29 January 2016

As Goes January, So Goes the Year...

And so we say goodby to January 2016.

There is an old saying on Wall Street that as goes January, so goes the year.  This is also known in some circles as the 'January barometer.'

If this is the case it is going to be a good year for precious metals and a very wild ride for stocks.

It certainly did not 'work' last year, which also forecast a good year for the metals and a bum year for stocks.  The metals continued their bear market decline, but stocks were in fact down to flat.

Ah, if only life and forecasting was that simple so that a single metric would suffice.

Gold Daily and Silver Weekly Charts - BoJ Shocks, Silver Inventory Drops

"Love is patient, love is kind. It does not envy, it does not boast, it is not proud.

It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres."

Gold and silver were stronger than expected today as the US dollar was soaring on the shocker that the Bank of Japan is going negative on yen interest rates.

This set the markets back on their heels because just a week ago BoJ's Kuroda publicly dismissed the possibility.

This is a possible artifact of the currency war, in which certain countries will be seeking to devalue their currencies through various mechanisms in the hope of stimulating their economies, among other things.

On that announcement the US dollar index lit its afterburners and rallied harder.   I am wondering if these currency interventions, because this is exactly what the BoJ has done, will do anything to roil the massive currency carry trades and derivatives associated with these.

BoJ purportedly acted to stimulate Banks to make loans, which is a bunch of hoo-haw.  All the BoJ would require is for a few well placed people to pick up the phone and make some phone calls.

Gold is still outpacing silver, and this is due to the 'flight to safety' environment, even though we saw a sharp reversal in the Risk equilibrium in equities today that I suspect is more technical and short term.

I will probably have something more to say about January a littler later on.

There was some actual movement in the Comex licensed gold warehouses, bring the monthly delivery total to a staggering 5,800 ounces.  Wow.

Silver was most interesting with a 21.5% drop in registered bullion which is a big one day move.  I commented on this earlier today here.  There are plenty of screaming headlines one can write about this in the search for clicks, but for now it is just an interesting fact with a significance that is not known, excepting that it is not 'business as usual.'

One theory I have heard is that the recent 'glitch' with the new London silver price fix that was so oddly far below the market spooked some holders of the metal into fears of having their registered bullion delivered out from under them 'on the cheap.'

There are also the usual rumours involving China which is said to be scooping up the remnants of gold and silver where they may. This I cannot address, but the notion that the 80 cents below prevailing market 'price fix' in London tightened up some strong hands makes some sense.

Let's continue to keep an eye on the chart formations and try to listen to the markets.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - BoJ Goes More Negative Than Hillary's Campaign

Stocks were on a tear today as the first look at the GDP number for 4Q 2015 came in as lousy as expected.

If the past is any indication, the next two revisions will take it lower to the zero bound, perhaps even negative.

Digging beneath the numbers, it appears that rising healthcare costs were a major contributor to GDP. Since healthcare costs in the US are far above what is paid in the rest of the developed world, one might consider the growth of those costs as a distortion on the greater economy, almost in the manner of a tax.

And the BOJ shocked the markets by opting for negative interest rates, just one week after Kuroda san came out and said they were not going to do it.

One wonders what they have seen that so greatly changed their minds and so quickly.

Stocks may have a little more upside, and the targets on the charts are somewhat visible to the discerning eye. But we must be wary of a failed rally on puff and stuff and HFT buying in the short squeeze. Because the problem with this market in general is that its underpinnings are lacking in substance to say the least, and vulnerable to a decline.

Have a pleasant weekend.

And Now For a Hard Drop In Comex Deliverable Silver

The 'registered' for delivery silver bullion at the Comex licensed facilities dropped by 7,792,110 troy ounces yesterday.

This takes the total from 36,322,409 to 28,530,299.

This is a one day decline of 21.5%.

