Stocks and Precious Metals Charts - Destroyer of Markets - Audacious Oligarchy

“A lie that is half-truth is the darkest of all lies.”

Alfred Lord Tennyson


“Pay no attention to the man behind the curtain!”

Noel Langley, The Wizard of Oz, screenplay


"I know nothing that I may say can influence you. You have no souls to be influenced. You are spineless, flaccid things. You pompously call yourselves Republicans and Democrats.  You are lick-spittlers and panderers, the creatures of the Plutocracy."

Jack London, The Iron Heel


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

C. S. Lewis

Stocks bounced today.

This was somewhat expected as noted yesterday. Their declines had reached the fibonacci retracements for a correction.

Gold and silver also had healthy bounces today.

Gold is a trading range.

Silver is in an intermediate consolidation pattern.

The Dollar laid off a bit from its recent gains.

Donholio continues to harm his chances for the next election by boasting or otherwise revealing things that he did.    In this latest he confessed, over a recorded phone call, to Bob Woodward that he had purposely downplayed the virulence and threat of the coronavirus pandemic.

This will be excused, or simply be ignored, by the true believers and kindred souls. And as always, those who cannot recall, or could not have known.

"And we can carry on the practice of charity and prayers in our daily lives, in the little things, if we can take the first step when called. It is that first step, away from the path of selfishness and death, and into the arms of love and true life, that is the key.  The first step out of the darkness and into the light is the hardest.  But once there, in that loving and hospitable place, our true home for which we were made, we find comfort and place, and pray that we may never leave."     Jesse, April 2014 

Repentance, forgiveness, thankfulness.

Need little, want less, love more.  For those who abide in love abide in God, and God in them.

Have a pleasant evening.

Financial Crisis III: Stores of Precious Metals in Trusts and Funds - Junk Bond and Credit Market Concerns

Here is the state of the gold and silver holdings in trusts and funds.

In other matters, there were two articles about risks in the credit markets that caught my eye this weekend.

These *could be* stories spread by market operators who are hoping for turmoil in the junk bond markets.

Or on the other hand this could be signs of something which some have feared would be approaching, as we seem to keep repeating the behaviours that prompted the last two financial crises this century.

The truth is hard to discern these days— it has few friends, and even fewer willing to stand for it.

Nevertheless, I thought it would be appropriate to bring them to your attention, for what it is worth.

Greenwich Time, A New Credit Bubble Gets Ready to Burst, May 31, 2019

The Street, U.S. Officials Meet in Secret Over Junk-Loan Frenzy as Recession Alarms Flash, June 1, 2019

Stocks and Precious Metals Charts - Economic Donkeys - Market Cheers the 'Powell Put'

"The real problem with our financial system is that our economic and political system work together to encourage excessive risk, and this risk in turn leads to cycles of prosperity and collapse. In 1998, a much smaller Lehman Brothers was placed in financial peril by the aftermath of the Asian financial crisis and failure of Long Term Capital Management, a major hedge fund. The Federal Reserve responded by lowering interest rates and other central banks followed suit. This reduced the cost of obtaining funds, effectively bailing out Lehman and other institutions in trouble.

As markets have grown to recognize how quick the Federal Reserve is to bail out institutions (and executives) in trouble, they naturally respond. In the 1990s, people talked about the “Greenspan Put” a term which derisively suggests that it is always safe to invest in risky assets, because the Federal Reserve is ready to bail out investors (a put is effectively a promise to buy an asset at a fixed price if you are unable to sell it to someone else at a higher price – this is a way to lock-in profits or limit losses on investments). However, in months following the collapse of Lehman, we learned that the “Bernanke Put” is even more valuable since Chairman Bernanke, alongside the Bank of England, the European Central Bank, and central banks in much of the rest of the world, is prepared to take drastic measures to prevent asset prices from falling when there are risks of global collapse."

Simon Johnson and Peter Boone, Economic Donkeys


"I have marked my estimates of the quality of the bounce by levels it achieves.   Given that this market is running on hot money and adrenaline, I would not tend to underestimate it."

Jesse, yesterday

Fed Chair Jay Powell gave the markets a fresh whiff of hot money in his statement today, which was widely interpreted as a dovish 'walking back' of the statement from October 3.

