29 November 2010

Gold Daily and Silver Weekly Charts

Gold is still struggling with the option expiration and a large overhang of potential orders that could stand for delivery at the Comex. Gold is a political metal, feared by the Central Banks of the developed nations, so the outcome is a little less predictable than might be otherwise.

Silver on the other hand is a dreadnought that takes no prisoners. Why is it able to shake off the kind of paper manipulation that seems to plague gold so often? It is because the central banks do not own any to lend on the cheap to their friends.

It seems only a matter of time until the exchange suspends trading and manages (forces) a cash settlement to bailout the big short interest held by the TBTF-who-must-not-be-maimed. That still will not resolve the artificial shortage that has been developing over the past twenty years or so. It requires time and effort to build mining capacity, and it appears that the preoccupation of the capital allocation has been slanted away from the production of real things, towards the development of better and faster systems of perception management, crowd control if you will, and wealth transference, from the many to the few.

This reminds of the famous anecdote that Boswell recorded, in which Samuel Johnson reacts to Bishop Berkeley's 'ingenious sophistry:'
"After we came out of the church, we stood talking for some time together of Bishop Berkeley's ingenious sophistry to prove the nonexistence of matter, and that every thing in the universe is merely ideal. I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it. I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it -- 'I refute it thus.'"
Many will obtain a similar object lesson for themselves the hard way over the next few years, of the essential difference between the paper money that primarily has come to serve the bloated frauds and sordid schemes of a decaying financial elite that no longer represents accountability, equity, or sustainability, and the enduring value of real money that exists of its own accord, standing firm as the passing constructs and vain devices of men founder against it.  There will doubtless be more ebb and flow, but in sum the resulting clash will be nothing short of epic, indeed.

SP 500 and NDX December Futures Daily Charts

SP 500 Futures Support and Resistance For Today

The market is likely to chop ahead of the Jobs Report on Friday 3 December.

Post market note: It appears the perceived support at the 50 DMA was well founded and provided an opportunity for the boys to bounce it higher and sweep the small bear specs out of the way. This will likely continue at least until 'something happens.' Will it be the Jobs Report on Friday? What can one really say about such pervasive malinvestment and fraud.

"And I set my heart to know wisdom and to know the madness and folly of men. I perceived that this too is grasping after the wind. For in much wisdom is much grief, and he who increases knowledge increases sorrow." Ecclesiastes 1:17-18

24 November 2010

Gold Daily Chart

Gold is hanging at the 1375 resistance, the former target of the breakout from the big cup and handle formation. It may take a little while, but if the markets hold together and gold can clear this level it may romp higher and reach our intermediate target more handily than most imagine, with perhaps some additional hesitation around the psychologically important 1400 level.

Silver may take the lead again once this option expiration and holiday shortened week is done.

But I think gold will tend to do better in a crisis, better than stocks and silver at least. So let's see what happens.

Banks Feel Threatened By the Bullion Bulls - Stills

SP 500 and NDX December Futures Daily Charts

23 November 2010

Gold Daily Chart

An Intraday Look at the US Equity Market and Some Related Observations

The support levels in stocks are rather obvious. You might wish to keep an eye on the techs which are following but with some reluctance. The support on the NDX futures is 2100.

The metals action is remniscent of the other failed option expiration stuffing that backfired on the bears as we had noted last week. The difference is that silver has relinquished its leadership role to gold at least for today.

A whiff of cordite has caused gold and stocks and to some extent silver to diverge today significantly, but tomorrow is another day. The call holders will convert to futures and their positions, leverage and will to hold them might be tested.

These markets are riddled with control frauds, but they are the works of men. So while they can be oppressive, they are hardly omnipotent.

22 November 2010

Gold Daily and Silver Weekly Charts

Interesting action in the precious metals ahead of the gold and silver Comex option expiration.

"Now listen, you wealthy, weep and wail because of the misery that is coming on you. Your wealth is rotting, and moths have eaten your clothes. Your gold and silver positions are false. Their corrosion will testify against you and eat your flesh like fire." James 5:1-3

SP 500 and NDX December Futures Daily Charts

Irish Prime Minister to Dissolve Government After a Budget Is Passed

Personally I would hope they do not even allow them to pass anything but a pro forma budget and then show them the door, because everything they do is tainted.

The elections will be a referendum on the financial corruption between the banks and the government elites in Ireland as they were in Iceland.

Why the Irish would yoke themselves and their children for years to save the multinational banks is puzzling. But it will not have been the first time that the Irish people were sold by their leaders to the monied powers in foreign lands, and it likely will not be the last.

