Stocks and Precious Metals Charts - La Belle Aurore - We'll Always Have Paris

 

"You might think that parking your money in a big bank like JP Morgan Chase would insulate you from fraud.  It’s just the opposite.  The big banks are the biggest perpetrators of financial fraud – fraud that affects millions of us, either directly or indirectly, on an ongoing basis.  While they are wrist slaps when properly scaled, you can see the list of 'settlements' made between the government and the big banks here.  These 'settlements,' the aftermath of Wall Street's near production of a second Great Depression, entailed not a single criminal indictment.  The top two repositories of banksters, based on the number of settlements, are Bank of America and JP Morgan Chase.

The banks engage in fraud for two reasons.  First, they profit from swindling the public.  Second, they can get away with it via a simple technique.  They buy off the regulators with promises of enormously lucrative jobs when they leave government service, and they buy off the politicians with huge direct and indirect campaign contributions."

Laurence Kotlikoff, When Banksters Buy Regulators and Prosecutors, Forbes, October 21, 2014


"It’s bad enough that two trial lawyers have written a book [cited above] comparing Dimon’s leadership of the bank to the Gambino crime family, and Bloomberg News spilling the secrets coming out of the Chicago precious metals trial, but now Dimon is likely to see new headlines linking his name to questionable payments to Tony Blair and unknown others."

Pam and Russ Martens, JPM Whistleblower Cites Payments to Tony Blair, Wall Street on Parade, August 3, 2022


“Berlin.  I used to love this old city.  But that was before it had caught sight of its own reflection and taken to wearing corsets laced so tight that it could hardly breathe.  I loved the easy, carefree philosophies, the cheap jazz, the vulgar cabarets and all of the other cultural excesses that characterized the Weimar years, and made Berlin seem like one of the most exciting cities in the world.”

Philip Kerr, Berlin Noir: March Violets


“We'll always have Paris.”

Howard Koch, screenwriter, Casablanca

 

Stocks were in risk on mode today, for whatever reason one wishes to imagine in order to rationalize its irrationality.

The Dollar was up marginally.

Gold and silver were hit lower again as is customary ahead of a non-farm payrolls report.

The amount of criminality and corruption in the US financial system should never be underestimated.

Why the American people allow themselves to be so easily distracted by divisive social controversies while being robbed blind by the kleptocracy is almost amazing.  

But there is historical precedent.  We know it, but we just cannot see it in ourselves, yet.

We are canning tomatoes tonight, and I did the blanching and peeling on eight quarts of San Marzanos.

Even with all the lack of rain, a proper drought in the past month, the garden is doing very well.

I have a huge pot of green beans that I am making 'West Virginia style.'  My wife's maternal grandmother was from there and she always called them that.    

Basically you fry bacon and saute an onion in a big pot and then steam the green beans down into them all, cooking out the liquid so that the beans are sauteed as well.   Its very good especially if you have more mature beans that are not suitable for steaming.  Try to pull off the strings before cooking.

My mind kept returning to Paris today.   The last time I was there was in 1992, when I was attending a graduate business seminar at ESSEC concerning the proposed European Union.  I think the slogan at the time was 'EU 92.'

The queen was tagging along on this trip and had a grand time, although she never went on a business trip again with me, as leaving the newly born young man with her parents was jarring for her.

Daisy gave the young man his first face licks today  He was beaming.

Have a pleasant evening.

Stocks and Precious Metals Charts - Old As Babylon, And Evil As Sin - Comex Option Expiration

 

"The whole town and all its inhabitants are quite drowned in carnival din, masks and confetti.  And on top of that the news of the Reichstag fire.  Dancing on a volcano."

Alban Berg, Letter from Berlin, September 1, 1933


“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


"There are so many ways of escaping from that which one fears, and not the least of these is hatred.”

Philip Kerr, Berlin Noir


"When you legitimize yourself entirely by inventing enemies, the truth ceases to matter, normal restraints of civilization and decency cease to matter, the checks and balances of normal politics cease to matter.  

The dangers of fascist politics come from the particular way in which it dehumanizes segments of the population.  It limits the capacity for empathy among other citizens, leading to the justification of inhumane treatment, from repression of freedom, mass imprisonment, and expulsion to, in extreme cases, mass extermination."

Jason Stanley, How Fascism Works

"Fascism begins the moment a ruling class, fearing the people may use their political democracy to gain economic democracy, begins to destroy political democracy in order to retain its power of exploitation and special privilege."

Thomas Clement Douglas


"Behind the concrete, the visible events, behind all the objective, logical considerations, we find that which goes beyond the merely rational: the struggle against evil, against the servants of the antichrist. 

Everywhere and always demonic powers lurk in the dark, waiting for the moment when man is weak; when of his own volition he leaves his place in Creation, as founded for him by God in freedom; and when he yields to the forces of evil, he separates himself from the powers of a higher order; after voluntarily taking the first step, he is driven on and on to the next and to the next, at a furiously accelerating rate."

