a few had been aware of the rumbling of the volcano preceding the outbreak.”

Erich Fromm, Escape from Freedom, 1941

"The economy — once a great scatter of small productive units in autonomous balance, has become dominated by two or three hundred giant corporations, administratively and politically interrelated.  The political order, once a decentralized set of several dozen states with a weak spinal cord, has become a centralized executive establishment which has taken up into itself many powers previously scattered.  The military order, once a slim establishment in a context of distrust fed by state militia, has become the largest and most expensive feature of government."

C. Wright Mills, The Power Elite, 1956

"On earth it has no equal,
      a thing that is made without fear.
He looks over every thing that is great;
      He is the king of the children of pride.”

Job 41:33-34

OK, the computer problem is resolved.   My laptop power plug was behaving badly, not charging, actually all hot and bothered, etc.   But a tech came out and put in a new motherboard tonight.  I sprang for the super duper premium on-site computer repair warranty service.   Well worth it I must say.

I didn't watch stocks all the closely today, although it was amusing to see the resources of the US putting forth their best effort to defend the stock prices for the holdings of Trump and the Congress, et al.

All hell seems to be breaking lose in the Mideast, but the Masters of the Wall Street and Washington universe are sans souci.    

Why worry when you are like unto God?

Maybe they can start worrying tomorrow.

 Anyway, my laptop is running like a champ again. 

Have a pleasant evening. 

Stocks and Precious Metals Charts - What Is Empire Without Wisdom and Without Virtue

 

“But what is liberty without wisdom and without virtue? It is the greatest of all possible evils; for it is folly, vice, and madness, without tuition or restraint. Those who know what virtuous liberty is, cannot bear to see it disgraced by incapable heads, on account of their having high-sounding words in their mouths.”

Edmund Burke, Letter to a Member of the National Assembly, 1791

"China's central bank reported its biggest monthly increase in gold reserves in more than two and a half years in June, official data showed on Tuesday, although bullion prices tumbled. China's ‌central bank ⁠maintained ⁠gold purchases for a 20th straight month, with its reserves hitting 75.44 million fine troy ounces by the end of June, versus 74.96 million a month earlier.  The 480,000-ounce rise, equivalent to near 15 metric tons, marked the biggest ⁠monthly addition ‌since October 2023."

Reuters, China gold reserves rise most since 2023, 7 July 2026

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Alan Greenspan, Congressional Testimony, July 24, 1998

“Control frauds are seemingly legitimate entities controlled by persons that use them as a fraud “weapon.” A single control fraud can cause greater losses than all other forms of property crime combined. Financial control frauds’ primary weapon is accounting. Fraudulent lenders produce exceptional short-term 'profits' through a four-part strategy: extreme growth (Ponzi), lending to uncreditworthy borrowers, extreme leverage, and minimal loss reserves.

These exceptional 'profits' defeat regulatory restrictions and turn private market discipline perverse. The profits also allow the CEO to convert firm assets for personal benefit through seemingly normal compensation mechanisms. The short-term profits cause stock options to appreciate. Fraudulent CEOs following this strategy are guaranteed extraordinary income while minimizing risks of detection and prosecution.

The optimization strategy causes catastrophic losses. The “profits” allow the fraud to grow rapidly by making bad loans for years. The “profits” allow the managers to loot the firm through exceptional compensation, which increases losses.

When many firms follow the same optimization strategy a financial bubble hyper-inflates. This further optimizes accounting control fraud because the frauds can hide losses by refinancing. Mega bubbles produce financial crises."

William K. Black, Control Frauds: Recurrent, Intensifying Bubbles and Crises, 15 April 2010

"[Martin] Hennecke stressed that investors should go for physical forms of gold and other precious metals rather than "paper gold investment scheme where there isn't full backing, where the metal might be leased out or used for derivatives. That's crucial because there is 80 times more paper gold in the market than actual physical metal in existence in the planet."

CNBC Asia, Go for Gold and Silver, 2 September 2009

"The problem is that sensible liquidity support can easily become inappropriate subsidies, particularly when some financial institutions are considered 'too big to fail'.  Outsiders will never observe the real-time information on which central banks make decisions, so we need to be able to trust the people running our central bank, otherwise the system will go badly wrong — again.

But it is also an all-too-accurate reflection of where we stand today with regard to global mega-banks and the large, nontransparent and highly dangerous subsidies they extract from the rest of society by being too big to fail.  The people who run global mega-banks get the upside when things go well – they are paid based on their return on equity unadjusted for risk, so they prefer a lot of debt piled on top of very little equity.