Euro Drops as Irish Government Plans to Dissolve After Budget
By Catarina Saraiva
November 22, 2010, 3:20 PM EST

Nov. 22 (Bloomberg) -- The euro fell for the first time in four days versus the dollar and yen after Ireland’s government started to unravel and Moody’s Investors Service said it may lower the nation’s credit rating by more than one level.

The dollar and yen advanced against most of their major counterparts as a drop in stocks encouraged investors to seek refuge from Europe’s financial crisis. The euro slid from a one- week high against the dollar as Ireland’s Prime Minister Brian Cowen said a day after asking for European aid that the government will resign following passage of the nation’s budget.

“Political uncertainty in Ireland could risk the timely implementation of the new budget and the austerity measures required to bring the deficit down,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “That’s a large negative for the euro.”

Éirinn go brách

FBI Raids Two Hedge Funds In Insider Trading Case: Plus Ça Change?

Genuine enforcement or bread and circuses?

Only time will tell.

The fish seems to be getting a little bigger. But only a little, and still on the relative periphery of the school.

What will be most interesting to watch is how the investigations and settlements, if any, unfold. Will they be 'cost of business as usual with no admission of guilt' fines, or will serious federal prosecutors get involved and start turning over the small fry to get to the heart of the scandals. Will they merely rustle the branches or strike to the roots? That is the difference between the appearance and the reality of reform.

However it turns out, be aware that fraud is still pervasive on Wall Street and in the US markets, and the status quo has been maintained by both political parties who receive enormous funds from the corporations in the FIRE sector.

Connecticut is to financial racketeering what Chicago was to the Mob and Prohibition. But always the real power is headquartered in New York.

Massive Insider Trading Investigation Could Nail Wall Street's Biggest Names

I would be quite a bit more impressed if the raids were on a few of the TBTF banks who make these hedge funds look like small time street dealers by comparison. But that would expand the investigation uncomfortably close to the inner warrens of the Washington Beltway, and the real seats of power and corruption, the old powers and monied interests.

FBI Raids Two Hedge Funds Amid Insider-Trading Case

Federal Bureau of Investigation agents raided the Connecticut offices of hedge funds Diamondback Capital Management LLC and Level Global Investors LP amid a far-reaching insider-trading investigation.

"The FBI is executing court-authorized search warrants in an ongoing investigation," said Richard Kolko, an FBI spokesman, who declined to comment further.

Both hedge funds are run by former managers of Steve Cohen's SAC Capital Advisors. Level Global Investors LP is a Greenwich, Conn., hedge-fund firm run by David Ganek, a former SAC Capital trader and art collector. He started Level Global in 2003 and earlier this year reported managing about $4 billion in assets.

Diamondback Capital Management LLC is based in Stamford, Conn., and was started in 2005. It oversees more than $5 billion in assets, according to SEC filings.

The move by the FBI follows an article by The Wall Street Journal describing an insider-trading investigation that is expected to encompass consultants, investment bankers, hedge-fund and mutual-fund traders. The investigation is said by people close to the situation to eclipse in size and magnitude past insider-trading probes..."

19 November 2010

18 November 2010

Gold Daily and Silver Weekly Chart

See these comments about next week's option expiration in Comex gold and silver.

SP 500 and NDX December Futures Daily Charts

So far, a bounce after a steep decline. Follow through is everything.

Gold and Silver Option Expiration in a Holiday Shortened Week in the US

It's that time again, another option expiration next week on November 23 for the Comex gold and silver options. And it will be a short week because of the Thanksgiving Day holiday in the states.

Generally the game is for the wiseguys on the exchange to stuff the call options buyers by driving the price below the largest groupings of calls. And if a large number of calls are converted to futures positions they like to take the price down again in the two days following expiration.

But keep in mind that the breakout in the metals was done in an expiration gambit that failed, in which the smart money was caught offsides of a failed attempt to push the price down, and fueled a sharp rally on short covering of their own.

James Turk provides a not dissimilar observation in his own way here, but much more confidently seasoned perhaps than your humble proprietaire.

So let's see what happens.

Net Asset Value of Certain Precious Metal Trusts and Funds

17 November 2010

SP 500 and NDX December Futures Daily Charts

Yesterday I said:
"This is important support and if the market will find a bottom this is about where it will be.

At the least I think the stock decline may take a pause for the GM IPO. The Street and the government have a vested interest in its success."
So far the script is playing out predictably but let's see how the next two days go. If stocks, gold, and silver can start moving higher again it's game on. If not then hold your chips close and keep an eye on the door.

Gold Daily Chart

Gold was testing its 50 Day Moving Average, which now stands at 1331.89, the last two days. Testing, testing...