Die Weiße Rose, Fourth Leaflet, Munich, 1942


“Each day we are becoming a creature of splendid glory, or one of unthinkable horror.”

C. S. Lewis


Stocks were able to rally today, and managed to hold on to the gains and go out near the highs.

The Dollar declined back to the bottom of the 102 handle.

Gold and silver rallied well, but were sold back down during the afternoon, still managing to hold on to some of their gains.

There will be a fairly significant precious metals option expiration on the Comex this Wednesday the 25^th.

 Pricing shenanigans are customary.    It's what they do.

Have a pleasant evening.

Citi and a Cartel of Global Banks Fined $1.2 Billion By EU over FX Market Rigging

I wanted to call your attention to this story about brazen manipulation in the forex exchange markets by the Banks for three reasons:

1. The markets are too large to be manipulated. When accusations of market manipulation are made, spokesmodels and apologists will dismiss them by saying 'the market is too big to be manipulated' and then cite some gross total of the market trade. This is utter baloney and they know it. Prices are set at the margins, not on the whole, and there is no market that is too big to be manipulated in some manner by big enough players.

2. The government is the problem. If there was a free market you would not see any manipulation. Get rid of all government involvement. This is such a howler that I won't even waste many words on it, except to say that this sophistry implies that if we eliminated the law, then there would not be any crime.  This is utopian nonsense, repeated as slogans by those who have stopped thinking for themselves.

3. The Banks are too well regulated to manipulate markets.  It is the same big banks that are involved in these market manipulation schemes, again and again. They are serial felons who always blame each instance of the felony crime to some 'rogue element' or isolated trader, which is also nonsense. And in each case the fine, while nominally large by individual standards, is really just a cost of doing business.

These market manipulation schemes will end when people reject the narratives put forward by the Bankers and their enablers and think tanks, and choose to elect people who are serious about financial and political reform.

At some point the long term price/physical manipulation in the gold market is going to blow up, and no one in authority could have seen it coming. Because their eyes are firmly closed and gaze averted.

And Trump is no different from his predecessors, and in some ways may be worse.

"Citigroup Inc.[aka Dr. Evil], Royal Bank of Scotland Group Plc and JPMorgan Chase & Co. are among five banks that agreed to pay European Union fines totaling 1.07 billion euros ($1.2 billion) for colluding on foreign-exchange trading strategies.

Citigroup was hit hardest with a 310.8 million-euro penalty, followed by fines of 249.2 million euros and 228.8 million euros for RBS and JPMorgan, the European Commission said in a statement on Thursday. Barclays Plc was fined 210.3 million euros and Mitsubishi UFJ Financial Group Inc. must pay nearly 70 million euros as part of the settlement with the EU’s antitrust regulator.

Traders ran two cartels on online chatrooms, swapping sensitive information and trading plans that allowed them to make informed decisions to buy or sell currencies, the regulator said. Many of them knew each other, calling one chatroom on the Bloomberg terminal the "Essex Express n’ the Jimmy" because all of the traders but one met on a commuter train from Essex to London. Other names for rooms were the "Three Way Banana Split" and "Semi Grumpy Old Men."

"Foreign exchange spot trading activities are one of the largest markets in the world, worth billions of euros every day," EU Competition Commissioner Margrethe Vestager said. "These cartel decisions send a clear message that the commission will not tolerate collusive behavior in any sector of the financial markets."


...The effects of the EU decision on banks will be “relatively mild, because the fines aren’t huge,” said Aitor Ortiz, an analyst at Bloomberg Intelligence. Referring to the third probe involving Credit Suisse, he said “we may still have to wait another year” to see the decision, because the bank has refused to join a settlement that would grant lower fines.

Traders exchanged information about outstanding customers’ orders, bid-ask spreads, their open-risk positions and details of current or planned trading activities. They would sometimes agree to "stand down" or stop a trading activity to avoid interfering with another trader in the group. They traded 11 currencies, including the euro, the U.S. dollar, the British pound and the Japanese yen...

Read the entire story here.

Blast From the Past: James Cramer On How To Manipulate Markets - B Day (Brexit) Tomorrow

Here is a nice synopsis of the various 'legal' and not so legal but overlooked-by-the-snoozing-regulators ways in which the financial trading desks and hedge funds manipulate markets intraday.

In some ways this is from the dark ages, because HFT algos can do the job so much better.

But all the basic principles remain the same, including manipulating the financial news and painting pictures with key markets, like the SP 500 futures for example.

And it is always a plus if your rigging of the market is along the directions favored by the big Wall Street Banks and their Federal Reserve System.

As a reminder, the UK is expected to 'trigger' Article 50 (Brexit) tomorrow.  Brexit is not a one off event, but will involve a negotiation process that will probably drag out over a couple of years.  Still, it is a sign of the times.

The Historic Moment Draws Near for Brexit

As always, non-professionals should never try to trade short term in these markets.   They are far too bent in the favor of insiders and pros.  I doubt that it could be more obvious anymore after the revelations of the last seventeen years or so.  I don't know if it is the worst in the post WW II era, but it pretty much seems to be right up there with the 1920s.