This also brings the total deliverable silver down to some unfamiliar lows not seen since 2011.  The level is not nearly as extreme as gold's, but it is getting there if this keeps up.  I include a chart of the registered silver at Comex for the last ten years below.

Silver in these warehouses has been seeing some large movements for some time now, a fact which I attributed to CNT using the Comex as a delivery mechanism for the silver which they use in their wholesale business.  But this kind of drop is not usual.

Comex Silver looks positively lively compared to Comex Gold, which is starting to resemble a Madame Tussaud's depiction of a commodity market, seeing very little activity, and almost frozen in time like some artifact from the past.

I bring these facts to your attention not out of some sense of alarm, and I do not wish to sensationalize them. Although some do. I think it is just something a bit unusual that bears watching, since it does not seem to be occurring in isolation and is an 'outlier' from the usual business. And I would not have brought it up except in passing if it had only related to CNT, which I would have then assumed was related to one of their large wholesale transactions.

Below is the statement of the warehouses from the day before, from last night's posting here.

28 January 2016

Gold Daily and Silver Weekly Charts - Pullback - Mostly Mozart - Terrible Vision

"Mozart's music is so pure and beautiful that I see it as a reflection of the inner beauty of the universe."

Albert Einstein

I forgot to mention that yesterday was Mozart's birthday. His 260th I believe. His music is certainly the silver lining in life, some recompense for the ugliness that passes for success with our modern day Trimalchios of finance.

When most of the Very Serious People of our time are dust and long forgotten, Mozart will be remembered because he brought beauty into the world by ordering sounds to please the minds and refresh the hearts.

And when people think of the powerful of our day in the same manner in which they may vaguely recall the Pharaohs, some of whose names may be familiar but little else of them comes to mind, gold will still be a repository of value.
"The common are but a breath, the highborn but a lie. If weighed on a balance, they are nothing; together they are only a breath, less substantial than their vanity."

Psalm 62:9
Nothing provides for our continuance, and nothing abides after death, except for love.  This is easily said, but rarely taken to heart.

Long ago I had a terrible dream.  After thinking about it I later believed was a vision of hell, at least as my subconscious mind had conceived it.  But at the time I did not think that it was that sort of thing, just a very puzzling but remarkably vivid dream.  I generally have mundane ones, and the occasional one where I forget an assignment and have to go back to graduate school.  lol.

In this dream the streets and buildings were hard and barren, but like marble, and beautifully kept like some ancient marketplace when it was newly made.  But it was void of all humanity, and totally devoid of any life, even plants.

As I stood at the gate in front of a widely open arch, a voice warned me sharply not to proceed within despite its magnificent beauty.  The streets and pillared buildings were crafted of fine white stone, quietly shimmering with a hidden but very intense heat.  Surprisingly there was no sunlight, no shadows, and it was under skies that were almost a fog, but higher off the ground.

The only other feature was dried leaves, like those of late Autumn, unremarkable and indistinguishable, brown remnants that were making faint scratching sounds as they were blown slowly across the cobble-stoned pavements in the slowly swirling heat.  I remember that it was that noise the drew my attention to them.  It was not a pleasant sound, almost like faint sounds of a scratching in the walls.

It was a vision that struck me to the heart. and I told no one about it.  But I never forgot it.

Much later I came to the believe that these 'leaves' were the souls of the lost, and the scratching sound was their voices, but indistinct, without a personal identity.  Having been stripped of their vanities and possessions, there was nothing left of them but the husks of living beings.  And so this is what remained.  They were not being punished or burned in the traditional sense, they were just not 'human,' anymore, and were more like dead leaves.

And deep down I knew that I wanted no part of this, that is was not a good place to be, that despite its hard but orderly beauty it was 'empty' in a very profound way.

Well, this is what I have made of it some years later in thinking about it.  It is hard to express it in words how strange this was, but even now the impression of it is intense in a way that makes it hard to even remember without a kind of dread.  I never have those sorts of dreams, so this one stands out.  And it was a 'pivotal learning moment' for me whatever it was.

