Gold Daily and Silver Weekly Charts

Looked like consolidation today.

Equities appeared to be a little wobbly overall, but they did shake off another large earthquake in Japan and an ECB rate hike.

Let's see how we go into the weekend.

SP 500 Intraday: New 7.4 Earthquake and Tsunami Alert In Japan

7.4 Earthquake 60 miles east of Sendai.  One to two meter tsunami alert.  Fukushima workers evacuated.

US equity futures took a plunge on the news, breaking the morning ramp, but have since regained some of today's gains as the market consider the implications.

I would expect the market to try and shrug this off at least until after the European close, and probably until about 11 PM Central Europe Time.

My heartfelt sympathy to all my friends in Japan. Tokyo was shaken but not damaged as Sendai is quite some distance to the northeast.

The full impact of these natural (and manmade) disasters is not fully factored in to the markets in this interconnected global economy, being smothered at least for now by monetary expansion and excess liquidity, the almost euphoric complacency of the Bernanke put.

At some point reality and the markets will converge.

90 minutes later: Bloomberg reports the tsunami warning has been called off.

SP 500 and NDX Futures Daily Charts - Suicide of the Middle Class

Late breaking news that Portugal will be seeking economic aid.

The volumes remain light, and the market vulnerable to a correction if something should happen which will cause a pickup in selling that overwhelms the Fed's monetary lift.

Marc Faber had an interesting interview with KWN: Bernanke Is Killing the Middle Class.

I am not sure it is Bernanke that is killing the middle class, as much as they are committing suicide to please the top one percent, and differentiate themselves from the poor, who they see as hopeless victims. Nothing else explains why ordinarily intelligent people spout slogans and support ridiculous notions and theories that are designed to reduce themselves and their own children to perpetual servitude.  The politicians and pundits are obviously paid to say and act as they do.  But why do the many willingly march to their own doom?

It tends to support the theory of Bernays, that the great bulk of people do not act on reason, but on emotions which are easily controlled and influenced, and therefore subject to manipulation. I can think of no better example of this than the manner in which the Tea Party was turned away from its initial cause of financial reform and put to the task of plundering the weak, the victims of the Wall Street and governing class frauds, upholding the very abuses by Wall Street that they had originally organized to protest.  As propaganda campaigns go, it does not get much better this.  No wonder the monied interests are so emboldened of late.

Gold Daily and Silver Weekly Charts - Blythe Retreats, Morgan Silver Ratio Tests Lows

A little learning is a dangerous thing;
drink deep, or taste not the Pierian spring:
there shallow draughts intoxicate the brain,
and drinking largely sobers us again.

Alexander Pope, Essay on Criticism


"Anger makes dull men witty, but it keeps them poor."

Francis Bacon

These quotes remind me of some of the rhetoric I see on the web, especially with regard to economic matters wherein people make long winded argument full of rhetorical flourishes about how this or that CANNOT happen, and that those who hold some other view are obviously istas who are ignorant beyond belief.

One could almost feel badly, except that these arguments are so often held by those with a general contempt for those weaker or less fortunate than themselves, and are often obviously self-serving, intolerant, and strident.

And yet they are mostly wrong and wrong again, acting against their own interests, and likely losing sums of money if they actually invest in accordance with these wrong-headed conclusions. It seems almost like some sort of karmic justice.

Sophocles was right. Many are the wonders, but nothing stranger than man. Everyone serves something, and if not a God of the highest good, then more likely some boastful bully or unworthy idol, or even worse, themselves, and so they serve a fool.

Turning to the markets, this is where I would look for some sort of trend consolidation or correction. Having said that, it is good to recognize that we are in extraordinary circumstances, with the Fed and the developed countries printing the major currencies without a firm anchor to something external like gold, silver, or even GDP growth.

Need the end of the day it was announced that Portugal will be asking for aid as it teeters on insolvency in support of the banks.

There is also talk that the ECB will be raising rates tomorrow. The right hand gives while the left hand takes, the better to deceive you, my dears.

Let's see how this develops.

Gold Daily and Silver Weekly - Metals Soar, Threaten to Break Out and Run - 1455 Target Met

“Since ancient times, credit markets have undergone periodic booms and busts. In 594 BC, for example, the Greek state of Attica found itself under severe economic stress because of the massive debt incurred by many of its citizens. The ensuing civil disorder resulted in a handover of power to Solon, one of the ‘seven wise men’ of Greece . Solon took radical steps to restore balance to the economy, such as canceling debts, freeing those enslaved for failing to repay their loans, and devaluing the currency by 25 percent.” FDIC Outlook, Summer 2006

The metals soared today breaking out across the board with mining stocks starting to follow. It appears that we have hit the target of 1455 which I had called out when gold was trying to break out of the big cup and handle formation around 1200.