Get right and sit tight.

This has been a public service announcement.  lol

Gold Daily And Silver Weekly Charts - New All Time Highs - We're Flying!

 

Nothing else matters now, because We're flying!!

 

This is the combined precious metal and stock market commentary for Friday the 13th.

 

A fresh new bubble in stocks has achieved liftoff.  What could go wrong?

 

Shaking off the very weak economic news from the real economy in the latter part of this week, stocks took the opportunity to break out higher on relatively low volumes ahead of a three day weekend because of President's Day on the 16th.

What sparked this rally is the 'new ceasefire' between the Ukraine and Russia, and perhaps even more importantly, the continuation of talks between the troika and Greece with regard to the debt crisis there.

 

And mostly, because they could.  Motive and opportunity.

This is a hot money bubble. The Wall Street wiseguys had the opportunity for a new high and they have taken it, consequences be damned.  The political animals will look the other way, as long as the campaign handouts keep coming, and justice is especially blind given the right career incentives.

The strong dollar may be painful for the real economy, but the benefit is that it attracts foreign investment in paper, and gives the Banks and the hedge funds the ability to buy up assets on the cheap.  It increased the consolidation in commercial business, especially in the healthcare field which is ripe for the plucking. 

 

It helps to inflate dollar denominated financial assets.  It is a boon to Wall Street.

 

The Fed does not have to tighten interest rates to put some reins on this.  They have always had the discretion to raise margin requirements and a variety of other tools as the primary bank regulator for which they volunteered after the last crisis in which they were instrumental.

The Fed and the regulators and Wall Street are wholly responsible for this.   We are caught in a boom and bust cycle thanks to the distortions from an oversized financial sector and a corrupt political system and the acquiescence of the media and the professional classes.

It will end badly. Make no mistake.  When it does, everyone will be amazed because 'no one saw it coming.'

Serial policy errors. But it is swelling the net worth of the one percent, and so nothing will be said.

 

But in the meantime, we're flying!

 

Have a pleasant weekend. See you on Tuesday.

 

 

 

 

Senate Report Reveals Powerful Manipulative Positions of Goldman, JPM In Global Commodities

"We had to struggle with the old enemies of peace--business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob."

Franklin D. Roosevelt

"Why is JP Morgan getting so much heat?   Maybe because it is a massive international crime syndicate."

Matt Taibbi, Talking JPM With Sam Seder

JPM and Goldman sought and obtained manipulative powers in global commodities, even while they were being bailed out on the back of the American people?   Oh no, nothing like this could be true, or so the shills and toadies of the moneyed interests will say.  Just get the government out of our way, and everything will be all right.  The market is naturally rational and efficient, pure and pristine.   No Bank would risk its reputation by doing anything illegal.

Especially when they buy off and intimidate enforcement, write the laws, and do what they will. 

I doubt that anything meaningful will be done about this.  The corruption runs deep.  In corporatism the private and public elites are largely interchangeable.  Different roles, similar objectives.

The politicians may make a good show of it, and talk harshly to their witnesses.  And then take their money, and lick their hands.

But at least we know more about what is true, and what is not.

Perhaps this may help you understand those who do not wish to remain under the power of the Banking cartel, and may be in a better position to do something about it.

Related: Wiseguys: Drawing Parallels Between the Mafia and Wall Street

Dealbook

Senate Report Criticizes Goldman and JPMorgan Over Their Roles in Commodities Market

By Nathaniel Popper and Peter Eavis

November 19, 2014

A two-year Senate-led investigation is throwing back the curtain on the outsize and sometimes hidden sway that Wall Street banks have gained over the markets for essential commodities like oil, aluminum and coal.

The Senate’s Permanent Subcommittee on Investigations found that Goldman Sachs and JPMorgan Chase assumed a role of such significance in the commodities markets that it became possible for the banks to influence the prices that consumers pay while also securing inside information about the markets that could be used by the banks’ own traders

Bankers from both firms, along with other industry executives and regulators, will testify about the allegations at hearings on Thursday and Friday.

The 400-page report, which was made public on Wednesday evening, included case studies on nine different commodities in which banks have taken big positions, including the 100 oil tankers and 55 million barrels of oil storage that were owned by Morgan Stanley, and the 31 power plants owned by JPMorgan at one point.

The subcommittee discussed several reasons that these commodity operations could create problems. The potential for price manipulation and the unfair advantage that banks can gain in these markets were among the top concerns expressed by Senator Levin and Senator John McCain, the top Republican on the subcommittee.

But both senators also echoed previous warnings that the enormous holdings of oil, uranium and other hazardous materials could expose the banks to significant legal liability that could, in turn, lead to runs on the banks.

A 2012 study by the Federal Reserve, cited in the report, found that banks have not put aside enough money and insurance to adequately prepare for the “extreme loss scenarios” involving commodities...

Read the entire article here.