And the markets huffed up that blast of fresh bubble brew and took off to the upside.

Stocks were up sharply, bond yields fell, gold got a big reversal the day after option expiry, and the Dollar took a dive.

Not that the real world matters but it was interesting that a huge chunk of the physical gold inventory in the Comex Hong Kong warehouses took a hike last night.   296,000 troy ounces is about twice the gold that is ready for delivery at these prices in New York. 

As you can see from the charts below, the stock futures went through the first two retracement levels pretty handily.

It should be noted that they were stalling around the first retracement target until Chairman Jay spoke around noon.

I found it to be interesting that despite the massive and relentless bear market squeeze, which took off and never once seemed to hesitate, the VIX did not drop by a commensurate amount.

Was this a 'set piece', a contrivance of some sort?   A systemic entitlement for the insiders and financiers, another easy score for the informed among so many?   No way to tell.

We'll just have to sit in the shadow of these dark markets, and see where it all goes next.

I did notice that the spokesmodels on bubblevision used the terms 'Fed Put' and 'Powell Put' about eighty times this afternoon.

I got a chuckle when one said 'Why not buy APPL if the Fed is protecting it?'

You just can't make this stuff up.   We have learned nothing, absolutely nothing, over the past twenty years.  And it just gets worse, each time that we allow this, and forget.

And why should things change, when the current scheme of things pays off so well for a few?

Let's see where we go next.

Have a pleasant evening.

Stocks and Precious Metals Charts - Blue Monday - How Are the Mighty Mispricings of Risk Fallen

"It was a time of terrible suffering. The contradictions were so obvious that it didn’t take a very bright person to realize something was terribly wrong.  And people blamed themselves, not the system.  They felt they had been at fault. People who were independent, who thought they were masters and mistresses of their lives, were all of a sudden dependent on others.  Relatives or relief. People of pride went into shock and sanitoriums. My mother was one.

What I learned during the Depression changed all that. I saw a blinding light like Saul on the road to Damascus.  Up to this time, I had been a conformist, a Southern snob.  I actually thought the only people who amounted to anything were the very small group which I belonged to.

The Depression affected people in two different ways.  The great majority reacted by thinking money is the most important thing in the world.  Get yours.  And get it for your children.  Nothing else matters.

And then there was a small number of people who felt the whole system was lousy.  You have to change it.  The kids come along and they want to change it, too. But they don’t seem to know what to put in its place. I’m not so sure I know, either.  I do think it has to be responsive to people’s needs.  And it has to be done by democratic means, if possible."

Virginia Durr, Recollection of 1933


"Having fallen from the eternal, the evil one's desires are endless, insatiable. Having fallen from pure Being, he is driven by the desire to possess, to fill his emptiness. But the problem is insoluble, always. He is compelled to have and to hold, to possess and consume, and nothing else. All he takes, he destroys. Certainly he rules the material, as he is called the Prince of this World in the gospels."

Denis de Rougemont

As you may have seen we had a rather stiff sell off today, on heavier volumes.

Stocks have pretty much given up all of their gains for 2018. I have included a year to date chart of the performance of a few financial assets below. Gold is outpacing most. Silver not so much.

You may have noted that I originally marked my stock charts with 'Blow Off Top In Progress?' and then a week or so ago dropped the question mark.  There was no longer any question in my mind.

Stocks were so frothily mispriced to risk that the trigger event did not take much:  a better than expected Jobs Report, and not by much, was enough to shock the markets into the realization that the continuous flow of hot money from the Fed almost directly to the Wall St Banks and wiseguys could not continue forever.

Today and Friday were definite flights to safety. Today in particular both gold and the US Dollar were higher. Silver was up by held back a bit by its industrial component.

The VIX, a measure of risk and volatility, rocketed higher.  It was greatly aided by a short squeeze.  The short interest on the VIX was profoundly malinvested against risk.  And today that was corrected.

This was not an ordinary 'Blue Monday' and it went out on the lows.  This was more of a 'Bad Monday.'

And contrary to popular thinking that sets up a strong possibility for a proper bull capitulation, and a relief rally from the lows.  So we will have to wait and see what unfolds in these times of exceptional greed and deception.

