Stocks and Precious Metals Charts - Without Love, Nothing

 

“The one who holds the seven stars in his right hand and walks in the midst of the seven gold lampstands says this: 'I know your works, your labor, and your endurance, and that you cannot tolerate the wicked; you have tested those who call themselves Apostles but are not, and discovered that they are impostors. Moreover, you have endurance and have suffered for my name, and you have not grown weary.

Yet I hold this against you: you have lost the love you had at first. Realize how far you have fallen. Repent, and do the works you did at first. Otherwise, I will come to you and remove your lampstand from its place, unless you repent.'”

Revelation 2:1-5

"Worldly pride is easier for us to perceive. We see it clearly in the self-proclaimed elite of our time. But less obvious perhaps is the spiritual form of pride, that reduces us into an insidiously distorted order of things. Spiritual pride blinds us to our own faults. But even worse, it leads us to magnify and fix ourselves upon the faults of others.

Spiritual pride leads to a lingering spiritual death. It turns the living being into a living tomb, all bright and polished on the outside, proudly ornamented with scrupulous attention to detail, and ostentatious adherence to the letter of the law— but inside full of corruption, and festering foulness. This is all too common among those whose love is directed to the rituals and the forms of religion, but wanting nothing to do with the human realities of it, the acts of mercy to others which are the second great commandment. It is a sickening romance with the self, unto death."

Jesse, Being Human, 20 August 2017

"If I speak with the words of men and of angels, but do not have love, I am a resounding gong or a clashing cymbal.  And if I have the gift of prophecy and comprehend all mysteries and all knowledge; if I have the faith to move mountains but do not have love, I am nothing.   If I give away everything that I have, and if I hand myself over for sacrifice but do not have love, I gain nothing."

1 Corinthians 13:1-3

"The blessed John the Evangelist lived in Ephesus until extreme old age.  His disciples could barely carry him to church and he could not muster the voice to speak many words.   During individual gatherings he usually said nothing but, 'Little children, love one another.'

The disciples and brothers in attendance, annoyed because they always heard the same words, finally said, 'Teacher, why do you always say this?'   He replied with a line worthy of John: 'Because it is the Lord's commandment, and if it alone is kept, it is sufficient.'"

Jerome, Commentary on Galatians, 4th century


Stocks managed a small gain today.

Gold and silver bounced back strongly from their recent shellacking in observance of the stock option expiration.

What a surprise.

VIX and the Dollar fell.

There will be a December futures options expiration on the Comex next Monday the 25^th.

Thanksgiving is around the corner, and then a month later, Christmas.

It's always something.

Have a pleasant evening.

Stocks and Precious Metals Charts - Most Likely To Be Left Standing

 

“Gold is money. Everything else is credit.”

J. P. Morgan, Congressional Testimony, 1912

"The consensus investment view seems to be that the credit crisis of 2008 was a freak occurrence, unlikely to repeat.  That is wishful thinking.  Monetary policy has painted itself into a corner.  Based on our present course, there will be more bubbles and more meltdowns.

Financial markets and institutions sense trouble, as reflected in the flight to supposedly safe assets such as Treasuries and corporate-debt instruments with paltry yields, as well as the reluctance to lend by commercial banks.  We are stuck in an epic liquidity trap.  The irony is, if global central banks succeed in creating inflation, the value of these safe assets will be destroyed.  It is a slaughter waiting to happen.

In the pedantic mentality of central bankers, their playbook creates just the right amount of inflation.  As inflation accelerates, consumers will spend to get rid of their dollars of diminishing value and spur the economy.  Once consumers start spending, it will be time to raise interest rates because a solid foundation for prosperity will have been established, they say. 

The belief among policy makers and financial markets in the possibility of this sort of fine-tuning is preposterous, but it is the slender thread on which remaining investment and business confidence rests.

The breakdown of the monetary system will be chaotic.  When inflation commences, it will be highly disruptive.  The damage to fixed-income assets will seem instantaneous.  Foreign-exchange markets will become dysfunctional.  The economy will become even more fragile and unpredictable.

Gold is an imperfect, but comparatively reliable, market gauge for the extent of current and future monetary destruction.  The recent acceleration in the dollar price of the metal to $1,381, a record high in nominal terms, coincided with talk of a new round of quantitative easing and highly visible discord among major nations on trade and currency-valuation issues.

Naysayers point to gold’s price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency.  The sudden torrent of commentary on gold isn’t the sign of a bubble.  Anti-gold pundits provide a great service to those who grasp this historical moment: they facilitate the advantageous positioning of the one asset most likely to be left standing when the dust settles."

John Hathaway, Tocqueville Asset Management, October 28, 2010

"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."

John Hathaway, Tocqueville Gold Newsletter, 2Q 2015

"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 Baruch, 20th century American financier


What determines the relative value of a currency?