When things go badly, the downside is someone else’s problem – in the first instance, typically, the Federal Reserve’s.  In the run-up to 2007, the complacency of the entire Fed System can be traced in part to the cozy relationship between the New York Fed (headed then by Mr. Geithner) and the Wall Street elite.  We cannot let this happen again."

Simon Johnson, Institutional Flaw At The Heart Of The Federal Reserve, 14 June 2012

Stocks popped yesterday on Monday, and flopped back today on Tuesday.

There seems to be a pattern here.    lol

Gold and silver were hit fairly hard, with silver taking it on the chin.

VIX rose a bit.

The Dollar drifted a little higher onto the 101 handle.  

Dollar strength is euro weakness.   And Europe's 'leaders' seem content to wear their gimp suits for Trump.

SpaceX is underwater from its IPO.   The only surprise is that there were those who bought it believing in anything more than a quick, cynical flip.   

I included a chart below showing the composition of the US gold reserves since 2012.  I could have gone further back but the result would have been pretty much the same.   Unchanging.

The steadiness of the Mint's 'working stock' is a result of their policy of continual replenishment.

Now we know, by Greenspan's own admission above and from other sources, that the US engages in swaps and loans of its gold quite frequently.   But those changes are never reflected in the official inventory.

I wonder what a thorough audit of not only the bullion but the claims on it would tell us?   

It appears that the 'peace' MOU with Iran is falling apart.

"The US is revoking Iran's newly issued general license to export oil and is reimposing full sanctions on production and sales after Iran struck four commercial vessels in the Strait of Hormuz today, per a US official. The US says Iran's latest actions are 'wholly unacceptable' and will be 'met with consequences.''   And Iran responds, 'The MOU just ended here.  If Washington wants to push, Tehran will respond by widening the front — closing Bab el-Mandeb is also on the table.'"

"Multiple loud explosions heard in Qeshm Island, Bandar Abbas and Sirik, near the Strait of Hormuz in southern Iran, with initial reports of US conducting strikes."

Still time to prepare and stock up. 

Have a pleasant evening. 

Stocks and Precious Metals Charts - The Lawless Entitlement of the Power Elite

 

"The Panama Papers opened yet another window on the global system of financial corruption, showing how political leaders and businesses use shell companies in secrecy havens like the British Virgin Islands and many US states to evade taxes and hide corruption and other crimes.

Yet the system of corruption depends on another factor beyond secrecy, one that is perhaps even more important: impunity.  Impunity means that the rich and powerful escape from punishment even when their malfeasance is in full view.

Impunity is epidemic in America.  The rich and powerful get away with their heists in broad daylight. When a politician like Bernie Sanders calls out the corruption, the New York Times and Wall Street Journal double down with their mockery over such a foolish 'dreamer.' 

The Journal recently opposed the corruption sentence of former Virginia governor Bob McDonnell for taking large gifts and bestowing official favors — because everybody does it.  And one of its columnists praised Panama for facilitating the ability of wealthy individuals to hide their income from 'predatory governments' trying to collect taxes.  No kidding.

Our major institutions, the ones that should know better, are often gross enablers of impunity.

Jeffrey Sachs, The Age of Impunity, 13 May 2016

"The bureaucrats, politicians, professional enablers, and financial elite are so intricately complicit in, and so benefited by, the broken system which we have now that they cannot talk about the systemic problems that are driving the real economy into a perpetual stagnation. They may talk a good game, and pledge themselves to reform in passing, but quickly turn the conversation to some emotional distraction, some other group of people to blame, some other social cause, anything but the serious subject of substantial financial reform.

They are very much a part of the problem, if not at the heart of it.

They cannot engage in effective reforms because in doing so they would: a) indict themselves and their predecessors and colleagues, and impugn their reputation for competency and/or integrity, and b) would hamper their very lucrative careers in a system that they cannot afford to change or meaningfully reform.

There are very serious consequences for speaking the truth these days. Insiders do not speak ill of other insiders, or they lose access to information and power. This explains much of our current problems.

Perhaps the slogan for these pampered princes and princesses should be 'it may be a rotten, broken system, but I am personally doing just fine by it.'

"A credibility trap is a condition in which the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves."

This is the credibility trap.

Jesse, Above the Law: The Age of Impunity and the Credibility Trap, 17 May 2016

 

Stocks managed to put together the usual Monday rally, without the vanguard of false news of peace.  And that rally faded badly in tech, but with the SP 500 holding it a bit higher.

Gold and silver were under a bit of pressure, but proved a little more resilient than normal.

VIX fell.

Price discovery is a fundamental principle of markets in what is often appropriately called 'market capitalism.'

When that process is subverted, malinvestment and harms to productivity and the prosperity of the public become commonplace.

This is what we are experiencing now.

Have a pleasant evening.