Tomorrow is going to give us a lot of data.  We blew out the short term correction metrics, and I have removed it from the charts.   We have now pretty much completed a solid retracement of the meltup from the trendline, when stock risks were thrown aside with abandon, along with all the gains for 2018 and then some.

IF we continue to go lower, the beginnings of the 'Trump Rally' will start peeking their noses back up.  Notice that I have never taken them off my charts.  But I am not counting anything down to there yet.   It will take an additional trigger event to bring that sort of price drop into play I imagine.

I hope you did not lose any money the last couple of days.   I do wish everyone well.  But if you embrace foolishness, and give yourselves over to the advice and leadership of the wicked, a downfall is not to be expected.

So let's see if tomorrow brings a sign that today was a proper capitulation of the bulls, and a cleansing of the excessive mispricing of risks.  Or perhaps we will get a marked capitulation tomorrow intraday.   We will know it because the relief rally that kicks in from the low will not fail like it did today.  Today was a bull trap, to skin the dip-buyers.

And let's keep an eye on that instrument of financial expansion and dominance and the willfulness, the Dollar, la douleur du monde..

One thing of which I am almost certain is that if stocks find a footing tomorrow and rally, all of our cautions and reckonings of the day will be forgotten once again, and it will be back to pride in our exceptionalism and superiority, and the mispricing of risks all over again. 

Have a pleasant evening.

P.S.  A little while ago I put some different measurements on the SP 500 and NDX charts.  I did notice that there is an unfilled 'gap' on the NDX chart and have highlighted that.   After hours the futures markets in stocks are taking the gas pipe.  If this continues into tomorrow AND stocks don't find a footing that one can call a capitulation then it might get quite interesting.

NAV Premiums of Certain Precious Metal Trusts and Funds - Capture and Crash

The gold/silver ratio is about 80 which is historically very high.

I believe that this is attributable to the price leadership of gold because of a flight to safety from economic uncertainty and policy errors such as negative interest rates.

Further, I believe that there is a looming short squeeze in the physical gold market which, if unaddressed by reforms and market pricing, will cause a dislocation in the global bullion markets.

I am obviously less certain about the second reason, but the data lend themselves to this interpretation. And I believe further that failing to address this mispriced risk is a failure of the regulators and the exchanges to rein in the excesses of the 'synthetic gold' derivative trade.

This is not an incidental lapse, but at the heart of their responsibilities in oversight, and further symptomatic of the financial crises which we have been suffering since at least 1999. Indeed, an environment of Too Big To Fail banking entities and captured and complacent regulators is a pernicious influence on the health of the economy and a barrier to a sustainable recovery.

When this trade cracks open, risking collateral damage in the banking system, there will be those who will say that 'no one could have foreseen this coming.' This is nonsense. It is hard to see only because those whose responsibility it is to protect the public against such abuses is standing idly by while it happens, allowing the insiders and perpetrators to hide their actions and its consequences from the rest of the market for the sake of outsized, short term personal profits.

The Warning: A Financial Cauldron of Very High Leverage and Interwoven Risks

"The current bubbles in junk bonds and foreign debt are not in any way driving the economy. Presumably we are seeing somewhat more investment as a result of the fact that uncreditworthy companies were able to borrow at a low cost, but there is no notable boom in such investment.

Similarly, if foreign borrowers have a harder time getting access to credit, it may be bad news for them, but the impact on the U.S. economy will be limited.

If some banks or other financial institutions have over committed themselves in these areas, the plunge in prices may threaten their survival. This could lead to some late nights for folks at the Fed and other regulators, but it will not pose a major risk to the economy."

Dean Baker, Bubbles that We Have to Worry About and Bubbles We Don't, 18 December 2015

And how large was Long Term Capital Management? And the Knickerbocker Trust?

Could they have been said to be 'driving the economy?

And most importantly, is the failure of any major financial institution likely to be an 'isolated incident' in this current financial structure?

I like Dean Baker quite a bit, and read his column every day, often linking to it.

But he may be greatly underestimating the size and interconnectedness and the leverage in the derivatives markets, which while it is a bit harder to see than the housing or tech bubbles is nonetheless there and even more deadly.

It is not the bubble itself that causes the problem alone, but the context in which a risk like that develops, the 'transmission' of the failure throughout the system.  Often in a system that has become sufficiently vulnerable the actual event that causes a collapse can seem relatively minor, until it is examined with an open systems mind after the fact.