I don't think we need to beat the question of 'what is a currency' to death.  I think everyone over the age of 12 has developed a feeling for that.   Except for propeller heads who are paid to pick nits.

Is it just something that exists in a finite amount?  Is it just relative scarcity?   

How much of your portfolio do you have invested in Limited Edition Nascar plates?  Beanie babies?

Faith, fraud, and force in varying degrees determine the relative value of a currency.  Where faith, or rational expectation in the continuing integrity of the redemption value in goods and service of a currency falters, fraud may suffice - for a time.  

Some monetary authorities love to misrepresent the relative value of real things compared to their favorite  issuance, or so we hear.

But at some point, official narratives and misrepresentations grow thin, and the day to day experience of people tends to scour away the ornaments of the monetary Pharisees.

And so, in the end, the issuer may come to rely on varying degrees of force.  But it only works where you are able to apply that force, the area which you control, and how effectively you can control it.  Empires like to extend their span of control for this reason.

Faith is easily lost.  And once lost, force is a tool that has a difficult task in restoring faith.  At most it can obtain varying degrees of compliance.  But that is not easy to sustain for longer periods of time.  

What has been in place for most of our lifetimes, the dollar hegemony, seems to be changing - slowly.   And so the prudent may seek alternatives.   And others may not.

Stocks continued to decline today, with a little more conviction.  The perception of their values may be wearing a bit thin.  You think?

Gold and silver were holding their own with varying degrees of success.   I would imagine that the open interest of the December contracts has declined quite a bit this week, as it rolls over to March. 

This rigging of the markets for profit is force, being applied by the enablers of the financial system.   They obtain their pound of flesh from the other market participants in return for promoting the official narrative which calls for graceful declines in confidence when necessary.   This is why the officials tolerate certain levels of price manipulation, when they are not doing it themselves.

I think we are well beyond the notion that markets are not manipulated.  Maybe not.  But at this point the facts speak for themselves.   A big difference from the dumb debates of 20 years ago.  Some people learn nothing, and new crops of greater fools show up to be harvested.  

The risk in equities remains elevated.   We are one exogenous event away from a serious revaluation of that risk.  And I have never been more certain that it is coming.

I am trying to remain optimistic, but everything that I see suggests that it will be rough seas ahead.

Hope for the best, but prepare for the worst.   Or not.

"A fire broke out backstage in a theatre.  The clown came out to warn the public; they thought it was a joke.  He repeated the warning, but the applause was even greater.  I think that's just how the world will come to an end: to general applause from those who believe it's a joke.”

Søren Kierkegaard

To remain standing firm in difficult times, in the great falling away, is what matters.

Everything else is pride and ornament.

Have a pleasant weekend.

Stocks and Precious Metals Charts - Manias and Their Diminishing Returns

 

"The economics are likely to be grim.  Sky high valuation of companies like OpenAI and Microsoft are largely based on the notion that LLMs (eg. chatbots) will, with continued scaling, become artificial general intelligence.  As I have always warned, that’s just a fantasy.  There is no principled solution to hallucinations in systems that traffic only in the statistics of language without explicit representation of facts and explicit tools to reason over those facts.

LLMs will not disappear, even if improvements diminish, but the economics will likely never make sense: additional training is expensive, the more scaling, the more costly.  And, as I have been warning, everyone is landing in more or less the same place, which leaves nobody with a moat.  LLMs such as they are, will become a commodity; price wars will keep revenue low.  Given the cost of chips, profits will be elusive.  When everyone realizes this, the financial bubble may burst quickly; even Nvidia might take a hit, when people realize the extent to which its valuation was based on a false premise."

Gary Marcus, Confirmed: LLMs have indeed reached a point of diminishing returns, November 9, 2024

"We may make ourselves popular by telling our fellow citizens that they have made Discoveries, conceived Inventions, and made Improvements; We may boast that we are the chosen people; we may even thank God that we are not like other men. But after all it will be but flattery, and the delusion, the self deceit of the Pharisee."

John Adams, Letter to John Taylor, 29 July 1814


AI has been the subject of tremendous overselling and hype, often by the financial interests who are always on the lookout for some new era idea to distort and promote. 

And indirectly related, crypto currency is all of that and more, with a much larger element of verbal manipulation and fraud. 

But being shrouded in 'new era' mystique, normal reasoning is challenged by the notion that 'who can say' when indeed, most do not understand what it is that they are being called to believe in.

Are they both real and legitimate things?  Absolutely.   Both are founded in mathematics.  My own house PhD's are well-versed in both of them.  And I am constantly being cautioned with the intricacies of what is indeed a complex subject with a lot of technical nuances.

But as an old lab rat turned business manager with time-served observing and facilitating the adoption of new technologies into profitable product cycles, I am keenly aware of the hype that new ways of doing things can become by the marketing machines of predatory finance.

Everyone was made a believer by the internet, which has indeed revolutionized communications, and seemingly came out of nowhere.  But those companies who have sustained and grown with it have done so with the same old boring methods of business: customer service, deploying and provisioning billable products, quality control, and the basic bull work of building things in the real world.