Lawsuit: CME Futures Market Creates 'Guaranteed Winners and Guaranteed Losers'

How appropriate that this morning Bart Chilton is appearing on Bloomberg TV with Terry Duffy, President of the CME, laughing it up with the 'news anchors' about 'Why Today's Markets Are Better Than Ever.'

I suppose that the US markets of today are quite efficient and effective. 

The public may just not understand in 'what way' they are intended to be efficient.

And may the odds be always in your favour.

This is a very brief excerpt of a well written story from Wall Street On Parade.

You may read it in its entirety here.
 

Lawsuit: Chicago Futures Market Creates “Guaranteed Winners and Guaranteed Losers”
By Pam Martens
November 6, 2014

Last week three futures traders told a Federal court in Chicago that it’s not just the high frequency trading firms that are reaping a windfall but the exchanges who are engaged in a conspiracy with them to create guaranteed winners and guaranteed losers...

But what Judge Charles P. Kocoras has been hearing in this case for months are these hair-raising charges of 'clandestine contracts' between the futures exchanges and high frequency traders; that the exchange is giving high frequency traders early peeks at data before the rest of the market under a process known as the 'Latency Loophole'; and that potentially as much as 50 percent of the trades on the exchange are 'wash trades.'

Nanex: The Market Is Rigged, With Details

"A rogue does not laugh in the same way that an honest man does; a hypocrite does not shed the tears of a man of good faith. All falsehood is a mask; and however well made the mask may be, with a little attention we may always succeed in distinguishing it from the true face."

Alexandre Dumas

The market is rigged.  Oh no, this could not possibly be correct, say the trolls, shills, revolving door careerists, media carnival barkers, and conmen's assistants. They simply do not understand it!

The analysis from Nanex, rich in details, does not only apply to very large orders in excess of 10,000 shares.  I have seen the same type of activity in smaller markets with orders of only a few thousand shares.  Anyone who has Level 2 access can observe it if they look closely enough, and have the will to look with their eyes and see.

These pampered princes of Wall Street are steadily degrading the markets, and distorting and taxing the real economy with their bias to speculative grifting rather than facilitating productive investment.

I do not agree that a 'free for all market' would be better than this.  Some of these schemes are as basically corrupt as a West Coast gangster's attempt to control all the horse racing wire services information for his own benefit.  And you don't fix corruption by firing all the police and prosecutors.

There are a few things that would go a long way to fixing this.  Fairness is not so terribly hard to establish if you do not wish to twist it with the faux complexity of a confidence racket that advantages some because.

I suspect that nothing will work until we root the big money out of politics.  Its corrupting influence touches everything and is corrosive to the common good, giving scandal to all by its shameful example. 

In some sense, this would be turning the markets back to what they were before they became utter casinos dominated by big players unleashed by the repeal of Glass-Steagall and the divestment of sound regulation in the name of a utopian market ideology that serves to promote a new level of systemic criminality.

This is analysis and conclusion below is from NANEX.

"...All this evidence points to one inescapable conclusion:

The order cancellations and trade executions just before, and during the trader's order were not a coincidence. This is premeditated, programmed theft, plain and simple.

Michael Lewis probably said it best when he told 60 minutes that the stock market is rigged.

To the High Frequency Traders (HFT) that make fantastic claims about providing liquidity, perhaps one should ask: "what kind of liquidity"? To the now obvious, ludicrous claim that "everyone's order uses the same tools that HFT uses", we'll just say, the data shows otherwise. To Mary Jo White and other officials who claim the market isn't rigged and that regulators need to look at the data before making any decisions: well, you made it this far - if things aren't clear, re-read this expose (or the nearly 3000 others pages we've published), or simply call us and we'll explain it to you. Or dust off Midas and lets us show you how to work with market data.

One more note to the SEC in particular - if you believe that the industry can fix these problems on their own, then we believe you are no longer fit to regulate, because that is not, and never was, how Wall Street works. Honestly, a free for all, no–holds–barred environment would be better than the current system of complicated rules which are partially enforced, but only against some participants. And make no mistake, what is shown above is as close to automatic pilfering as one can get. It probably results in a few firms showing spectacularly perfect trading records; it definitely results in people believing the market is unfair and corrupt.

And to CNBC and other financial media companies who say these problems have all been fixed - we think you might have been lied to. Probably by the ones doing the market rigging. A certain HFT lobbyist group immediately comes to mind - the one that presents the same tired "liquidity, spreads, costs" argument, without data to back it up. This paper shows that the liquidity claim is clearly a lie.

Academics interested in continuing the study shown on this page - we believe we know how you can find and quantify these events. Serious inquiries only please.

Note that none of this would be possible if the direct feeds weren't illegally supplying HFT with faster information than the SIP.

And finally, to our regular readers: we are taking a break. Everyone has a limit to how much corruption they can witness and digest in a given period of time and we've simply reached our limit."

You may read the detailed examination and explanation of this from Nanex here.

SP 500 Futures Intraday - You Can't Follow the Opera Without a Libretto

This is from my post earlier today at 11:17 AM.

