04 February 2015

Gold Daily and Silver Weekly Charts - Pigtocracy Falling - The Field Is Won

"Sooner or later a crash is coming, and it may be terrific."

Roger Babson

"I rebel against your man-made, unjust, unconstitutional forms of law, that tax, fine, imprison and hang women, while they deny them the right of representation in the government; and I shall work on with might and main to pay every dollar of that honest debt, but not a penny shall go to this unjust claim. And I shall earnestly and persistently continue to urge all women to the practical recognition of the old revolutionary maxim, that 'Resistance to tyranny is obedience to God.'"

Susan B. Anthony

"Son Roper, I thank our Lord the field is won."

Sir Thomas More

There was a lot of pushing and shoving in the gold and silver markets today.
Very little was actually done at the Comex, except for the usual posturing.
Speaking of posturing, the ECB tried to get tough on Greece today, and cut off credit to them because of their failure to reform, and also has disallowed Greek debt to be held as collateral in its banks.
Greece is a very small country.  Some think that because of this they have a poor bargain position.  Nothing could be further from the truth.  They have a very powerful bargaining position, but it is a bit too binary. 
They can default and pull out of the EU and the euro and declare their own sovereign currency.  They can also cut trade deals with Russia for whatever imports they may need.
This would shake the ECB and its financial institutions to their foundations.  And it would set a pattern that has them terrified.
That is the long and short of it.
I suspect we will see a lot of posturing and jawboning, like a dance, as part of this negotiation.  This is why they make their statements public, because that is their intent.  It is noise.  Noise is no use if you intend it to be heard, but then make it in a soundproof room.
The really serious discussions may be non-verbal, but certainly not documented and will not be publicized before their time.  If someone has ever been involved in a very serious political or international negotiation, this is how it is done, if the parties involved are serious adults.

I have done it.  And many times I have assisted our side in assessing the moves and the thinking of the other parties, and sorting out the wheat from the chaff in any statements.  I am sure Greece and the EU have a back channel.   And if not then I may have greatly over-estimated the Europeans.

What is curious to me is where the US is on this.  And do not think for a minute they are not involved and have not expressed an opinion and preference.  With the ongoing proxy war in the Ukraine and Syria between the US and Russia, they are almost certainly keeping a close eye on the potentially pivotal role of Greece.   For now most of us only have access to US thinking through their rather clumsy propaganda they put out through their attendant news sources and organizations.

If both parties act responsibly, there will be a settlement here somewhere in between their 'positions' that allows each party to save face, and hold to whatever principles they tend to uphold.
And if not, it will be rather messy.
There is quite a bit of posturing going on in the precious metals markets now as well.  The paper tigers in New York and London are swirling the edge of the abyss, falling further behind the paper-to-physical ratio.  
A couple readers took me to task for saying that there might be a big reset on the price of the metals, with the exchanges having to declare force majeure.  Their point was that the Comex does not need to do this in order to compel a cash settlement. 
I would have to go back and read it, because I had thought I was referencing both New York AND London.   But that does not matter, because the main point was not that there would be a forced cash settlement, but rather that like MF Global the terms of the settlement would be dictated by the exchange. 
I am not saying that there would be a cash settlement offered at the current market price in dollars.  Rather, there would be a take-it-or-leave-it cash offer at whatever price the exchange decided.  And it could be substantially below the 'market price' for physical bullion, some pre-dated price.  And it may involve the nullification of some arrangements. 
When the game unwinds unexpectedly and with some violence, I have found the insiders who run the game to be rather expansive in their efforts to limit their own losses, and those of their friends, and to re-arrange the rules as they wish under some legal pretext of extraordinary circumstances, even if it was something they did that caused them. 
Surely you remember what JPM did with regard to customer money and physical assets in the aftermath of MF Global.  And that was just an isolated incident.
Have a pleasant evening.