15 September 2015

Gold Daily and Silver Weekly Charts - Desperation, Deception, and the Elusive Denouement

"The real problem isn’t what the Fed may do, but the ultimately unavoidable consequences of what the Fed has already done. The cost of reckless Fed-induced yield seeking will likely be felt first in the financial markets as previous paper gains evaporate, while defaults on excessive low-quality covenant-lite credit will emerge over the course of the economic cycle, and the impact of malinvestment will be to limit productivity and economic growth over the longer run. This is all rather inevitable except in the eyes of those who haven’t watched and memorized a dozen adaptations of the same movie."

John Hussman, The Beauty of Truth and the Beast of Dogma

There was little to no delivery action at The Bucket Shop yesterday in both gold and silver.  Delivery and withdrawal of gold in New York seems to have become unfashionable since 2013.

As for the warehouses, they apparently continue to slowly bleed out bullion, as you can see from the reports attached.

We are all informed by very serious people that all of this means nothing.  Nothing means nothing, except whatever it is that they say that day.  Sounds like politics as usual.

There was intraday commentary about the latest public relations campaign against thinking seriously about the precious metals market at Bullion Bank Apologists and Precious Metals.

All is well.

There are a number of odd things happening in the markets.   I do not know exactly why they are happening, or what it all means.   But I do know that many of the 'explanations' for them which we hear are directed at things that are not under contention, as a dodge, and are often heavily layered with hair-splitting jargon that hits everywhere except the target.

And quite a few times they obviously and clumsily make stuff up, and then attack that to prove their points, when fear and intimidation fail.

I think we will cut this Gordian knot with a call to deliver that fails.   I think it will precipitate in the London market, maybe in Switzerland.   And other markets, like The Bucket Shop, will more likely be downstream collateral after the fact.  We might see some indications there, but not the reckoning if we arrive at the resolution that I anticipate..

I know that the wiseguys are quite confident, in thinking that no one will ever catch up to them.  They tell us so in words and actions.  But it is this very lack of reasoned judgment and moral sense that is likely to trip them up.

Maybe these jokers and their enablers are right.   But I certainly have not heard anything that would persuade me, particularly if you watch the tape during the day and see their clumsy antics close up.  No, there is no ring of truth in their words, just a slightly better form of childish rationalizations when caught in the act of doing something that they ought not to have done.

The big tickle this week is the FOMC meeting.   They would dearly love to raise rates, but are afraid of the reaction of the global equity and bond markets.

I have included the lease rates for silver and gold in two charts below, because someone asked to see them.  They are slightly elevated.   But should we even trust these figures?  When have the financial firms released numbers that were not to their short term advantage?   Libor and CDS much?   This is one of the challenges that makes such a liar out of the 'efficient markets hypothesis.'

There was some additional intraday commentary about The Corruption of the Institutions by the Powerful.   Moral behaviour is as out of fashion among the ruling elite as spats and garters, I know, except for some self-righteous Puritanism.   And there are consequences to this disordered outlook, large and in charge.

Let's see how the week unfolds, especially around the end with the mighty FOMC meeting.

Will they or won't they?  And is there any reason for a system to operate in such an obtuse manner?

Have a pleasant evening.