"I may adjust my outlook if the September SP 500 futures do not hold at 1518 which is the 50% Fibonacci retracement level. Right now we are at 1553 which is about a 38.2% retracement from the highly controlled, almost straight line rally that began at the beginning of the year."

Here is what the futures market looks like now in the chart below.   This market is trading on the technicals. 

Technicals is sometimes a euphemism for calculated insider manipulation, as in a 'wash and rinse.' You convince the small investor to get in despite their fears at some higher price, and then one pulls the rug out from under them since the entire rally has been manufactured, and buy the same paper back on the cheap, thereby skinning them once again.

Some of this is herd instinct with the smaller traders, but the big dogs at the Banks and funds are setting the tone in this trade with all the passion of a McCormick reaper.

This is the norm for deregulated or under-regulated markets, a far cry from the 'efficient markets theory' which is a canard. This was standard operating procedure in the 1920's before reforms were introduced.

If you do not believe this happens, if you do not believe that traders signal each other of their intentions, if you do not know that the big trading desks watch the structure of the market as in who is holding what and then act on it,  if you do not understand that the financial sector is being recapitalized by looting the real economy,  then you may be either a shill for the house, witting or not, or one of the suckers at the table.

"It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair

We may have more downside to the 50% retracement, and it could be more IF something real happens.  That means something real, something fundamental, and not a manufactured event off some mild Fed jawboning. 

But in my opinion everything that has occurred since Bernanke's non-statement last week has been the second act in this opera buffo known as the US financial markets. 

Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets

Are there any markets that have not been corrupted by lax regulation, and as a consequence by Banks who have been emboldened in their insatiable greed by the lack of effective enforcement of the rules and equal justice for all?

It is somewhat ironic that this news of routine price rigging comes on the revelation that Obama is replacing Gary Gensler, Chairman of the CFTC, for being too aggressive in seeking to regulate the Swaps markets and angering some foreign banks (read London trading operations of the big multinational banks). 

London has become a favored haven for corrupt financial practices such as 'the London Whale.'

I will suggest to you that this is still just the tip of the iceberg.  And for those who assert that there is no manipulation in the precious metals markets, despite all the odd price action and blatantly predatory selling raids, I would suggest that they are obviously lacking in something, exactly what I cannot say.

There will be no sustainable recovery until the impediments to honest price discovery and the pernicious tax of corruption is eliminated through greater transparency, equal enforcement of existing laws, and serious reform. 

One can seriously wonder how confident they can be that the governments of the US and the UK, and of Europe as well, are seriously committed to performing the basic function of maintaining honest markets for their constituents.  If market confidence breaks, there will be hell to pay.

Even if they hide and tolerate this corruption for the sake of 'confidence, ' markets have a significant role to play in the economy.  That function has become warped and perverted through corrupt practices, with serious real world results, which accumulate and worsen over time, with consequences that we have yet to discover.

Breaking News from Bloomberg:

"Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter..."

Let's File This Email About Greenspan and Replicating the Gold Standard Under 'Irony'

I found this little gem, and added it to my collection of reminders that Greenspan said that fiat money 'worked' because central bankers had learned to 'replicate' the gold standard through their policy actions.  I had said 'emulate' but perhaps that was a quirk of memory.

This is from a publicly published note by Jude Wanniski titled Savings Glut.

From: Jude Wanniski < jwanniski@polyconomics.com
To: Ben.S.Bernanke@ * * * * *.GOV
Subject: Fwd: Re: Savings glut
5:44 pm, 7/21/2005

"Greenspan was plain awful in his testimony this week. But members of Congress don't know any better, so they slobber all over him. He again said we don't need a gold standard, because he has demonstrated since he came to the Fed in 1987 that the central bank could 'replicate' the gold standard.

Take a look at the dollar/gold price from 1987 until today and you will see how terrific he has been in replicating the gold standard. I can't wait for him to leave, Ben, because he now has so much invested in his Fed legacy as a Maestro that he could never admit he screwed up almost all along the way."

Wanniski sent this to Bernanke, who was at that time either on the Fed Board of Governors, or on the Council of Economic Advisors to W Bush.  I can't recall the exact date of the transition.

The note is almost a howler, given the excesses in trickle down helicopter monetization and banking subsidies that Bernanke has engaged in since becoming the Chairman of the Fed, and the manner in which he has haplessly ravaged the quality of the Fed's Balance Sheet, while accomplishing little except extending the unsustainable status quo.  The Fed's performance as a major banking regulator has been almost pathological.

And I also like this note because it helps to dispel the myth that the Fed does not watch and worry about the price of gold, which we have known about for quite some time. It is tied to their aspirations on interest rates, through the management of market perception. Larry Summers wrote about this relationship in Gibson's Paradox.

Well, nothing has changed, the irresponsibles are still in charge, and they are being defended by their economic partisans while they degrade the national currency to support the looting of the system by their cronies from Wall Street and the Banks. 

The idea that stuffing the one percent's already swollen pockets with even more hot money will stimulate the economy would be funny if it was not having such tragic consequences, with even worse to come.