Gold and silver were taking back some of the recent gains as they moved lower. Interestingly enough so was the dollar, moving lower. Is risk back on? Not to judge by the stock market results.

There were the usual piddling to no deliveries at The Bucket Shop, and some silver was pushed around the plate, with gold a snoozer as usual.

I would like to see gold hold its level and move higher from here. But there are a lot of things that I would like that are apparently not meant to be, so let's see what happens.

GDP number out tomorrow.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Uncertainty and Risk

Stocks tried to rally early but were pushed back in what turned out to be a wide ranging day.

The durable goods number this morning sucked out loud.  Not much sign of recovery there.

After the bell, AMZN missed its EPS projection by a mile, taking the stock quite a bit lower in the after hours trade.

GDP estimate for 4Q tomorrow.

Have a pleasant evening.

Deep State: Inside Washington's Shadowy Power Elite

“Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it. If one can afford private security, public safety is of no concern; to the person fortunate enough to own a Gulfstream jet, crumbling bridges cause less apprehension, and viable public transportation doesn’t even compute. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?”

― Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government

"Our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise.

But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened."

Martin Gilens and Benjamin I. Page, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, Princeton 2014

"As a congressional staff member for 28 years specializing in national security and possessing a top secret security clearance, I was at least on the fringes of the world I am describing, if neither totally in it by virtue of full membership nor of it by psychological disposition.

But, like virtually every employed person, I became, to some extent, assimilated into the culture of the institution I worked for, and only by slow degrees, starting before the invasion of Iraq, did I begin fundamentally to question the reasons of state that motivate the people who are, to quote George W. Bush,  'the deciders.'

Cultural assimilation is partly a matter of what psychologist Irving L. Janis called groupthink,  the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town's cool kids drop those ideas as if they were radioactive.

As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said,  'It is difficult to get a man to understand something when his salary depends upon his not understanding it.'"

Mike Lofgren

27 January 2016

Gold Daily and Silver Weekly Charts - Continuing Flight to Safety

"If we lived in a state where virtue was profitable, common sense would make us saintly. But since we see that abhorrence, anger, pride, and stupidity commonly profit far beyond charity, modesty, justice, and thought, perhaps we must stand fast a little - even at the risk of being heroes."

Robert Bolt, A Man For All Seasons

"I wonder, Madam, that you have not penetration to see the strong inducement to this excess; for he who makes a beast of himself gets rid of the pain of being a man."

Samuel Johnson, from Anecdotes of the Revd. Percival Stockdale

Gold continued to push higher today after some early weakness.  Interestingly enough the dollar has shown some weakness, but the overall flavor of the markets has the tang of a repricing in of risks that have been sore neglected, and for far too long.

The FOMC deferred on doing anything at their meeting today in grudging recognition of the deteriorating 'recovery.'

There was intraday commentary on the little noted 'informal one-on-one' meeting between Bernie Sanders and the President.   You may read about it here.

Hillary Clinton announced today that she would considering appointing Barack Obama to the US Supreme Court.

"Why Richard, it profits a man nothing to give his soul for the whole world... but for Wales?"

Let's see if the 'cup and handle' in gold can continue its formation and become activated.  If it does I will go over the formation and its implications.  But for now I will save myself the effort, since no charts may work in markets divergent from market fundamentals.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The Fed Bends a Bit Towards Reality

Need little, want less, love more.

There was intraday commentary about the FOMC decision and statement here.

Things continue to unfold, slowly but with almost relentless certainty.

Have a pleasant evening.

FOMC Statement for January 27, 2016

Net-net the Fed is bothered by the dampening effects of the stronger dollar on exports, and the lack of inflation.

They continue to promote the fantasy of a recovery in the labor markets, but that vain hope will dissipate no doubt given time.

