Gold Daily and Silver Weekly Charts

So far the support levels are holding well.

Let's see how the rest of the week goes. Overhead resistance is key here.

SP 500 and NDX Futures Daily Charts

The Street was supporting stocks for the LinkedIn IPO which was priced today after the close at the high end of the range. This is supposed to be a bellwether for the social networking IPO market which is a plum for the pigmen to sell at high valuations.

Although LinkedIn is hardly like Facebook, nevertheless it is viewed as important revenue wise for those who run the retail side of Wall Street.

Gold Daily and Silver Weekly Charts - US Debt Currency Has TIC Douloureux

The metals seem almost locked at the hip with equities at this point in the credit crisis.  Its an idle liquidity thing, driven by negative real interest rates on savings and sovereign debt.  The real economy offers few productive outlets and the recovery cannnot obtain traction because the government has not corrected the abuses and distortions that created the problem in the first place.

As one might expect, la Douleur appears to be struggling to break out higher, and avoid falling over a rising wedge. It can go either way.  Lower seems a bit more likely, but in the world of fiat, these things are relative.

Foreign governments, of at least the non-client state kind, appear to be continuing to eschew Treasuries. 

TIC Report Shows China Sold Treasuries Again - WSJ

"China sold U.S. Treasury securities in March, reducing its holdings for the fifth straight month while remaining the largest foreign holder, the Treasury Department said Monday.

Overall, foreigners were net buyers of long-term U.S. financial assets in March, according to the monthly Treasury International Capital report, known as TIC.

China's holdings fell $9.20 billion to $1.145 trillion, following net selling of $600 million in February.

Meanwhile, Japan has been a heavy net buyer in recent months, accumulating Treasurys at record levels. Japan remained the second-largest holder of Treasurys, lifting its holdings ..."

Let's see, the Fed buys Yen, and the BOJ buys Treasuries.

You put your right hand in, you put your right hand out, you put your right hand in, and you shake it all about...  

Looks like DSK isn't the only one doing the hokey pokey.

SP 500 and NDX Futures Daily Charts - Bearish Head Fake for 10,000th Time

Stocks slump on bad economic news, bulls buy dip, film at 11.

Net Asset Value of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts - and Le US Douleur - More Volatility Ahead for Silver

Silver was hit harder as the US equities fell, and gold maintained some resilience.

The intraday moves had the character of bear raids and sharp selling in size, rather than steady liquidation.

Notice that the dollar too was weaker today, although it remains in a short term uptrend.

The number of contracts standing for May delivery of silver ROSE today according to Harvey Organ. The Comex delivered no actual silver, but the trading desks offered plenty of paper, as overall open interest rose again.

Someone asked me what it might be like if the Comex was unable to meet its deliveries, and there was a  cascading effect to the metals encumbered by counterparty risk in the two big ETFs, if they were hit by a wave of redemptions as large shareholders sought to lock in supply.

I did not see their scenario of multiple days of up limits until the market clears, simply because it seems to be a few large members important to the exchange who seem to be 'holding the bag'  in this case.  Market solutions are for the little people and relative outsiders like the Hunt Brothers.

Rather, I would anticipate a declaration of force majeure, and a forced settlement in cash and shares of SLV, which themselves are probably representations of bullion rather than the metal itself.   I do not know what the rationale for this might be, and it is not quite clear to me that they would even need one except for cosmetic purposes. 

When you have power and have learned to use it with ruthless hypocrisy, the only thing you need to respond to is a greater force of power that calls you to accounts. This is one of the great lessons from the recent financial crisis.  When the government and the regulators do not uphold their responsibilities, fraud becomes fashionable.

The Comex has about 32 million ounces of deliverable silver on their books, and they are dragging out the delivery process each month, as virtually no new inventory becomes available to replenish their supply.

I was a little shocked that the parabolic rise in price and  the subsequent calculated smackdown in conjunction with the increased margin requirements shook no new significant inventory loose for the dealers, only more paper profits. Customer withdrawals continue as well, with almost 3.5 million ounces leaving this month.