My only regret is that I wasted so much time trying to raise these concerns on economic chat sites with establishment economists who clearly did not wish to hear or see anything but the party line.  This is about when Brad DeLong, in explaining why he had to censor my concerns about Greenspan's monetary policy and the growing credit bubble said, "Greenspan never made a policy decision with which I disagreed."  Well Brad, how did that work out in retrospect? 

And as bad as the neo-Keynesians may be, the Chicago-Columbia austerity crowd are even worse.  Economics is a generally disgraced profession with only a few bright lights.

The stock, bond, and commodity markets are a joke. The Banking System resembles a control fraud.

The manipulation of the metals, equity, and credit markets is approaching a financial war crime, it is so contemptible. Although I am sure it will have its bureaucratic defenders.

At long last, they have no shame.

Another crisis is coming.  They know it is coming, and are attempting to cover it up while they make themselves and their patrons comfortable.  They are trying to stifle all alarms and indicators to the contrary.

The market is whatever we say it is, indeed.  And this time it will be worse.

I am sorry to speak so bluntly.  I keep trying to maintain some optimism, but these jokers are barking at the moon.  This disconnect between reality and the official story is becoming almost unbelievable.

Matt Taibbi Discusses the Market Rigging in the Swaps and LIBOR Markets By the Banks

Derivatives and many real world calculations of risk and price are based on a relatively few published data, such as LIBOR.

Similarly, the 'spot' price of gold and silver is based in large part on the front month contract for gold and silver on the Comex. And those prices in turn have enormous leverage over the price of mining stocks.

Some have pointed to the 'physical market' in London for metals at the LBMA as the true price market for physical bullion, with their AM and PM 'price fix.'  And while it is true that the LBMA is a market dominated by insiders, with less disclosure than many exchanges,  it has come out that even on the LBMA the price is largely based on paper trading with leverage approaching 100 to 1. 

And LBMA is heavily interconnected with the Comex.

Since those making markets on the Comex in metal futures deliver a very small percentage of the actual gold and silver that is traded on paper, and much of that is settled for cash, the opportunity for price rigging is significant, hugely so.

And as in the case of other long running market schemes, like Bernie Madoff's, the stony silence and arrogant denials of any irregularities, despite very unusual trading activity in quiet hours and around key dates, is disconcerting considering the opaque nature of some unusually large market positions and significant circumstantial evidence with regard to motive and opportunity.

"All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings ­ in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP ­ are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above.

And those who are doing it can get away with it. Forget the Illuminati ­ this is the real thing, and it's no secret. You can stare right at it, anytime you want."

Matt Taibbi: Everything Is Rigged

Matt Taibbi: Everything Is Rigged - The Biggest Price-Fixing Scandal Ever

“The worst crimes were dared by a few, willed by more, and tolerated by all.”

Tacitus

There are more scandals to come.   Wall Street is now a pathological environment, and the City of London is as bad or worse.

When someone raises their voice over these abuses they are often met with stony denial and ridicule.  That is the credibility trap at work.  Those who owe their positions to the system, as corrupt as it may be, feel the need to defend it rather than reform it.

There will be no sustainable recovery until the system is reformed.  

Rolling Stone
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
By Matt Taibbi
April 25, 2013

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps...

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings ­ in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP ­ are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati ­ this is the real thing, and it's no secret. You can stare right at it, anytime you want.


Read the entire story here.

Market Manipulation, News, and Leverage

This piece on leverage and market manipulation came out a few weeks ago. Philip Byrne reminded me about it, and he is right.

Using leverage in these markets is a dangerous strategy.

I was also reminded of this because of the recent 'leak' of the FOMC minutes by the Fed that demonstrated that they had a 'preferred recipients' list who receive the information ahead of the markets, although normally not by a day.

And I think one might suspect and assume that there is more ad hoc leaking going on than the Fed would care to admit, and other key data points as well, especially from non-governmental sources.

So using leverage as an outsider is double deadly in a thin market based largely on policy and artificial flows of hot money.   In this case he had been speaking about shorting stocks with leverage in the stock market.  But he  draws the same lesson for levered long positions in commodities.

I also have to chuckle a little.  Some of the financial networks are pitching stocks heavily as a 'safe investment' now that commodities like gold have been proven to be unreliable.  And they are trotting out the usual suspects to make the pitch.

I will never forget how former Fed Governor Wayne Angell remarked that 'the Fed will drive people out of their savings and money market funds and into stocks.'  This on a financial network in 2004, and it worked; people piled into financial assets and a housing bubble, with Greenspan himself as cheerleader.  And they got slaughtered in the 2008 market crash. 

Nicely done.  And now its come on back in suckers for another handoff.  Take your money out of the banks and commodities and pile into stocks, which have already been run up on some record thin volumes.   Its a safe haven!

This is from Phil Byrne:

"The best thing about yesterday is that the Fed gave us a glimpse of the future. Those people who owned gold with leverage were waiting to have their throats cut – almost begging for it.. The best part is that this market operation has created instability where they once had stability. Nobody will take a levered position against them anymore – not on the stocks short side and not on the levered long gold side.