They may *get it* but their complicity in and personal advancement from a broken system hampers their ability to recognize and act on the real state of the economy, which is a weakening recovery and broad mispricing of risk in financial assets.

The Fed has been and is still playing a major role in the failure to reform and recover as advisor, regulator, and central banker.

Like the Congress, they are creatures of Big Money who go along to get along, while persuading themselves perhaps, and certainly the public, of their virtue.  But in an environment made generally corrupt it would be improbable for such a key institution not to have fallen into this credibility trap.

Federal Reserve Open Market Committee
Release Date: January 27, 2016

For release at 2:00 p.m. EST

Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year. Household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further; however, net exports have been soft and inventory investment slowed.

A range of recent labor market indicators, including strong job gains, points to some additional decline in underutilization of labor resources. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined further; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. Inflation is expected to remain low in the near term, in part because of the further declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook.

Given the economic outlook, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.  However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo.

What Are Sanders and Obama Going To Discuss

Apparently President Obama and Senator Sanders are going to have an 'informal one-on-one meeting with no agenda' and no press today.

This presidential election has really framed up as an attempt at a popular revolt against a Big Money political establishment. And it is fascinating to watch.

Although the mainstream media keeps feigning astonishment, the broader public is clearly seeking two non-establishment candidate who, for better or worse, they think cannot be bought off by Big Money and the revolving door.

This meeting is an informal one with no set agenda.

Perhaps Obama will share the insight he allegedly had early in his Presidency about reformers as recounted by the ex-CIA whistleblower Ray McGovern.
"He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, Why don’t you do the things we thought you stood for? Obama turned sharply and said, “Don’t you remember what happened to Martin Luther King Jr.?” That’s a quote, and that’s a very revealing quote."

Ray McGovern

I am sure Obama was being flip.   They was no need to buy him because he was a well-crafted brand backed by Big Money from the very start.  What he was voicing, if indeed he said this, was the time honored motto of political corruption, to go along to get along.  This was the great lesson to the Democratic party from the Clintons.

I have included a short but interesting video at the very bottom about how things work in Washington these days as recounted by Neil Barofsky to Bill Moyers.

And finally I include a short video describing the state of politics in the US from that wild eyed radical, former President Jimmy Carter.

Bernie Sanders Meets With Obama Today: What They Might Talk About
By Pam Martens and Russ Martens
January 27, 2016

Expensive media real estate is reporting that presidential candidate, Senator Bernie Sanders of Vermont, will meet with President Obama in the Oval Office today. Much is being made of the fact that the meeting comes less than a week before the politically important Iowa caucuses and just two days after Politico published an exclusive interview with the President in which he appeared to favor a Clinton presidency. (Memo to the President: this election is about finding an authentic non-establishment candidate, so your opinion as the quintessential establishment figure is not likely to sway folks – at least not in a good way.)

The first thing that came to mind when we heard about the meeting was that one or more kingpins on Wall Street might have asked the President to whisper in Senator Sanders’ ear to stop repeating at every campaign stop that the business model of Wall Street is fraud. Sanders is also regularly stating on the stump that one of his top priorities as President will be to break up those Wall Street banks that would require another taxpayer bailout if they should fail.

Would Wall Street actually be brazen enough to try to censor the message of a sitting U.S. Senator? Back in March of last year, Reuters reported that representatives of Citigroup, JPMorgan, Goldman Sachs and Bank of America “have met to discuss ways to urge Democrats, including [Elizabeth] Warren and Ohio Senator Sherrod Brown, to soften their party’s tone toward Wall Street.” The article noted that withholding campaign donations to Senate Democrats was one option that was on the table at the Wall Street banks...

Read the entire story at Wall Street On Parade.

26 January 2016

Gold Daily and Silver Weekly Charts - Fed Rate Decision Tomorrow, Registered Gold Plunges

Gold and silver were both in rally mode today, continuing the 'bounce' off the recent bottom and a desire to move higher.