The system is at the heart of the problem, not the source of the particular failure that sets its tumbling.

Should one ignore the estimated notional size of the $1.2 quadrillion global derivatives market. And the estimates that put it at more than 10 times the total world GDP.

Oh yes, I know, the insurance and cross-party netting surely mitigates these risks.  And this is the same bad estimate and theory that feeds and precedes almost every major financial panic and crisis.

What happens when a large failure of a 'single institution' takes down a major counterparty affecting multiple financial firms in a cascading of mispriced risks?

Suddenly these theoretically controlled derivatives turn into a tsunami of cross party financial contagion.   This is the real risk, not the derivatives themselves, but their size and their relative fragility to the unexpected, and the concentration of their holdings in a few systemically important places.

Does Dean really believe that it may be too bad for some 'foreign borrowers' but the exceptional American financial system will be able to withstand the winds that blow through the world markets?

What is the estimate of the damage that can be done when confidence fails and there is a widespread and sudden withdrawal of liquidity and a freezing of the short term global credit markets from an enormously interconnected and grossly leveraged financial system that resembles a pyramid scheme?

Are we going to go through all of this again, with the hopes that only the Fed and few Bank regulators will have some sleepless nights but otherwise all is well?   The last time they quickly panicked and went to the Congress with a blank check and a threat of civil chaos.

And what is so different now?   Now they are like the 300 Spartans, willing to risk all and lay down their careers for the sake of the American public, saving them from the consequences a financial system that has been gorging itself on the rich rewards of massive speculation?

Are you kidding me?

Genuine financial reform and hard systemic firewalls like Glass-Steagall are the only remedy.  And we most certainly do not have them now.

Why are there so many plans that now include the 'bail-ins' of public savings and pensions?

I am not fear-mongering.  I am raising all of the hard questions that politicians like Elizabeth Warren and Bernie Sanders have been asking, and which have largely gone unanswered behind a wall of opaque secrecy inside a crony club of the revolving door,  with deriding dismissals and vague assurances of hope for change.

And we had all of that before the financial crisis of 2008 as well.

Remember Brooksley Born?

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

PBS Frontline, The Warning

And the risks are still hidden, and growing rather than diminishing, such is the tide of the influence of Big Banking and Big Money.

In this current financial system, no TBTF Bank is an island of secular failure anywhere in the world.

Gold Daily and Silver Weekly Charts - Gresham's Law, Mispricing of Risk, & the Synthetic Gold Carry Trade

"Gold is unique among assets, in that it is not issued by any government or central bank, which means that its value is not influenced by political decisions or the solvency of one institution or another."

Salvatore Rossi, Central Bank of Italy, 30 Sept 2013


Real gold does not fear examination or the furnace.

Chinese Proverb


"Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."

Bernard M. Baruch


"You have to choose between trusting to the natural stability of gold and the natural stability and intelligence of the members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."

George Bernard Shaw


"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton


Gresham's law is an economic principle that states:  When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.

And this is why gold is flowing from West to East.

There was a fairly lengthy intraday commentary on gold and silver which you might wish to read here.   It covers quite a few topics related to the precious metals.

Surprisingly enough there was an actual delivery of silver at The Bucket Shop yesterday as Nova Scotia stopped 43 contracts for its 'house account.'

Otherwise it was the same old, same old with price going down or nowhere in the highly leveraged, synthetic markets of New York, and with physical bullion slowly leaking out of the warehouses.

The question is not whether or not the financial markets are going to slide into another crisis.  The only real question is when, since there is little to no interest in reform.

"We hypothesize that, having learned from the misadventures of the 1960s, the policy elites, well-versed in the practice of financial engineering and market manipulation, would have seen no need to dump stocks of government gold reserves onto the market, 1960s style, to keep the price in check.

Instead, synthetic gold, sourced in pyramids of credit extended to bullion bankers by central banks with little or no claim on physical substance, have provided a more efficient, better-camouflaged form of intervention. COMEX synthetic gold and related over-the-counter derivatives are traded in macro strategies implemented by hedge funds, high-frequency trades, and commodity funds in pair trades with interest-rate, currencies, equity futures, or even more exotic offsets. The volumes traded are huge, and bear little resemblance to actual flows of physical metal.