Here’s what I wrote to clients a couple of weeks ago:

Market Manipulation

The price of gold is a good segue into explaining how the markets are being manipulated.

Anyone who has read about the Japanese martial art known as Judo knows that the basic tenet of the art is to use the attackers leverage against him. Instead of picking up one’s opponent and throwing them down, Judo experts redirect the force created in their opponent’s attacks to knock them down. It’s the same in the markets.

We’re not the only investment firm that understands the problems in our economy and markets. Since 2008, a lot of work has been done to understand the problems in the world and this work has led to bets on the market – oftentimes with leverage such as selling short a stock, buying a put option, or borrowing money and buying gold.

Whenever investors use leverage, they leave themselves vulnerable because leverage turns small losses into big losses – it’s the reason why Lehman Brothers is no longer around. Knowing this, the Fed and its agents wait for these traders to place leveraged bets, and then the Fed’s agents forcefully take the other side of the trade. This is why we include charts of the VIX – they represent leveraged option trades.

A year ago, US corporate earnings growth was slowing meaningfully, Japan was recovering from a nuclear disaster worse than Chernobyl – one that continues to get worse – and at the same time, southern Europe was at the point where nobody would buy their debt and traders were making extreme bets against European markets and the European currency.

All it took was a promise by Europe’s central bank to “do whatever it takes” to prevent bankruptcy and the markets reversed in a huge way. Anyone betting against the European central bank incurred heavy losses. Later in the year, the Fed, then the Bank of Japan did the same thing with similar rallies.

The market has figured out this strategy which is why nobody is willing to bet against the world’s central banks in a meaningful way any longer. It’s the reason why markets are going up despite the tremors we face such as Cyprus, Italy, Spain, Portugal, North Korea, China, Japan, Argentina, and economic stagnation in the US.

Without speculators to crush, the Fed’s ability to keep the markets moving higher is seriously compromised.

Gold was the final bet against the Fed – they’ve won and by winning, they’ve lost!"

Philip M. Byrne, CFA
Chief Investment Officer
GeoVest Advisors Inc.

Intermediate Gold Chart Revisited - Range Trade in the Currency War

"There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice, that does not live by secrecy."

Joseph Pulitzer

I think that gold is caught in a range trade since its big run up to a record high.

The range is roughly between 1550/1570 and 1800.

I do not think the government is funding this directly, but indirectly the funds are coming from the Fed and its cronies, and well as de facto policy endorsement from the government, so that the regulatory bodies turn a blind eye to the massive shorting at opportune times.

The short interest money flows are getting rather intense as the gold price dips lower to the bottom end of the range, showing increased resistance from stronger hands. This would also indicate a rising or stable interest rate caused by short selling rather than by long liquidation.

The metal bears spent quite a bit of time and ammunition in the middle of last year trying to break support.  So I think we might see another contest at that level hold again, or even become exhausted before we reach it.   I cannot know how strong the hands of the metal longs have become.  And of course, the ready supply of paper to throw at them. 

I think the leverage in the metals is creeping to higher highs.  It will be an interesting contest to watch, as the shorts keep expanding their bets, as indicated by changes in open interest, aided by a decrease in margin requirements at the Comex, and the longs hanging on to a brazen, relentless pounding from London and New York.

As an aside, some fellows talk about backwardation in the gold futures prices, but I see a normal contango.  This is merely an observation from the data. And when people talk about supply constraints, at least some data to show this would be useful to see to back that up.   One can infer it, but it is not really credible without some factual data. 

I don't think this is a bullion play, but rather a paper play, for now.  But as it goes on, it takes an obvious toll in the real world.  Just like the ongoing bailouts of the banks using the creation of currency. 

But at some point the tide will turn, and the timid will find their voice once again. It just is a matter of how much damage has been done, and what demagogues may arise to attempt to tap the wellsprings of confusion, hatred, and resentment.

The 'GotGold Report' shows an interesting chart, that the big short in gold is being driven by the 'managed funds' boys, which includes the hedge funds. This implies that their customers might get taken out to the woodshed in a high powered reversal.

Several commentators including Denver Dave, Harvey Organ,  Him Sinclair, and Dan Norcini among others, have been seeing the same things in the COT reports, but I like this chart which GotGold has created, as it is shown here.   There are none braver than those playing with Other People's Money, especially to the extent that they are insiders and the Others are not.

Peter Hug, the 'trading director' for Kitco Metals, was on Bloomberg TV today calling for a decline in gold to the 1525 level, probably based on the last chart shown below.   I know Kitco buys and sells metals on the retail side, but I wonder what trading they do to merit a 'trading director.'  Are they arbitraging customer sales and gold and silver held in non-allocated accounts?  I am sure that they are hedging their inventory exposures.  I do not think they offer managed funds, so they are probably trading for their own book.