There was intraday commentary in which I suggested that we are seeing a flight to safety, wherein gold bullion tends to lead riskier aspects of the precious metals higher, and moves in conjunction with the dollar pretty much.

I also mentioned the potential 'cup and handle' bottom which I have alluded to previously, and posted a closeup of what the chart formation would look like if it was activated.

You may read that here.

There was a bit of bad news today. According to Koos Jansen, China has stopped publishing the Shanghai Gold Exchange's Withdrawal figures. You may read his recent article on this at his blog site here.

When I was looking up the latest reports on activity in the CME licensed warehouses, I was a little surprise to see that the registered for delivery gold bullion plunged by about 2/3rds. And so I posted an update on it which you may read about here.

As I have said before, this does not imply a default to deliver is imminent, or any of ther other things that some will say it means.  It is likely an indication of physical tightness and gold being held in strong hands not for sale at these prices.

But it also does not mean nothing, as some apologists for the current way of conducting this business would have you think. When something has not happened before, over a period of many years of data, chances are pretty good that something has changed.

As my friend Nick says, 'Let the shorts burn.'

FOMC tomorrow. And as a continuing reminder, these markets have hardly become transparent and efficient, so be ready for anything in the short term.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Rally Mode of the Day - An APPL a Day

US equities were in rally mode today, ahead of the FOMC decision tomorrow and Apple's earnings out tonight.

As you may recall I have suggested that we would see stocks rally off the recent bottom, and then go up and take back a goodly chunk of the recent decline.

And unless something changes, and the Fed's monetary policy *might* qualify if it changes enough, stocks are likely to fail in this rally at some point and go back down to test a new low, or at least retest the prior one.

So let's see what happens while the world waits for AAPL.

Have a pleasant evening.

Gold Registered for Delivery at the CME Warehouses Plunges To a New Low

Over 200,000 ounces of gold bullion were withdrawn from the registered (deliverable) category in the Comex licensed warehouses at the least.

That takes the new total down to a little under 74,000 ounces of actual physical bullion registered for delivery at these prices.  I will check later but I do believe this is a new low for this century.

Since January is pretty much a non-delivery month for an increasingly non-delivering exchange, it may not mean all that much, but it is interesting to watch for all the reasons we have discussed previously.

And it is a fairly recent phenomenon with no other good explanation that those holding their gold at CME licensed warehouse do not with to hold their gold in a deliverable category at these prices.

Or they enjoy doing useless and pointless paperwork, as some would have you believe.

One should keep an open mind about things.  But some reasonably persuasive data to back up the theories from the perennial apologists for the bullion banks would be more persuasive.

When something has not happened before, and other evidence suggests that something has radically changed, I do not think that it is wise to just dismiss it.

This should send the 'potential claims per ounce' back towards those highs from the end of last year.

My own theory as you know is that traders who are holding gold in these warehouses do not wish to take the risk of losing it in a physical short squeeze, or have otherwise encumbered the gold and do not wish to risk a delivery and loss of the physical bullion.

There could be another reason for this.  I have surely not heard anything remotely plausible yet, just the usual tortured rationales from the perennial bullion bank apologists and creatures of a failing bullion hypothecation system.

Gold Is In a 'Flight To Safety' - Cup and Handle?

Maybe not so much in the US where the people are still largely unaware of most global financial events and currencies, and certainly of the historical role of gold.

But the strong upward correlation of the US Dollar and Gold of late are evidence of a strong 'flight to safety' trade.

In a flight to safety the price of gold bullion would likely lead silver and the miners. If at some point silver can pick up the baton and run higher, then we might think a proper bottom has been set and a new bull leg could be forming.

Speaking of that, as I have noted previously, gold *might* be forming a rounded or cup and handle bottom.  I am watching it forming on the gold chart although I have not yet marked it explicitly.

We have not seen many chart formations come to fruition because of the relentless capping of the prices with synthetic gold.