The bulls need to stick the breakout, and resist any attempts to break back down again, and set up the next leg up to $50 Silver and $1590 Gold.

I think it will take a stock market crash to stop this advance which is intimately tied to global monetary expansion and a corrupt financial system.

Not yet, but some day. Down Goes Morgan, Down Goes Morgan..

At some point they will be carrying them out of the silver pit on stretchers.

SP 500 and NDX Futures Daily Charts

Benny and the Boys need to hang on here.

There is a LOT of air under this monetary meringue.

I can see an event dropping the SP futures down to test the 1200 level in less time than most might imagine.

Gold Daily and Silver Weekly Charts

"The CME Final for Friday reports that volume was indeed 174,502 lots, 9.34% above estimate, open interest rose 983 lots – 3.06 tonnes or 0.2% - to 493,137 contracts.

This suggests that the heavy selling which sent gold plunging $26.40 in the aftermath of the employment report was a short selling raid, which was only partially successful in spooking out longs." John Brimelow

We *could* get a pullback or a consolidation here abouts, but I am not betting on it.

For a variety of reasons I went to low leverage and beta today, and am hiding in long term investments until I can get a better idea of which way the wind is blowing.

When you get this kind of cynical action in the financial markets on such light participation, you get the sense that you are in a warehouse full of leaking gasoline cans, and that the watchmen are about to light up.

SP 500 and NDX Futures Daily charts

US stocks closed near or at the highs of the year, on one of the lowest volume days of the year.

Texas Instruments offers to buy National Semiconductor.

If I were of a mind to look for a top this would be about the place for at least a minor correction of 3 to 5 per cent. But with Benny in the game and the banks skewing the trade, it does not appear likely unless there is some exogenous event.

Capitalism is a very good system. I would like to see the US try it out again. The first step is to commit your economy to legitimate price discovery and fair and efficient markets. It takes work to achieve this, as the idea that markets are naturally perfect is as great a canard as the perfectibility of central planning by an autonomous elite.

"Unfettered capitalism is a revolutionary force that consumes greater and greater numbers of human lives until it finally consumes itself."  Chris Hedges

The pigmen and piglets, pounding the table for more, are going to be in for quite a surprise when what goes around, comes around.

Gold Daily and Silver Weekly Charts

The failed bear raid in the metals today was so clumsy that it was almost embarrassing.

There was disappointment in those who were short the metals, or had lost their positions, and were feeling discouraged that silver and gold had failed to break down for them today and stay there as planned.

It's like a nightmare, isn't it? It will only get worse. Cry me a river...

SP 500 and NDX Futures Daily Charts

At some point this rally is going to fizzle and correct. I would not get in front of it until there is a sold break of the trend, and the wiseguys start hitting the exits.

The problem is that the volumes are so light that people are concerned that they will miss out on the drop, and so they keep shorting it trying to pick a top and front run a decline.

Better to miss the first leg than to exhaust yourself, and be too weary and dispirited to play it when it comes.

I am using shorts only to hedge my bullion and mining longs at this point, along with a few other devices. It helps me buy these dips as we saw today and hold them with some conviction.

The long term trend is so obvious that if one does not get it by now you may as well start keeping bees in Sussex.

SP 500 Futures Intraday

The bear raid on the metals is coming in as expected. This always happens when there is a dodgy Non-Farm Payrolls report, which is most of the time these days.  They cannot break the trend it seems, but can make it uncomfortable to go against them in the short term, those who are not able to keep the longer term trend and overall economic landscape in mind. 

As for US equities, I could not bet against broad stocks here until I see a genuine failure of a trend. The monied interests seem determined to take this tragic comedy higher, because they do not know what else to do, but to deceive and loot, and do again what has failed twice before.   They may not care, as long as they end up with rents and income producing assets.

There was a double dose of Dick Grasso and David Kelly on Bloomberg this morning, extolling the virtues of Wall Street and the wonders of the economic recovery.   That was painful to watch.  The brood of vipers on parade.

Who cares?  We'll all be rich, with more dollars than we could have ever imagined.  Just put your faith in the financial powers and your own false pride. 

And if and when that falters, then turn on the weak, the unfortunate, and the different in your prideful anger, and bully and abuse them for their 'failure' which is dragging you down.  Since we're perfect, there must have been insidious influences working against us from within.  Certainly there was no fault in the status quo and those made wealthy by deceit, fraud, and human misery.

This is what passes for reform in some circles.

I am afraid it will be getting worse before it gets better.