So let's see what happens.  I have no crystal ball unfortunately. But I was willing to dump some  hedges today, in order to free up cash for some possible long buys in the near future.  I will have to watch how the 'sequester' plays out.  Kicked cans and down the road comes to mind.

It would be customary to get a plunge and then a snap back in a capitulation bottom.  However, there is a reasonable chance that the shorts capitulate, either based on an event or sheer exhaustion from trying to meet their downside price objective.

But longer term this is damaging the supply sources and the mining industry.  Desperate central bankers do not really care about this, but it will have its way, sooner or later.  They are truly frightened of losing control.

As a reminder, next week is Comex option expiration, and I suspect we will see a bottom either around that time, or later this week.  Maybe even today.  This is based on the structure of the options, which unfortunately is a fluid situation, so it is not as predictive as one might otherwise hope.

And I do think, almost beyond reasonable doubt, that this 'thrown rope' higher in the SP futures, with the exception of the dip around the fiscal cliff scare, is being driven indirectly by Fed and Administration policy.

“The stock market is the key player in the game of economic growth.”

Alan Greenspan to Maria Bartiromo

And besides targeted tax cuts and loopholes, there are few better methods of channeling liquidity to the one percent that are betting than the equity markets and bond markets, supplemented by privileged access to non-public information about policy, as well as managing public perception of policy and the economy.

"If we understand the mechanism and motives of the group mind, it is now possible to control and regiment the masses according to our will without them knowing it."

Edward Bernays

This bubble in stocks and tinkering with real world supplies of products will end badly, as always.  And it does not provide much comfort to think that the best defense against corruption for many of the leaders of the West is ignorance and incompetence.  It seems like a great confederacy of greed, shepherded by the rule of dark powers, and spiritual wickedness in high places.

A Commentary on the Metals Markets: Gold and Silver Price Controls

This article excerpted below by Jeff Lewis seems to capture the nature of the recent action in the metals market. And the SP stock futures market, inversely. It is fairly heavy handed stuff.

I often watch 'the tape' throughout the day, and have been doing so, off and on, for the past fifteen years, and part time much longer, since 1976 at least.  What I see is how he describes it.

I have been through these cycles in metals and stocks many times, almost too many to count. And so I am not so overly moved one way or the other.  That is the benefit of no leverage, a proper allocation, and a suitably long time horizon. 

If I am concerned, it is because this sort of thing undermines the confidence in the markets and the financial system, and ultimately the currency.  And judging from the polls, the confidence and approval is quite low.

This fakery and gimmickry is not productive, and does not contribute anything to an economic recovery.  It does not recommend hard work, and savings, and sound investment. 

Quite the opposite, it teaches the arts of the conman,  greed and corruption, by example.  It makes the people cynical and ashamed of their leaders.  And that is corrosive of society as a whole, where the ends justify the means, honor means little, and oaths of office even less.

The plutocrats who recognize no justice but their own do not want to hear it, but this is the very essence of moral hazard.

"Consider for a moment the remarkably high volume of COMEX contracts traded during the days when the spot prices for gold and/or silver were driven sharply lower.

An illusion of weakness tends to prevail in these situations because the majority of precious metal traders do not seem to understand the difference between a paper claim and the real thing, nor do they seem to realize that only paper contracts or claims are being sold when the price of the precious metals drops — not the actual metal itself. Basically, the futures contract seller cannot be forced to deliver physical metal, and so sellers can simply settle their profit or loss on the trade in cash.

Furthermore, the fact that such price drops are typically initiated by the dumping of huge swaths of paper contracts by proprietary traders working at giant bullion banks that are too big to bail and/or fail, makes them seem more like manipulative attempts to scare the precious metals market into a selling panic.

No one is actually selling real bullion during these allegedly “not-for-profit”-led precious metal sell-offs.  Instead, the paper market is moving the metal prices as the tail seemingly wags the dog.

Perhaps this was once a civilized way to discover the fair price of a commodity, but in today's age — regardless of the obvious and highly questionable concentration of only a few sellers comprising the entire net short position of the futures market — every market trades in a high speed, momentum-based, and computer program monitored environment.

This manipulative activity is also permitted by regulators and exchanges in the equities market via dark pools that spoof and front-run millions of unsuspecting penny stock day traders who seem caught up in the race to catch the elusive Red Queen of a good trade.

Practically every notable move lower comes from concentrated short sellers intentionally destabilizing the market to force precious metal prices down, although the so-called exports never seem to see it this way. Furthermore, no matter how blatant the sudden dumping is, it is almost always painted and viewed publically as a 'longs selling' event.

If all of that were not enough, predictable sell-offs almost always occur after margin announcements. As a case in point, maintenance margins were lowered last week, thereby providing an incentive for unsuspecting momentum or technical oriented longs to enter the market.

As usual, these weak longs were quickly harvested in less than two trading sessions after the margin announcement was made...

The good news, or the flip side, is that open interest has remained high in the precious metals futures markets, despite the numerous downdrafts. This indicates that stronger hands are accumulating..."

Jeffery Lewis, The Untold Reality of Gold and Silver Price Controls