I delivered a talk to a large business technology conference on this subject in 1999 in Amsterdam, in which I urged them to give some thought to the practical adoption and management of what it was their companies were building as providers.   I would estimate that easily more than two thirds of those companies did not exist by 2006, just in time for another bubble to arise from the monetization of something else.  And of those who did still exist, most were hardly the same, except perhaps in name only.

But vast profits, enormous returns, can be made in the early days by those who sell the tools and the dream, and of companies that rise seemingly out of nowhere to capture fantastic valuations and fortunes, only to fade away into the bank accounts of the same old financiers and their enablers.

So, we had stocks lower today, as part of a recent rounding trend.

The VIX is signaling a short term low in the valuation of risks.

Gold and silver managed to hold their own after an overnight bear raid, most likely targeting the remaining open interest in the big December futures contract.  The attack on the December contract is a perennial thing that I have written about in the past.

It is what those who are holding the bag for delivery of what they do not have will do, setting up 'alternatives' and distractions to delay their day of reckoning.   In the short term, as always, it's all about the Benjamins

And on the horizon, the gathering storm that will come roaring in 'out of nowhere' and sweep it all away. 

One of the consolations of living to an older age is to see the hard hand of time strip all the gilding off the ornaments and monuments of the hypocrites and Pharisees of finance.

The timing and specific trigger event(s) are still uncertain, but a steep decline in risk assets is coming. It will be on a scale with the last two bubbles when it comes tumbling back to earth. 

It is like avalanche conditions prevailing. You know it is coming, but can only estimate what exactly will set it in motion, and when.

Have a pleasant evening. 

Stocks and Precious Metals Charts - The Allure of Illusions - Gullibility Reaching Terminal Phase

 

“The whole aim of practical politics is to keep the populace alarmed, and hence clamorous to be led to safety, by an endless series of hobgoblins, most of them imaginary.”

H.L. Mencken, The Divine Afflatus, New York Evening Mail, 16 November 1917

"Among those who participated actively and enthusiastically in [Woodrow] Wilson’s war were the progressive intellectuals, people of the John Dewey circle, who took great pride, as you can see from their own writings at the time, in having shown that what they called the 'more intelligent members of the community,' namely, themselves, were able to drive a reluctant population into a war by terrifying them and eliciting jingoist fanaticism.

The means that were used were extensive.  For example, there was a good deal of fabrication of atrocities by the Huns, Belgian babies with their arms torn off, all sorts of awful things that you still read in history books.  Much of it was invented by the British propaganda ministry, whose own commitment at the time, as they put it in their secret deliberations, was 'to direct the thought of most of the world.'

But more crucially they wanted to control the thought of the more intelligent members of the community in the United States, who would then disseminate the propaganda that they were concocting and convert the pacifistic country to wartime hysteria.  That worked.  It worked very well.  And it taught a lesson: State propaganda, when supported by the educated classes and when no deviation is permitted from it, can have a big effect."

Noam Chomsky, Media Control, 2002

"They have become foolish in their reasoning, and their senseless minds are darkened."

Romans 1:21

"Journalism is one of the devices whereby industrial autocracy keeps its control over political democracy; whereby the minds of the people are kept in a state of acquiescence, so that when the crisis of an election comes, they go to the polls and cast their ballots for either one of the two candidates of their exploiters."

Upton Sinclair, The Brass Check

"Many will become addicted to hateful and malicious thoughts and hateful words.  Slaves to their desires, they will be ferocious, angry despisers of what is good and right.  With brutal treachery they will act without restraint, bigoted and blinded by clouds of conceit.   They will demand and find their delight in the pleasures of this world, and ignore their need to serve God.  They may act religious, but they want to serve themselves."

2 Timothy 3:1-5

Monetary canards never die.   They just get spun with a twist and come back again in different forms.

The trillion dollar platinum coin is morphing into a 'Strategic Bitcoin Reserve' to pay off the US debt.

Well, at least we know we are nearer to the end of this phase of the great transfer or wealth - the downward spiral of dumbness.

I have seen a lot of things in the past 50 years of so of trading, but the same dumb scams and debates keep coming back, again and again, and people keep buying them.  Until the end comes.

Deflation is inevitable.  Debt doesn't matter. Madoff found a money machine.  Enron was making a killing thinking differently  It's a new era of tech stocks and valuations.

It's all about the Benjamins.  And those with few morals seeking those with little sense. 

Ask yourself this, as you would of all Ponzi schemes.   Who is the greater fool?

And those who know better stand by and do nothing, or just go along to get along and get their piece.

Stocks were a bit mixed.   They are getting tired.

The economic data this morning came in-line, but got spun as Dollar strong.

Gold and silver just got hammered.   Stock option expiration on Friday.

And the beat goes on.

Have a pleasant evening.