However it transpires, if it does, it will be memorable.   I am looking at the supply and demand as the numbers are published, and not at anything esoteric or private.  So I would imagine that the CFTC and the least sophisticated traders in the market can see the same things unfolding.  I hear things from time to time about back room discussions about the resolution of all this, and have to work to separate them from the tide disinformation, of which there is quite a bit more than you might imagine.  People are very concerned about a potential shock to the credibility of the system.  Of course, they may be utterly out of touch with current reality.  Trust is in short supply, and the natives are growing restless.

Rumours, and disparaging talk, and theoretical discussions are well and good, but as they say, show me the money, or in this case, the bullion. 

Where is it, how much of there is it, and what are they going to do when and if the supply of silver bullion drops below 30 million ounces deliverable, which is really a pittance given the size of the market? A silver futures contract on Comex is 5,000 ounces, and so that represents a mere 6,000 contracts.  There are a total of 123,000 contracts open today.  Last Friday the volume was an eye popping 126,000 contracts!  This at times seems less a market, and more a game of musical chairs, or a shell game.  And if the allegations are true about the LBMA,  and their leverage, then what we have here may be a recipe for a severe market dislocation.

And this is why I expect the silver market to remain highly volatile, with some amazing moves ahead, both up and down. And stretchers perhaps, to carry out some players from the pits, as they get caught offside in high frequency moves, and an increasingly disorderly trade. And this due to the failure to reform the financial system.

And for us, the smaller investors, caution is advised.

SP 500 and NDX Futures Daily Charts

Another weak day on stocks.

They are pressing on the pivots, wherein this starts changing from a correction to a new downtrend.

The techs were leading the way down today, followed by consumer discretionaries.

The markets were shocked a bit today by the startling events in NYC, as IMF chief Dominique Strauss-Kahn was arrested on very serious sexual assault charges. DSK was one of the leading candidates for French political office, and was in the midst of critical meetings at the IMF on global currency and European solvency issues.

Strauss-Kahn's position at the IMF will be filled for the time being by John Lipsky.

John Lipsky assumed the position of First Deputy Managing Director of the International Monetary Fund on September 1, 2006. Before coming to the Fund, Mr. Lipsky was Vice Chairman of the JPMorgan Investment Bank. Previously, Mr. Lipsky served as JPMorgan's Chief Economist, and as Chase Manhattan Bank's Chief Economist and Director of Research. He served as Chief Economist of Salomon Brothers, Inc. from 1992 until 1997. From 1989 to 1992, Mr. Lipsky was based in London, where he directed Salomon Brothers' European Economic and Market Analysis Group.

Gold, Silver, and Dollar Daily Charts with Long Term Trends and Fibonacci Retracements

Here is some general knowledge on Fibonacci Retracements

The placement of the pattern on the chart is given to some subjectivity. I prefer to do it according to the patterns I am attempting to analyze. Obvoiusly there are other ways of doing it.

This is by way of saying that these are my own calculations. There are others.

The Anglo-American banking cartel will resist change with increasing determination, and at times bitter opposition.

US Monetary Aggregates

It is easy to be misled by short term trending in money supply charts, especially those showing year over year growth as a percentage.  Money supply changes are seasonal and often very volatile, but nevermoreso during a credit collapse and quantitative easing.

A look at the longer term trends is most useful. And if necessary a review of Money Supply: A Primer.

The last chart is an index where 100 equals the M2 supply around the end of 2007, and the onset of the credit crisis. Since then it has grown almost twenty percent. 

Has GDP or the population grown 20 percent? So money per capita or per unit of productive effort is growing.   All one has to do is look at some reality based metric of money supply growth and negative real interest rates to understand the ten year bull market in gold and silver, and commodities in terms of US dollars. 

I understand people like to look at the various independent M3 estimates, but since the Fed no longer reports Eurodollars I have not seen what I could consider a credible recent estimate. And I doubt VERY much that M3 is underrunning M2 given the dollars that the Fed has been spreading around the world's banks.