We suspect that shorting gold has come to seem like a riskless proposition as long as there is confidence in the Fed. Synthetic gold is the perfect substance for a carry trade: an easy borrow with very low carrying cost and little upside basis risk. Such a hypothesis, in our opinion, does much to explain the incongruity of a declining gold price while fundamentals for paper currency, and the U.S. dollar in particular, obviously deteriorate; while demand for physical gold has exceeded new mine supply for several years running; and while above-ground 400-ounce .995-gold bars located in London, New York, and other financial capitals (in cohabitation with speculative trading activity in paper markets) have steadily dwindled and disappeared into Asian financial centers reformulated as .9999 kilo bars."

Tocqueville Gold Newsletter 2Q 2015

Have a pleasant evening.

Nova Scotia Apparently Backing the Meager Action in Comex Gold - Gresham's Law

Gresham's law is an economic principle that states that when an official market or cartel overvalues one type of money or asset and undervalues another with respect to its fair market value and risks, the undervalued money or asset will leave the country as best it can, or will disappear from circulation into hoards, while the overvalued money or assets will flood into circulation.

Let me stipulate up front that when it comes to the global gold market, the Comex has actual gold flows that are so meager compared to the amount of trading which occurs on paper that I have said it is starting to look like The Bucket Shop.

And in recognition to the disclaimer statement that appears on all of their documents, the exchange makes no claims and accept no liability that any of these numbers are accurate. They are taking the originators of these numbers at their word, some of which are Banks which have recently been shown to be serial offenders when it comes to their financial dealings, pricing, and representations.

As of Wednesday, only 171,613 ounces (5.13 tonnes) were 'up for delivery.'   In a global market where the daily deliveries are measured in metric tonnes, that is a very small amount.

In terms of overall active Comex contracts, that represents a paper to physical leverage of roughly 263 to 1, compared to a historic trend of about 24:1.

And as I looked things over, I was struck by the fact that of those meager ounces available, 101,312 (3.2 tonnes) were from the vaults of Nova Scotia, or roughly 60% of the total.

That struck a chord in my memory, so I looked over the list of deliveries for the month of October.

Of the pathetically small amount of 240 contracts, or 24,000 ounces (.75 tonnes) delivered in the entire month, 17,600 have come from the 'house account' at Nova Scotia.

And the 'takers' of those few ounces have been the 'house accounts' at JP Morgan and HSBC.

So what I am trying to prove with all this?  Nothing.   I am merely showing an interesting trend change that has gone largely overlooked, except in some notable exceptions of the 'smart money.'

And I am documenting some facts for those who have a mind to see them, and to establish a record that people can refer to when these jokers blow up yet another market through their reckless obsession with gambling large.

It shows that in a world of global gold flows, very little is moving in the Comex warehouses, and the little that is changing hands seems to be moving between the houses of three of the big bullion banks.

And it tend to support a hypothesis that the gold trading in London and New York has taken on the character of currency crosses, and lost their ties to the physical commodity nature of the product.  This divergence may be convenient for the management of the price, and for easy profits for those managing the game.

But it has longer term consequences which will eventually come back to shock the markets.  Where have we seen these types of divergences among risk, valuation, and the underlying realities before?  In just about every financial fraud and following crisis in the modern era at least.

So remember this when the next crisis comes, and the distraction, dissimulation, and duplicities are put forward, and the search for non-consequential scapegoats is underway. And you are expected to bail out these jokers once again 'to save the system.'

I am fairly confident that all of this will come to pass if things do not change, and serious reform and enforcement of the rules of the markets are not undertaken.  So far the changes we have are largely cosmetic.  In a plutocracy big money manages the government and the media;  they have bought and paid for it.  And eliminating government only serves to eliminate the middleman.  Transparency and reform are the only sustainable answer.

The big action in the precious metal bullion markets is in Asia.

And gold and silver bullion are steadily flowing from West to East because of a mispricing of valuation and risks.   And the reason for the stunning drop in physical trading activity in the West is because in a manifestation of Gresham's Law,  the hypothecated paper metals are driving out the bullion out of the market.

This is a trend, and it has significance to those who are willing to see it.