If gold and silver can start moving higher again with stocks holding their own it's game on.

16 November 2010

SP 500 and NDX December Futures Daily Charts

This is important support and if the market will find a bottom this is about where it will be.

At the least I think the stock decline may take a pause for the GM IPO. The Street and the government have a vested interest in its success.

Gold Daily and Silver Weekly Charts

Net Asset Value of Certain Precious Metal Trusts and Funds

I have reopened a 'long bullion - short stocks' paired trade as of yesterday weighted to rather net short stocks but have added to the bullion side here to make it more 'balanced.' I like to capture profits on one side of the trade by adding slowly to the other side if I am running imbalanced but one has to be careful with this approach. The less experienced are better off in cash here, waiting to see where things settle down.

It will be interesting to see if support on the SP futures holds above 1174. I could be adding to the short US stocks position depending on how things progress.

There will be no sustained recovery or financial stability while the market is dominated by TBTF institutions supported by cheap money from the Fed. It really is all about the reform, or lack thereof, and a system that is based on political corruption, insider dealings, and control frauds by con men, what Charles Hugh Smith has called the banality of evil.

The financial jackals will need to look for fresh prey and new hunting grounds.
"The biggest opportunity for us is not necessarily to do more things, but to be Goldman Sachs in more places." Lloyd Blankfein

And the developed nations and their people in their suffering might keep this more famous aphorism in mind:
"Le secret des grandes fortunes sans cause apparente est un crime oublié, parce qu' il a été proprement fait." (Behind every inexplicably great fortune there is a crime that remains undisclosed because it was well executed.) Honore de Balzac, Le Père Goriot

15 November 2010

IMF Reveals New SDR Weighting Tied to the "Big Four" In Rebuff to BRICs

The 'Washington-based' IMF chose the status quo, merely tinkering slightly with the dollar-euro-pound-yen balance in its SDR. The Anglo-American financiers threw a bone to the Europeans with a slight increase. Japan retained its place in the colonial powers club. I find it almost incredible that the UK remains a financial power to the exclusion of the BRICs.

I cannot imagine that Russia and China will be pleased with this rebuff to their concerns, although they were granted more of the trappings of power at the G20.

Now that the SDR is off the table as a broadly acceptable replacement for the dollar reserve currency regime, at least for the next five years, we might expect more regionalization of trade and the formation of new trading blocs. This implies less financial stability as the developing and commodity nations begin to rebel against the current foundations of global finance that continue to subject them to the monetary policies of the Big Four: US, Europe, UK and Japan.

As US analysts are so fond of saying, But what choice do they have? Time to open the door and let us in so we can set up a banking system for you such as that which has destroyed the economies of the developed nations.

Such are the burdens of financial leadership that 'bind your sons to exile to serve your captives needs.' And so it begins all over again.

IMF Lowers Dollar, Yen Weights in Its SDR Valuation Basket, Increases Euro
By Candice Zachariahs
Nov 15, 2010 6:12 PM ET

The International Monetary Fund reduced the weighting of the U.S. dollar and the yen and increased that of the euro in its Special Drawing Rights valuation basket after its regular five-year review.

The value of the SDR, which the IMF created in 1969 to supplement its member countries official reserves, will continue to be based on a basket of currencies comprised of the dollar, euro, yen and pound, the fund said in an e-mailed statement. UBS AG, the world’s second-largest foreign-exchange trader, said in June that the fund may include the Australian and Canadian dollars in the SDR basket this year, boosting demand for the commodity-backed currencies.

“There’s a long-term trend towards less U.S. dollars and more euro in terms of where central banks are putting their reserves, and this is consistent with that,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “There was some talk of the IMF putting in other currencies like the Aussie, but they’ve kept to the big four.”

The greenback’s weighting declined to 41.9 percent compared with 44 percent after a 2005 review, the fund said in its statement dated Nov. 15. The euro’s share rose to 37.4 percent from 34 percent. The yen’s fell to 9.4 percent from 11 percent, while the pound was little changed at 11.3 percent. SDRs are the Washington-based lender’s unit of account.

The new valuations will be effective Jan. 1, the fund said.

SP 500 and NDX December Futures Charts

Gold Daily And Silver Weekly Charts

13 November 2010

Remember, Remember, the Twelfth of November

"On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Act (GLB) into law. This landmark legislation does much to unravel the influence of the Glass-Steagall Act on the United States' financial system.

Now banks and other providers of financial services have far greater freedom to compete against each other. No doubt, the legislation will prompt an altering of the financial landscape in this country."

John Krainer, Federal Reserve Bank of San Francisco Economic Review, 2000