Can the Fed keep this QE up? Will deflation set in, finally? It is a policy decision in a purely fiat currency. That could change, and I will know what to look for when it does. The Fed could be subjected to some external force, either from foreign creditors or domestic politics.   I expect that foreign shock to be inflationary rather than deflationary however.  As for the domestic forces, a choice for third world status is always an option.

The top five percent of Americans hold by far most of the country's wealth. And deflation may be in their short term interests, as in the case in the UK which seems to be going down that path. These policy decisions bring up a different set of considerations, many of which will stress the social fabric to the breaking point.  But a people grown coarse by war and ideology have done much odder things before. 
But for now the trend has not changed, and it would probably take a global economic collapse to change it. That is possible. And in such an event everything will get sold, for a time, as they were in the market crash of 2008.

Those who have been betting on deflation for the past five or ten years have been wrong. They could be right some time in the future. But one can be wrong on a mistaken principle for a very long, long time.

US Bonds have been in a long term disinflationary rally. There seem to be a number of 'name' people now looking for a trend change. That is the crux of Bernanke's short term focus, and the target of QE^n.

Notes From a Good Ol' Friend in Louisiana On the Rising Waters, Cotton and Sugar

Here is a human face on the flooding in Louisiana and some economic implications. I have edited out the personal references and details of his mail order business.

Here in Louisiana, there is palpable concern about the flood. I am 68 miles away from Vicksburg, due West on I-20. My effort to continue on working is one amongst many. But in the background there is the bated breath of trepidation for the economy as a whole, and for our own situation in particular.

Vicksburg crests May 19. The levees are expected to hold, but then Pemberton assured Davis he could hold Vicksburg. If I delay one week I will know for sure as the crisis should have passed. I don't want to find myself surrounded by flood waters which could reach more than two and maybe four feet here in Monroe. The lip of the Mississippi Delta is about 15 miles East of here. An extremis situation could be devastating.

Then downstream, south of here, when they open the Morganza Spillway much suffering will happen. Of course, their hope is to avoid wiping out no less than nine refineries, a plugged port facility, and the movement of commerce upriver.

What's the point of all this? No matter what, much sugar, cotton, etc will be wiped out, and already has been by the rain, floods, and now the intentional man made act of opening the spillway.

Sugar is about a twenty four month cycle. When they cover the thousands of hectares of cane a significant percentage of the years crop will vanish. Next year will be a recovery year with a more stable situation in sugar not before 2013. So much for the knock on effects of opening the spillway.

Not being reported much is the fact there are three nuclear power plants threatened by the rising waters. This poses some threat to compound the situation. Of course we aren't Japan, we're better and all that happy delusion. Of course, the same people built these reactors, so who's to say what may be?

I am suggesting the optimistic outcome, after a stiff market reaction. By late summer, maybe July, we'll all be taking a long sigh of relief. Meantime, the rails and trucks should be straining at their capacity to replace the disrupted flow of commerce caused by the stoppage of river traffic.

Even now, when you cross the bridge at Vicksburg, one can read the headlines of the newspaper the Northbound barge pilot is reading as he barely clears the undercarriage of the bridge. Whatever they're paying him, he should get a raise.

I don't even try to play these things. I am simply shedding some light on a situation for your consideration. Me, Imagonna get me some likker, maybe a gal named Sookie, and hope for the best.

I would be careful about playing these things. There is the market, and then there is the paper market in the States. And the paper market is dominated by a few financial monstrosities and a ravening pack of hedgehogs.

Gold Daily and Silver Weekly Charts - Shanghai Reduces Silver Margins

"This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well.

If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are." Matt Taibbi, The People v. Goldman Sachs

The weekly range in silver was remarkable, but notice that it ended the week fairly close to where it left off last week.

The banks are desperate, and facing a large amount of potential demand in the June contracts. They do not seem to be able to find supply, so they are struggling to dampen demand and obtain corollary trading profits in the miners and related sectors.

A very unsettled set of markets indeed, with the BRICs buying heavily, and the Anglo-American financial cartel fighting it every step of the way.

Shanghai Metals Exchange Reduces Silver Margins

This is going to be interesting.